Category: Politics

  • Michael Keating. An alternative budget strategy – Part 1

    In May this year I posted five articles by Dr Michael Keating on the economic and social consequences of the recent Hockey budget. Over the next three days I will be posting three follow-up articles by Michael Keating on an alternative budget strategy.  Dr Michael Keating was formerly Secretary of the Department of Finance and Secretary of the Department of Prime Minister and Cabinet. John Menadue

    Part 1. An Alternative Budget Strategy 

     Two months later and the Abbott Government’s Budget is the worst received in living memory. There is widespread community agreement that this Budget is basically unfair.

    Readers will not need reminding of the various cuts to welfare, health and education, but in the absence of the usual Budget information from the Government, perhaps the best summary of the distributional impact of this Budget has been provided by NATSEM. In short, NATSEM modelling found that by 2017-18, “Low income families with children (bottom 20 per cent) are worse off by around 6.6 per cent while single parents are worse off by around 10.8 per cent”.  In contrast “High income families are marginally better off thanks to the carbon tax removal”. And this analysis does not include other measures such as the Medicare copayment, the cuts to education and training, and possibly the harshest measure of all, the denial of access to any income support for young unemployed people every other six months.

    But is there an alternative to the Government’s budget strategy  –  contrary to the assertion by the Government and its supporters that in fact ‘there is no alternative’ (which is of course a familiar refuge for conservatives)?

    First, the Government is right that we do need to restore the Budget to surplus; indeed the previous Labor Government was equally committed to that, and over much the same time-frame. Furthermore, the projected rate of fiscal consolidation over the next four years – 0.6 per cent of GDP – is not draconian and seems to get the balance about right in terms of its impact on a still soft economy.

    Second, Australia also faces longer term fiscal pressures, partly because of our aging population, but more importantly because of rising expectations for increasing public services as incomes rise, combined with new technological enhancements impacting particularly on health services. In short, the Treasury estimated in its most recent 2010 Intergenerational Report that these structural budget pressures were likely to add as much as a net 4½ percentage points of GDP to total outlays by 2049-50 if the (then) present policies were maintained. And since then spending pressures under the previous Labor Government probably further increased, notwithstanding some savings initiatives, because of big new spending programs associated with the Gonski reforms of schools funding and the National Disability Insurance Scheme. Three years out from now, in 2017-18, these fiscal pressures start biting significantly, and given the long lead-times in effecting budget reform, prudent budgeting would start making preparations for financing these demands now by some combination of greater revenue and/or greater efficiencies.

    Where the Government and its cheer squad are wrong, however, is their assumption that their proposals represent the only tenable strategy to achieve the goal of a budget surplus. In effect the Government asks us to believe that the Government’s ‘tough’ budget decisions were absolutely necessary because no alternative course was possible. For example, the retiring Secretary of the Treasury, Martin Parkinson, in an almost unprecedented intervention into the political debate, has seemed to suggest that ‘vague notions of fairness’ should not be invoked to oppose the government’s program of fiscal consolidation.  Equally Paul Kelly has pontificated in the Australian that our budgetary problems are such that the ’harsh medicine’ being handed out is necessary, and that opposition ‘reveals an immaturity in political debate that the nation was meant to have left behind decades ago’.

    In fact, quite to the contrary, it is a sign of the maturity of our democratic system if there is a proper debate about the best policies for the future.  We should not be silenced by claims that any opposition to the Government’s particular strategy for restoring a budget surplus is irresponsible. Equally, however, that proper debate does require some appreciation of what are the alternatives to the Government’s proposed fiscal strategy.

    Clearly the country needs something better than the present approach by the Senate. The necessary budget surplus cannot be restored while the Senate rejects so many of the Government’s savings measures, while passing most of the tax reductions. Indeed at the time of writing it is reported that the Senate’s votes have led to a situation where so far the Budget will be $7 billion worse off over the next four years than if the Budget had contained no policy changes at all.

    In the following comment I therefore sketch the outlines of an alternative approach to restoring the Budget to surplus over the next four years and sustaining that surplus in the long run. Fundamentally this comment attempts to sketch how a fairer outcome could be achieved by relying more on measures to increase the revenue, and less on cuts to welfare.  By comparison, of the decisions taken in the Government’s Budget, 77 per cent of the projected improvement reflected decisions to reduce spending.

    It is contended that this proposed rebalancing in favour of higher taxation can be done without damaging economic growth. In fact there is no correlation between levels of taxation and the rate of growth in GDP per capita among the developed OECD countries. Of course, there is likely to be a point where a particular tax is so high that it could affect economic growth and/or employment, but the ratio of government revenue to GDP is lower in Australia than in almost all other Western democracies, and our starting point fiscal position is also much better (see Table below). Indeed, spending some of the proceeds from higher taxation, so as to avoid the cuts to tertiary education and training and research and development, would even help to improve the rate of future economic growth.

    Country*

    Total Tax Revenue as a proportion of GDP 2011

    (%)

    General Government Net Lending as proportion of GDP 2013 (%)

    General Government Net Financial Liabilities as proportion of GDP 2013 (%)
    Australia

    26.5

    -1.4

    11.8
    Canada

    30.4

    -3.0

    40.4
    Japan

    28.6

    -9.3

    137.5
    United Kingdom

    35.7

    -5.9

    65.4
    United States

    24.0

    -6.4

    81.2
    OECD

    34.1

    -4.6

    69.1

    *The figures for each country refer to all levels of government, and the net lending by general government is equivalent to the Budget deficits of all governments

    Source: OECD Statistics, http://www.oecd-ilibrary.org/economics/government, accessed 13 July 2014.

    Note that Australia is the lowest on each of the three indicators except for tax revenue, but if borrowing is added tax revenue then Australia is the lowest at about 28% of GDP compared to more than 30% in the US.

  • Walter Hamilton. When Local Becomes Global

    Why is Vladimir Putin calling down upon himself the ire of the world by failing to help secure the crash site of MH-17 for international investigators? The answer, I think, is pretty obvious. He does not want to demonstrate how much influence, if not control, Russia has over events in eastern Ukraine. Putin’s response has been to blame the government in Kiev and hold it responsible for the situation.

    Since the fall of the Moscow-backed regime in Kiev, it has been Russian policy to destabilize its neighbour so as to discredit and weaken the pro-Western government that has taken over. It has used existing ethnic and religious divisions in Ukraine to hive off the Crimean peninsula and turn a large swathe of territory in the east into a war zone.

    For historical reasons many people living in the east of Ukraine identify with Russia; in Europe, where borders have changed often in the past century, this kind of cross-border allegiance is not unusual. Before now Hitler and Stalin, among others, exploited similar sources of tension. Putin has used pro-Russian Ukrainians––advised, trained and equipped by his own military intelligence services––together with a ‘free corps’ of Cossacks and other Russian mercenaries, some of them veterans of the fighting in Chechnya, to pursue his anti-Western agenda.

    He may have good reason to fear the loss of a satellite state, but his actions only serve to underscore why most of Ukrainian citizens want a future in the EU.

    Putin’s particular approach has been conditioned by a desire to localize the conflict as much as possible, thus avoiding a direct confrontation with member states of the European Union. Until this week he had been partially successful. Although both the United States and the EU imposed sanctions against Moscow following its invasion of the Crimea, there have been signs recently of a split in the trans-Atlantic response to Russia’s aggression. Washington expanded its sanctions regime after it determined that Moscow was supplying ever-more sophisticated weapons to the rebels, including surface-to-air missile launchers, but the EU did not follow suit. German Chancellor Angela Merkel and French President Francois Hollande (who have not been the most outspoken of world leaders condemning the attack on MH-17) are the chief architects of a ‘slowly-slowly’ approach to Putin. Their approach, along with Putin’s ‘localizing’ strategy, has crashed just as surely as the ill-fated Malaysian Airlines plane.

    Local has become global. In an interconnected world, a conflict in the very centre of Europe in which the most sophisticated types of conventional weapons are deployed was never going to remain local for long. International travel is just one way in which humanity is knitted together; we cannot turn our backs on any festering conflict and hope it goes away. The complaint that the aircraft should not have been using air space above a conflict zone (as was done by many other commercial flights) completely misses the point. Whoever supplied and wantonly fired the missile, having failed to even identify the target, bears the whole responsibility.

    Putin has been hoisted with his own petard: if he continues to stand aside from this tragedy he is condemned as irresponsible and ruthless; if he exercises the authority of his office to clear the disaster area for a proper recovery and investigation, he demonstrates the true extent of Russia’s involvement. Alternatively, if indeed he cannot influence the disparate militias that are roving over the disputed territory, it will become clear that he has engineered a crisis over which he has lost control.

    Putin faces an unenviable choice, as far as his own prestige is concerned (and that, rather that the dignified recovery of the remains of 298 innocent people, seems to be the overriding consideration in Moscow). It is hard to imagine how this terrible situation can play out to his advantage. The best outcome, and the best memorial to the lost lives, would be an end to the fighting and a political settlement that respects the sovereignty of Ukraine and the rights of all its citizens.

    Walter Hamilton reported from foreign bureaus for the ABC and AAP for 14 years.

     

     

  • Bugger the planet, ignore our children and trash our reputation.

    The repeal of the carbon tax is a political victory for Tony Abbott but it is hard to imagine a worse combination of poor reasoning and bad policy making. It shows little appreciation of economics. It will increase the budget deficit. It shows a mistrust of the market. Tony Abbott’s political legacy will be defined by the repeal of the carbon tax. It is one of the worst examples of policy vandalism in our history.

    As the world’s greatest carbon polluter per capita, we are now probably the only country in the world going backwards on carbon reduction. We will be left with a nonsense called ‘Direct Action’ which Malcolm Turnbull rightly described as a fig leaf when you don’t have a real policy to reduce carbon.

    All the expert advice around the world from the climate scientists and economists is that we have a real problem which is best addressed through a market mechanism – either a carbon tax or an emissions trading scheme. Our own Treasury, Ken Henry, Bernie Fraser and Ross Garnaut, all tell us that the best and cheapest way to reduce carbon pollution is through a market mechanism rather than direct action. Tony Abbott prefers to take the advice on climate change – not of the experts but of Rupert Murdoch and other foolish people.

    Our political system and our political leaders have failed us badly. John Howard reluctantly said in 2007 that he would introduce an emissions trading scheme, but told us later that he really didn’t believe in it but he had to do it because of political pressure. Kevin Rudd’s emissions trading scheme was pursued more in the end to skewer Malcolm Turnbull. It was at the cost of a good policy outcome. When the Liberal Party dumped Malcolm Turnbull for Tony Abbott, Rudd refused to call a double dissolution on the ‘great moral challenge of climate change’. Julia Gillard told us that she would never introduce a carbon tax, and then did just that under pressure from the Greens. Then Tony Abbott, despite having favoured a carbon tax in his Daily Telegraph blog of 2009, played the carbon tax issue like a dog with a bone. No untruth was out of the question. No scare was too great.  He played to the climate sceptics and the extreme right wing of his own party and in the community. As the chair of the G20 in Brisbane later this year, he will do his best to keep climate change off the agenda.

    And then there were the Greens who must bear a huge responsibility for their policy purity that denied us a sensible outcome in 2009. The Greens joined with the Coalition in the Senate to vote down Kevin Rudd’s proposals because they ‘locked in an inadequate 5% target’. Five years later we still have a 5% target with no clear or efficient way to get there. The Greens should hang their heads in shame. They took no risks but kept parading their policy purity. Their hypocrisy continues on one issue after another. Just think asylum seekers when they sided with Tony Abbott and Scott Morrison on critical issues. In parading their self-righteousness the Greens invariably ask for more than is on the table and finish up with nothing. It is often better to hold your nose and make some real progress.

    But in it all, Tony Abbott stands out as the greatest vandal. He warned us about dramatic increases in power prices that the carbon tax would incur. Those scare tactics are turning out to be largely nonsense. The price rises due to carbon tax have been so small that the Australia Bureau of Statistics has had trouble measuring them. There certainly have been increases in electricity prices but they have little to do with the carbon tax. Only 7% of power prices are due to the carbon tax and another 7% is due to various other means to encourage energy saving and use of renewables. The big increase in electricity prices has been the gouging by the state-owned networks in NSW and Qld. On top of this gold plating by the networks which has forced up prices, we are likely to see a doubling of gas prices in the next two years as the domestic price of gas rises to the world price.

    The price increases from the carbon tax have been minimal, the economy has continued to grow and Whyalla has not been wiped off the map.

    And the carbon tax has been doing what it was designed to do in reducing carbon emissions. Only yesterday Frank Jotzo, Director, Centre for Climate Economics and Policy at ANU said in The Conversation

    ‘Carbon emissions in Australia’s national electricity market would have been 11 to 17 million tonnes higher if Australia had not introduced a carbon price. New research using the latest data indicates that the policy was working despite its imminent Senate repeal. Over the first two years of operation of the carbon price (July 2012 to July 2014) carbon emissions were down by 29 million tonnes or 8.2% across the national electricity market compared to the two years prior. The conclusion from our research is that the carbon price has been performing well in its main job; delivering emission cuts in the power sector, which is the largest source of emissions and the sector with the biggest opportunity for cuts.’

    Frank Jotzo adds that the reduction in carbon emissions would have been higher if companies had been confident that the carbon tax was here to stay. With Tony Abbott raising doubts some companies deferred decisions to reduce pollution.

    We are out of step with all other major countries. A month ago China and the UK signed an agreement to work together towards a global framework for combatting climate change. China has emission reduction schemes in six major provinces which will lead to a national scheme. China is the largest investor in renewable energy and coal use is being scaled down. President Obama is pushing ahead with ambitious carbon reduction policies. Ten US states are well ahead in carbon reduction. The Europeans have had an emissions trading scheme since 2005. Commenting on the Abbott government’s decision to abolish the carbon tax, the European Union’s Climate Commissioner said today ‘The EU regrets the repeal of Australia’s carbon pricing mechanism just as new carbon pricing initiatives are emerging all around the world. The EU is convinced that pricing carbon is not only the most cost-effective way to reduce emissions but also the tool to make the economic paradigm shift the world needs.’

    The repeal of the carbon tax will have some short term benefits for business. The chief beneficiaries will be the heavy polluting electricity generators in the La Trobe Valley who burn brown coal. But there will be significant down-sides in the long term. A carbon tax or an emissions trading scheme is essential in both reducing carbon emissions and helping organisations switch to low emissions technology. Companies will not be able to avoid making this transition. The sooner they do it the better. But there will now be fewer incentives for Australian businesses to develop low emissions technology. We will continue to depend on fossil fuels both as a major domestic energy source and an export product.  Tony Abbott prides himself in becoming an ambassador to the world for highly polluting thermal coal.

    Direct Action is not a serious policy. The cost will be higher than a market mechanism. The carbon tax penalised polluters, but Direct Action will be paid by taxpayers as an incentive for polluters to reduce pollution. What an absurd idea! Perhaps Tony Abbott has in mind paying people to give up smoking!

    If the world and Australia are to grow and prosper our polluting industries must decline and industries based on renewable sources of energy must expand. To delay that process is foolhardy…

    Tony Abbott and all Australians will come to rue the decision to abandon the carbon tax and an emissions trading scheme. Politics has won in the short term but at great cost to our future.

    Can Bill Shorten lead us out of this mess? He bears a heavy responsibility

  • An Alternative Budget Strategy by Michael Keating

    In this blog in May this year I posted a five-part series by Michael Keating on the government’s May budget and the economic and social consequences.  There has been a great deal of discussion and confusion, particularly in the senate, over this budget. This has caused Joe Hockey only a few days ago to warn that he is ready to bypass parliament and force through new spending cuts if Labor and the Greens do not come to the table on millions of dollars of budget savings.

    Next week I will be posting three-part series by Michael Keating on an alternative budget strategy. In that series, Michael Keating says ‘there is an alternative to the government’s budget strategy – contrary to the assertion by the government and its supporters that in fact “there is no alternative”.’

    This three-part alternative will be posted on Monday, Tuesday and Wednesday next week.  John Menadue

  • Take your pick on the way News Corp operates.

    On oath before the Leveson Enquiry, Rupert Murdoch said “I’ve never asked a prime minister for anything’. (Leveson transcript 25 April 2012)

    In his book ‘The Whitlam Government 1972-75’, published in 1985, Gough Whitlam says

    ‘ … in the week after the 1972 election, Menadue, who had become my private secretary at the beginning of 1960 and had then become Murdoch’s financial manager in mid-1967, saw me on Murdoch’s behalf to put the proposition that Murdoch should become High Commissioner in London. Murdoch was confident that there could be no conflict of interest, since he would put his British interests in trust and there would be no public outcry since the media proprietors would not oppose the appointment of one of themselves.’ (p.581)

    In my book ‘Things you learn along the way’ published in 1999, I said

    ‘Murdoch certainly believed that he had played a major part in the 1972 election result and that something was due to him. What he asked for was that he be appointed as Australian High Commissioner to London … Murdoch raised the appointment with me and explained that if he was the High Commissioner he would put his newspaper and television interests in trust so that there would not be a conflict of interest. He believed also that he could influence other Australian media proprietors and avoid medial flak for the new government over the appointment. He has since denied that the sought the High Commissioner’s job. … But Whitlam was adamant about Rupert for London. “No way” he said.’ (p.113)

    He boasted way back in 1997 “I bet if I was going to be shot at dawn, I could get out of it.” (Shawcross, Rupert Murdoch, The Making of a Media Empire p62/3)

    On his latest trip to Australia Murdoch gave us the benefit of his well-researched and in depth  understanding on climate change…”we should not be building windmills and all that rubbish” and to meet rising sea levels. “we have to stop building vast houses on the seashore”   His loyal employee and interviewer, Paul Kelly, did not even blink.

     

  • Chris Mitchell, The Australian and Iraq

    As part of the celebration of the 50th anniversary of The Australian, the editor, Chris Mitchell, revealed on Monday 14 July that he was a secret opponent of the invasion of Iraq. This will come as a surprise for many who followed The Australian’s wholehearted support of the Iraq invasion and hectored and criticised those who opposed it.

    In The Monthly magazine yesterday, Robert Manne tells us about this remarkable confession by Chris Mitchell. See Monthly link below.  John Menadue.

     

    http://www.themonthly.com.au/blog/robert-manne/2014/07/14/1405315103/chris-mitchell-australian-and-iraq

  • Malaysia, Manus, Nauru and offshore processing.

    I have not always held the view that asylum seekers who come to Australia could be transferred and processed in another country. I changed my mind on that partly because of the rapid increase in boat arrivals after the Agreement with Malaysia fell over in 2011. The large number of boat arrivals was reducing public support for a generous and humane refugee program.

    I came to the view that what was important is that asylum seekers are treated with humanity and that the process is fair and efficient. The issue of where that processing occurs, on shore or offshore is a secondary issue.

    For the present we have comprehensively lost the argument of opposition to offshore processing of boat arrivals

    I also supported the proposed Malaysian Agreement for two other reasons. First, I saw it as part of an important building block in regional cooperation. Secondly, the UNHCR was prepared to work with us in the proposed arrangement with Malaysia. The UNHCR does not support the transfers to Manus (PNG) and Nauru and the processing in those countries.

    Unfortunately the agreement with Malaysia was made impossible by the combined support of the Greens and the Coalition in the Senate to block amendments to the Migration Act. The action of the Coalition and the Greens in the Senate was supported by refugee advocates across Australia. .

    The collapse of the Malaysian Agreement was the turning point. We have been on a slippery slide ever since. Boat arrivals quadrupled as a result of the High Court decision and the collapse of the Malaysian Agreement. In the second half of 2013 asylum seekers arriving by boat were running at a rate of over 40,000 per annum. We may wish it otherwise but no Australian Government can keep intact a generous humanitarian refugee program with boat arrivals at over 40.000 pa. At the peak of the Indo China outflow the largest number of people arriving by boat was 1423 people in 1977/78. In the aftermath of the collapse of the Malaysian Agreement it was almost thirty times higher.

    My own view is that the Fraser Government could not have sustained our generous acceptance of Indo Chinese refugees if boat arrivals had been anywhere near the rate the Rudd government faced in mid-2013. To think otherwise is kidding ourselves. I was Secretary of the Department of Immigration and Ethnic Affairs for some of the time involved

    The failure of the Malaysian Agreement triggered Manus and Nauru.

    The UNHCR has a long history of support for the transfer of asylum seekers in appropriate circumstances. Late last year the UNHCR issued a ‘Guidance Note on Bilateral and Multilateral Transfer Arrangements of Asylum Seekers’. It set out clear conditions, including important issues of non-refoulment and protection of the rights and the safety of asylum seekers in the country to which they were to be transferred.

    In the Melbourne Age on 13 December last year, Arja Keski-Nummi and I outlined a system of ‘effective protection’ that should govern any transfers of asylum seekers in our region. We set down several important criteria.

    • All countries should commit to the principle of non-refoulment.
    • Provide asylum seekers with a legal status and access to work and education.
    • Work to help not only displaced people but also host communities.
    • Increase our refugee intake from our region.
    • Work with partners in the region in association with UNHCR to create an atmosphere of safety and trust.

    Clearly few of the conditions have been met in the arrangements with PNG and Nauru. Importantly, the UNHCR will not cooperate in our arrangements with either country.

    We need to think again about total opposition to transfers and regional processing. That opposition has led us into a tragic cull de sac

    A way to minimize the damage to asylum seekers and our own credibility is to now press for such things as

    • Increasing the annual “regular” refugee intake to 25,000 from its present 13,750.
    • Negotiate Orderly Departure Agreements with Sri Lanka and Afghanistan. The governments in those countries are likely to welcome the departure of some of their opponents. In 1983 we negotiated an ODA with Vietnam under which 100,000 Vietnamese came to Australia without risky journeys.
    • Develop alternate migration pathways e.g. 457 visas for Iranians. There is often a blurred line between refugees and persons fleeing for economic reasons.
    • Wind back mandatory detention which is cruel and expensive.It punishes but does not deter as we have seen time and time again. Stopping boat arrivals in recent months is not because of mandatory detention. It is not because of Operation Sovereign Borders. It is because of government policy that no boat arrivals will ever be settled in Australia. That is the deterrent.
    • Allow asylum seekers in the community to work

    We may indulge ourselves with tears and criticism over what has happened but we need to apply ourselves where improvement is possible to help people in great need. It will require political pragmatism and compromise.

  • Creating a Long-Term Framework for Asylum Seeker Policy

    Last Friday 11 July 2014, I attended a roundtable at Parliament House, Canberra to discuss possible actions that could be taken to find a way out of the present divisive and harsh treatment of asylum seekers. The media release following that roundtable is reproduced below. The roundtable drew on  discussion paper ‘Beyond Operation Sovereign Borders’, prepared by Peter Hughes and Arja Keski-Nummi. That discussion paper can be found by clicking on my website at the top of this page. The paper is described on the website as ‘Final Policy Paper – Beyond Operation Sovereign Borders’.  John Menadue.

    High-level Roundtable held at Parliament House, Canberra

    A diverse group of 35 high-level policymakers and experts, including a former Indonesian Ambassador to Australia, a strategist from Malaysia, and parliamentarians from three of the four major parties, met all day Friday 11 July to discuss a long-term framework for Australia’s asylum seeker policy.

    Jointly organised by Australia21, the Andrew & Renata Kaldor Centre for International Refugee Law at UNSW, and the Centre for Policy Development, the roundtable was conducted under the Chatham House Rule.

    Members of the Steering Committee, Bob Douglas, Jane McAdam and Travers McLeod, said today:

    “This roundtable marked the start of a new conversation about a complex policy area that has been a political hot potato for too long. It aims to be a contribution which is helpful to all sides of the political spectrum and which reflects Australian values.”

    Participants recognised there is no panacea in this debate, and that a focus on politics over policy is unhelpful. They noted that forced migration is a global phenomenon, not something that Australia can control on its own, nor is asylum seeker policy one that should be viewed in isolation from other aspects of national and foreign policy. The ultimate goal was to consider how Australia could facilitate a sustainable immigration policy that balances protection, safety, transparency and prosperity.

    Discussion paper released today

    The roundtable drew on a discussion paper ‘Beyond Operation Sovereign Borders: A Long-Term Asylum Policy for Australia’ prepared by two former senior Immigration Department officials, Peter Hughes and Arja Keski-Nummi, working with the Centre for Policy Development. Released today, the paper suggests pathways to better policy responses for the future. Drawing on lessons from the past, it examines the evidence, including the rate of irregular maritime arrivals and the regional implications of refugee flows, including the way refugee policy has evolved in Australia since asylum seekers first began arriving by boat in the aftermath of the Vietnam War.

    Common ground at the roundtable

    Contributions at the roundtable were frank, respectful and constructive. Fresh positions were adopted. Although the participants in this first roundtable did not seek to reach consensus on a new policy, some important areas of common ground did emerge:

    • While emphasising that Australia must respect its international legal obligations, the roundtable also recognised that the community wants reassurance that Australia retains control over who becomes Australian citizens and under what circumstances.
    • Participants stressed the importance of implementing fair, transparent and efficient refugee status determination procedures, wherever processing takes place. They supported raising Australia’s humanitarian intake, perhaps set as a percentage of our annual migration intake.

    Media  Release – 13 July 2014

    • Participants expressed concern at the militarisation of current approaches, and emphasised the need to build regional protection capacity and foster bilateral partnerships built on trust and respect.
    • There was support for extending the rights available to asylum seekers awaiting the outcome of their protection claims, including the right to work, and for phasing out mandatory detention.
    • Participants recommended measures to expedite the processing of particular cohorts of claimants, and encouraged new community initiatives, especially in regional Australia, that bring Australians into direct contact with refugees and use their skills to help rehabilitate depressed areas.
    • The participants are committed to creating a ‘second track’ dialogue that will engage the community, policymakers, experts and politicians in rethinking our approach.
    • Finally, it was noted that any new approach must use language carefully, recognising the humanity of those in search of protection.

    A full report on this project will be released later in 2014.

    Attendees

    Paris Aristotle AM,  Adam Bandt MP, Paul Barratt AO, Admiral Chris Barrie AC, Father Frank Brennan SJ AO, Julian Burnside AO QC, The Hon Fred Chaney AO, Dr Joyce Chia, Noel Clement, Dr David Corlett, Senator Sam Dastyari, Professor Bob Douglas AO, Erika Feller, Ellen Hansen, Dr Claire Higgins, Peter Hughes, Associate Professor Mary Anne Kenny, Arja Keski-Nummi, Dr Anne Kilcullen, David Lang, Ben Lewis, Libby Lloyd AM, The Hon Ian Macphee AO, Professor Robert Manne, Professor Jane McAdam, Dr Travers McLeod, John Menadue AO, Right Reverend Professor Stephen Pickard, Reverend Elenie Poulos, Paul Power, Ambassador Wiryono Sastro Handoyo, Jo Szwarc, Angus Taylor MP, Oliver White and Steven Wong.

    Media contacts             

    Bob Douglas
     Australia 21
     Tel: 0409 233 138, email: bobdouglas@netspeed.com.au

     Professor Jane McAdam
    Andrew & Renata Kaldor
    Centre for International Refugee Law
    Tel (02) 9385 2250, email j.mcadam@unsw.edu.au

    Travers McLeod
    Centre for Policy Development
    Tel: 0487 302 927; email: travers.mcleod@cpd.org.au

    About the organisers 

    Australia21 is a non-partisan, non-profit, registered research organisation which seeks to develop and promote new frameworks for understanding and acting on complex questions that are important to Australia’s future.

    The Andrew & Renata Kaldor Centre for International Refugee Law at UNSW is the world’s first academic research centre dedicated to the study of international refugee law and policy.

    The Centre for Policy Development is an independent and non-partisan think tank which develops and promotes policy proposals to help Australia thrive and lead in a fast-changing global environment over the long-term.

  • Warwick Elsche. I hope you know what you’re doing, Tony!

    Rum has never been my drink; two wipe-outs in youth. One nip – very nice, two – too many, any more – dangerous – positively confusing.

    I suppose it was surprising then that I chose it as my companion as, with another million Australians, I settled in to hear the policy speech which would oust a dysfunctional Labor Government and make a Prime Minister of robust, forthright, Tony Abbott.

    Perhaps I should admit to a strong pro-Liberal partisanship; a particular admiration for Tony and the direct brand of politics he represents. It was this quality which had bought his Party to the point of certain accession to Government.

    Though suddenly feeling woozy, light-headed and extremely vague (how many nips did I have), I remembered his firm undertaking that he would not be a PM who said one thing before an election and did the opposite once elected. Smart guy Tony – knows the damage he did to Gillard over the “lie” on the carbon tax. He won’t put himself in that position!

    I vaguely remembered his promise to be a “Prime Minister for Indigenous Affairs’. He would preserve all front line services. He might even spend the first week of his Prime Ministry with these people on a settlement in the north. What a caring guy! Aussies will love their new boss. (Through the haze I heard nothing about heading north for a week.) There were some promises however. His Government would axe the program helping to re-establish aboriginal offenders return to society on release from prison. Several other front line services would go too. Everyone had to do some heavy lifting to cure the mess that Labor had left and Aborigines would be no exception. $170 million, he said, would be taken from Aboriginal Health Services and some half a billion dollars would come from the aboriginal budget.

    He confidently acknowledged his firm promise that there would be no cuts in Health and Education. But through the haze I heard him reveal that $80 billion would in fact be removed from their budgets. These were not broken promises, he said.

    I am finding it a bit hard to follow him here. 

    There would be no cuts to the popular media outlets – the ABC or SBS. Only $20 million would actually be taken from these organizations and there might be more to follow.

    He said there would be no interference with Medicare, the cornerstone of Australian health services – except for the addition of a $7 co-payment for each doctor’s visit and a $5 surcharge on prescriptions from a chemist. These also, he said, are not broken promises.

    In my confused state I think I am starting to get the message. Things are not really what they are; they are what Tony says they are. But will voters understand this?

    He said Australia would become a more robust and individualistic country, standing boldly on our own. During the campaign our Foreign Minister to be, Julie Bishop, had roundly upset Papua New Guinea Prime Minister Peter O’Neill by publicly misquoting him on the state of Australia’s future aid to his country. But this was only practice. Australia would go further – It would again unsettle Indonesia, it would bring a rare and embarrassing public rebuke from China and it would totally rupture relations with near-neighbour Timor-Leste. (Is this real or is it the rum messing with me? Am I confusing what he said with what happened afterwards?) We would in fact go further and offend and threaten trade with nearly thirty Arab countries by ignoring the UN, the International Court of Justice, the International Red Cross, and almost every country in the world, by insisting on our own terminology for Occupied East Jerusalem.

    Listening to the banks, who have suddenly become enormously friendly – we’ll take away the protection Labor legislation gave to consumers in their dealings with them and their financial advisors.

    Will this win votes Tony? Why are you telling them this? 

    Students would not be left out when it came to heavy lifting. Uni fees would be allowed to rise – in some courses more than doubling.  And if any should, by chance, escape this burden, the interest rate on their HECS debt would be hiked.

    The rich of course would do their share too. Income over $180,000 would be taxed at an additional 2%. Anyone earning $200,000, as most politicians do, will face a slug of $400 annually – a whole $8.00 a week.

    At the other end of the scale, the unemployed would wait six months before they were eligible for any benefit and what benefits they get would be reduced. To get anything at all they would have to show they have applied for no fewer than forty jobs per month – ten applications per week. Their losses would come to something over $50.00 a week – nearly six times the impost on a $200,000 a year earner.

    I hope you know what you are doing Tony telling them all this I think through my haze. 

    Tony threw in for good measure the fact that the school kids bonus would go and they would get tougher with the child care rebate.

    Tony said we knew his view on climate change and at last he would have the opportunity to do something about it. The carbon tax would go, but to ensure there was no internal opposition or attempts to advise the Government, a whole lot else would go with it. To show our independence from the experts, including UNESCO, Tony said, we will allow the dumping of millions of tons of dredge material on the Great Barrier Reef in North Queensland. We will reward the loggers, “the real conservationists”, by de-listing from the world heritage list 74,000 hectares of virgin forest in Tasmania. A robust government in a newly robust country will not be lectured on climate change by so-called experts! To remove any threat from that quarter we will take 500 jobs from the Environment Department and slash their funds. In fact we can do better. We will axe the Climate Change Authority, the Clean Energy Finance Corporation, the Climate Commission and the Australian Renewal Energy Authority. Just in case we have left anyone who would lecture us on the science of climate change, we will whip 500 jobs and $120 million off the CSIRO. In fact, for the first time in decades, he would scrap the whole science department altogether – but we will have a Ministry for Sport.

    Again – is this smart Tony? I guess you know.

    Pensioners, self-funded retirees and families will all lose much more than the annual $400 impost on high income earners.

    This seemed to jolt me awake. Had I heard right or was the rum continuing to confuse me? I was worried, really worried. But Tony knows best and he did win didn’t he? Would Tony have won had he enunciated these policies?

    We may yet find out.

    Before the election Tony promised us a double dissolution if his program was frustrated. Since the victory his henchman, Joe Hockey, has been similarly hairy-chested on the subject of a double dissolution. Rum haze or not – we now know what his program for any double dissolution must be. I can only hope it will work for him. Or will he at last break a promise and walk away from his double dissolution undertaking?

    Things are, after all, what Tony says they are. 

    Warwick Elsche, freelance journalist.

  • Tessa Morris-Suzuki. Another Australia-Japan Relationship is Possible.

    Today, Australian Prime Minister Abbott and Japanese Prime Minister Abe meet in Canberra, and Prime Minister Abe presents an address to the Australian parliament. This is a historic occasion, and will be remembered as a pivotal point in Australia-Japan relations.

    In their discussions, the two leaders are highlighting the crucial economic and security ties that bind Australia and Japan together, and emphasizing the vital role that both countries play as leading democracies in the Asia-Pacific region.

    Like many others who have spent much of their lives trying to further the relationship between Japan and Australia, I applaud these sentiments, but ask: what sort of Australia-Japan relationship is being built in Canberra today, in whose name, and in whose interests?

    An ABC news headline from 3 July 2014 reads, “Australia says it supports revision of Japanese constitution”. According to the first sentence of the article that follows, “Australia has welcomed Japan’s announcement to allow its military to fight overseas, saying it will enable Japan to further contribute to international peace and stability”.

    There are two things wrong with this article. First, Japan has not revised its constitution. Rather, the Japanese government has issued a cabinet decision stating that it will “reinterpret” Article Nine of the constitution to mean something totally incompatible with the actual wording of the constitutional text. Second, it is not “Australia”, but rather an anonymous spokesperson from the Australian Department of Foreign Affairs and Trade, who has welcomed the change.

    A recent newspaper article by two respected ANU academics welcomes Japan’s constitutional change, while suggesting that the whole issue is “much ado about nothing”; for, as the article goes on to mention in passing, “the Japanese cabinet is entitled to modify its interpretation of Article 9 in light of the changing security environment the country faces”.

    This casual statement is emblematic of the state of debate in Australia and Japan today, and is an alarming indication of how much we have forgotten and devalued the fundamental principles of constitutional democracy. In the succinct words of Wikipedia, these are that “the legislature makes the laws; the executive put the laws into operation; and the judiciary interprets the laws. The doctrine of the separation of powers is often assumed to be one of the cornerstones of fair government”. Or, as the Supreme Court of Hawaii put it in a major judgment “the courts, not the legislature, are the ultimate interpreters of the constitution”.

    In the case of Japan, it is the executive that has pushed through the reinterpretation of the constitution, after extensive backdoor political horsetrading but no public consultation, and in the teeth of majority opposition from public opinion. If the Japanese cabinet can interpret Article Nine to mean the opposite of what it says, there is nothing to stop them doing exactly the same with the articles that protect basic human rights, sexual equality, freedom of speech etc.

    Prime Minister Abbott and his government welcome this change because they believe it to be in Australia’s “national interest” (as defined by Abbott’s executive). But their lack of concern for democratic procedure in Japan also reflects the fact that the Abbott government has an equally cavalier approach to the fundamental principles of democracy: in particular to the principle that democratic governments do not take important actions which influence domestic society and foreign relations without informing parliament and the electorate.

    Recent infringements of international law by the Abbott government in relation to asylum seekers have earned Australia the condemnation of global media and major international human rights organizations, and, worse still, have been carried out under a veil of secrecy which violates every principle of fair and open government.

    These recent actions in Japan and Australia are not only undermining the precious democratic systems of both countries, but are also inflaming already rapidly deteriorating international relations in our region, and deepening social divisions within both countries.

    Here in Australia, colleagues and I have found ourselves hosting an increasing number of Japanese visitors and second or third generation Korean denizens of Japan who no longer feel comfortable living in the country of their birth. Meanwhile, Australian media hysteria about asylum seekers heightens xenophobic stereotypes and stirs ghosts of Australian racism which have never been laid to rest, making life increasingly uncomfortable for many Australian citizens and residents.

    It is true that, despite all these rapidly worsening problems, Australia and Japan remain among the most democratic countries in our region. This makes it easy for us to shrug our shoulders and dismiss the issues discussed here as “much ado about nothing”. After all, things are so much worse in so many other countries. But I would argue that it is precisely because Australia and Japan are among the leading democracies of our region that we should care profoundly about steps by our governments that usurp and undermine fundamental democratic rights.

    Prime Minister Abe’s most recent election campaign was backed by a poster, displayed across the length and breadth of Japan, which depicted Abe and ruling party Secretary General Shigeru Ishiba, with the words “we are taking back Japan” (Nihon o torimodosu). Every time I saw one of those posters, I wondered who that small word “we” refered to. When I see Prime Minister Abe and Prime Minister Abbott cementing their relationship, I wonder which “we” they are speaking of and for.

    Respect for the principles of democracy is vital to a healthy future relationship between Australia and Japan. Good relations between the countries of our region, including good relations between Japan and its neighbours and between Australia and it neighbours, are fundamental to the interests of the people of Australia and Japan. A relationship between Japan and Australia that truly values human rights and democracy is possible. Non-governmental actions between citizens, grassroots group, scholars, educators and others are essential to building that relationship.

    It is time for ordinary Japanese, Australians and other concerned about our two countries’ relationship to make their voices heard, to share their concerns and to begin, in whatever ways we can, to take back the relationship between Australia and Japan.

    Tessa Morris-Suzuki is an Australian National University College of Asia and the Pacific Japanese history professor and an Australian Research Council Laureate Fellow.

     

     

     

  • Woolworths and Pharmacies.

    The response of the Australian Pharmacy Guild (APG) to Woolworth’s proposal for free health checks was entirely predictable. It was about protecting the territory of pharmacists.

    But the APG did have a point. Are the leviathan department stores who sell large amounts of alcohol and tobacco really serious about our health? I don’t think so?

    But if the challenge of Woolworths would help curb the anti-social behaviour of the APG that would be a real public service.

    Pharmacists are the most over-qualified and under-utilised of health professionals. In the national interest and in their professional interest, pharmacists must participate in the transformation of our health sector. The 5,000 or so pharmacies on high street are a highly accessible and high profile resource, more so than GPs’ surgeries. Pharmacy attracts HSC students with high academic scores. Standing at the boundary of self-care pharmacists provide a range of services to customers – advice on medications, advice to see the GP, aches and pains, colds and flu, burns, rashes and abrasions. I cannot see why pharmacists for example shouldn’t almost immediately undertake blood tests, as well as flu injections and managing repeat prescriptions.  Their more active involvement in preventive health programs and primary care in general is essential.

    But the APG sees pharmacists primarily as shop keepers rather than health professionals

    Professor Sansom, described as Australia’s ‘pre-eminent pharmacist’, a former Chair of the PBAC, and the Australian Pharmacy Examining Council, put it bluntly a few years ago. ‘The profession would miss out on inclusion in future healthcare models unless it changed its current structure.’  He added ‘the current structure which is heavily structured on drug distribution…All of those things together and independently restrict the innovation and development in pharmacy practice which will promote this profession as a legitimate partner in new primary healthcare delivery models rather than being seen simply as a distributor.’

    Andrew Gilbert, Professor and Director of the Quality Use of Medicines and Pharmacy Research Centre at the University of South Australia, also described the problem very graphically a few years ago…

    ‘I know from the many telephone calls I get from disgruntled young pharmacists who are expected to dispense over 300 prescription items a day. They say that they are instructed that their primary duty is to supply the product, correctly labelled to the right person and that this type of professional performance measure limits any attempt to work with patients, to use Consumer Medicines Information Sheets as part of the patient consultation process and to provide a primary healthcare service. … These [supply] requirements leave no time for patient-centred healthcare, primary healthcare services, patient education and training, professional development through mentoring by experienced pharmacists and discussions with other health professionals regarding the care of complex patients. Professional services … [are] viewed as optional extras by many community pharmacists; services that may be provided if they are not too busy with the core business – supply. … Why is one of the most valuable professional services a pharmacist can offer, a pharmaceutical care focussed review in collaboration with the patient and their doctor only offered as an add on service in some pharmacies that chose to participate.’

    In addition to resisting the enhanced professional role of pharmacists the APG is in the front line in resisting competition. For example pharmacies must generally, in urban areas, be 1.5 km from each other? One consequence of this restriction of competition agreed to by the PGA and  Australian governments is that the number of community pharmacies has remained substantially unchanged at 5,000 since 1993.(At 30 June 2012  there were 5298 community pharmacies)  There are Pharmacy Location Rules which effectively put a cap on pharmacy numbers, This capping of pharmacy numbers is despite  population increase of almost 30 % since 19993 and an increase in PBS services, including Repatriation Pharmaceutical Services of over 80% since 1993.  In 1993, the average number of PBS prescriptions per pharmacy was 21,200. Last year it was close to 40,000.

    The consumer organization, Choice, in 2005 commissioned a study by the Allen Consulting Group on these location rules. Choice commented that ‘the location rules provide little consumer benefit and only advantage existing pharmacy operators’. (Choice, August 2009, p65)

    Last week the Productivity Commission said ‘There has been a failure to act on recommendations of a national independent review of pharmacies to relax ownership and other competitive restrictions”

    Our pharmacy sector needs a major shakeup. It needs to encourage pharmacists and particularly young pharmacist to be in the front line of primary care including employing nurse practitoners. In short they need to be less like shopkeepers and more the professionals they were trained to be. Further we need more competition but not from types like Woolworths

    I outlined the above case to the 2009 Pharmacy Australia Congress. It was well received well by many pharmacists but not by all. It was particularly welcomed by younger pharmacists who felt their professional skills were not being effectively used. Subsequently I accepted an invitation to speak to the Australian College of Pharmacy Dinner in Brisbane. It was described as a “must not miss event”. But the invitation was withdrawn. It was the first time in my public life that this had occurred. Perhaps I did not have the pulling power I thought! But the real reason for the withdrawal I am certain was that the APG leaned on the Brisbane College. This is typically the way the APG works–don’t engage in public debate but like all vested interests covertly lobby ministers, members of parliament and senior officials. That lobbying would now be going on with the present five year Pharmacy Agreement to expire in June next year. The present agreement is worth over $10b or $2m each year for the 5000 or so community pharmacies in Australia

    The APG like other powerful vested interests in the health field, the AMA, Medicines Australia and the Private Health Insurance Industry stand in the way of necessary reform. The public pays in higher prices and higher taxes.

  • Walter Hamilton. Abe Over Australia.

    In the six years since Kevin Rudd’s speech, in Mandarin, to students at Beijing University appeared to signal a sudden shift in Australia’s foreign policy focus towards China, and away from Japan, much has happened. Some even believe that the replacement of Rudd by Julia Gillard (not linguistically so equipped and keen to distinguish her policies from his) followed by the election of Tony Abbott as prime minister (bringing an ideological as well as a political agenda to the issue) has caused Rudd’s ‘pro-China’ course to be reversed. But this is a misreading of the larger picture. When Japanese Prime Minister Shinzo Abe arrives in Australia on Monday––the most important visit by a Japanese leader since that of his grandfather Nobusuke Kishi in 1957––it will signify a new phase in the bilateral relationship that began taking shape before Rudd, continued during his two administrations, and has solidified since the Abbott government gained office.

    The deepening of the relationship has multiple strands: trade, strategic alignment, political engagement, and defence co-operation. On the Australian side, it has been driven by senior bureaucrats in the Department of Defence and the Department of Foreign Affairs and Trade (DFAT) rather than by individual politicians. Kevin Rudd’s facility in Mandarin excited the public imagination in 2008 without really impinging on the policy direction in Canberra, which always interpreted the United States’ ‘pivot to Asia’ as a pas de deux with Japan––and possibly a pas de trois (DFAT makes much of the fact that ‘Japan describes Australia as its second most important security partner’). While new forms of political and defence exchange with China are being pursued at the same time, they build upon a shallower institutional base.

    Some major recent additions to the Japan-Australia framework include the Joint Declaration on Security Cooperation of 2007 (which set in train regular ‘2+2’ talks involving the defence and foreign ministers of both countries); the signing of the Acquisition and Cross-Serving Agreement (ACSA) in 2010 (which makes joint military exercises operate more smoothly and could lead to a joint submarine development project); and the conclusion of the Japan Australia Economic Partnership Agreement last April (which Abbott and Abe will sign in Canberra during his visit). Some Japanese commentators consider a bilateral security treaty to be the logical outcome of these developments, although such a step is not in immediate prospect.

    If Australians have not being paying attention to the drift of affairs, now is the time to do so. Certainly it is past time to discard the ‘if not China, then Japan’ false dichotomy––a notion that pretends to offer a fail-safe choice without our having to properly articulate the national interest.

    Australia embarked on the latest phase of relationship building with Japan before the sudden deterioration in Japan-China relations in 2012. But under the Abe and Abbott administrations it seems that that event has been more of a spur than a complication. Abe has set a furious pace of diplomacy in the past two years, shoring up support among like-minded maritime states, with emphasis on two principles: any attempt to change the territorial status quo in the region by force must be resisted; and law-abiding states must uphold international rules government freedom of movement at sea. China and the disputed Senkaku/Diaoyu Islands are the drivers of Tokyo’s preoccupation. China, on the other hand, considers the status quo, in which the United States asserts a leadership role in regional affairs, is itself an anachronism left over from an imperialist world order that Japan supposedly renounced in 1945.

    In last month’s 2+2 talks in Tokyo, the Australian delegation was the first to be told of the latest incident in which a Chinese military fighter aircraft allegedly ‘buzzed’ a Japanese jet near the contested Senkaku-Diaoyu islands. The occasion enabled Japan to invite an expression of Australian solidarity in a moment of ‘danger’. It is not known if the Australian side resisted, but it is unlikely.

    Japan has come to expect solidarity from the Abbott government. (For the PM, Japan is a ‘best friend’; for Defence Minister David Johnston, Japan is ‘one of my favourite countries’.)  Australia has been quick to approve the Abe Cabinet’s controversial decision to embrace the ‘right of collective defence’ (the actual Japanese phrase shudanteki jieiken translates as ‘the right of collective self-defence’, but I would argue that this is oxymoronic and misleading), which till now was adjudged contrary to the letter and spirit of the Japanese postwar constitution. Australia has eagerly endorsed a policy with which most of the Japanese public disagrees. Canberra and Washington consider that fully-fledged defence co-operation with Japan requires this newly-declared freedom of action, which Abe insists will not be used to get Japan involved in a foreign war. How that assurance can and will be policed, now or under a future administration––the legal bulwark having been dismantled––he has not explained. It is a question Australian journalists might wish to ask this week.

    When Tony Abbott was in Tokyo in April he was afforded the opportunity of attending a session of Japan’s new National Security Council. That favour will be returned in Canberra, with interest. Abe will join a meeting of the Cabinet-level National Security Committee, as well as address a joint sitting of Parliament, the first Japanese leader to be extended this privilege.

    Australians will see a Japanese politician they are not used to. Abe can speak in clear English. His appearance will be very different from the archetypal bespectacled ‘transistor salesman’ of Charles De Gaulle’s infamous bon mot (a reference to Prime Minister Ikeda in 1960). On the contrary, Abe is handsome, energetic, direct and emotional. He will seem ‘more like us’, and this will please policy-makers on both sides. But will Australians believe him when he says Japan still stands for peace and stability? That will be the true test.

    In the week before Abe’s Australian visit, around the foreign policy ‘ballroom’, that glittering and restless dance-floor where world leaders take and change partners, some strange moves have been observed. In Seoul, there was a presidential waltz between China’s Xi Jinping and South Korea’s Park Guen-hye. Unprecedentedly, Xi chose Park for his first dance on the peninsula ahead of North Korea’s Kim Jong-un. The fact that Tokyo currently has wretched relations with Seoul surely had something to do with it. Then, what do we see in Pyongyang, but a Japanese diplomatic mission persuading North Korea to undertake a ‘serious’ investigation into the fate of Japanese citizens kidnapped by the communist state in the 1970s and 1980 (an issue especially dear to Abe). As an up-front payment, the Abe government immediately eased sanctions against North Korea, previously at the top of its ‘hate’ list­––in the absence of any international agreement on the bigger issues of human rights abuses and Pyongyang’s nuclear weapons program. Strange dance partners indeed.

    The lesson to be learnt from Seoul and Pyongyang is that, in the absence of a sound and progressive relationship between China and Japan––Abe and Xi have not held one summit meeting, whereas Park and Xi have met five times––all other contingent relationships are subject to distortions, in substance or interpretation. The Korean peninsula is a dangerous venue in which to get out of step with the music; rising tensions in the East China and South China Seas over a grab bag of disputed reefs and atolls are also pulling diplomacy out of shape.

    This rapidly shifting and unpredictable environment puts at risk––indeed could be inflamed by––any gains in Australia’s bilateral relationship with Japan. A closer relationship with a democratic Japan, a major trading partner and security interlocutor, is highly desirable, do not mistake me, but it cannot proceed indifferent to the multilateral regional outlook. The distorting effect of the serious falling-out between Tokyo and Beijing is already changing calculations and choices; ideological symmetries and short-term opportunism are not a sound basis for calculating national interest in the longer run.

    The political theatre surrounding Abe’s appearance in Australia will play in a pre-determined way before other regional spectators. Australia will not control the reviews. That is, unless the government is brave enough to take the opportunity to raise its hand to the orchestra, bring the dance to a halt for a moment, and forthrightly address the subject that all in the throng are talking about behind their fans: the dangerous wrong-headedness harming relations between Japan and China. Somehow a new start must be made, and Australia will have few better opportunities than during this week to play the honest broker. If all the talk we hear is platitudes about shared values and interests, framing the deepening relationship between Australia and Japan exclusively within a narrow two-step of brinkmanship and Sinophobia, it will be an opportunity sadly missed.

    Walter Hamilton reported from Japan for eleven years for the ABC.

  • John Menadue. Free Trade Agreement with Japan – ‘turbo charging’ our trade or mainly hype?

    Next Tuesday Prime Minister Abe will visit Australia. I expect the Free Trade Agreement with Japan or its new name the Economic Partnership Agreement with Japan will feature prominently.  I repost below what I said on March 29 about the limited value of these bilateral agreements.

    Only last week, the Productivity Commission expressed similar reservations. It said ‘Australia recently agreed to bilateral trade agreements with Korea and Japan. Trade agreements can distort comparative advantage between nations and consequently reduce efficient resource allocation. The rules of origin in Australia’s nine bilateral agreements  vary widely and are likely to impede competition and add to compliance costs of firms engaging in trade‘. 

    I expect that we will see more hype about these bilateral trade agreements. The results are invariably disappointing.  John Menadue.

    Repost

    Tony Abbott and Andrew Robb have been hyping up the Free Trade Agreement (FTA) that has recently been concluded with the Republic of Korea, although most of the preparation and negotiation had been conducted by the Rudd and Gillard Governments.

    Andrew Robb the Trade Minister has now escalated the rhetoric by saying that the pending FTA would “turbo charge” our trade with Japan. If only!

    There are many more FTAs in the pipeline, including with China. Seven FTAs are in force including one with the US.  The proposed agreements with Japan and China have both been under negotiation for 9 years!

    Unfortunately the record shows that FTAs don’t achieve very much.

    The most important way to free up trade is through multilateral agreements, not bilateral agreements. Failing multilateral agreements, the next best approach is unilateral action by ourselves to reduce protection. The third best way to improve trade and economic prospects is through bilateral FTAs. But they are seen as political trophies rather than a genuine liberalisation of trade.

    Bilateral FTAs are regarded as sub-optimal for a number of reasons.

    • They divert trade from one partner to another partner, rather than create new trade.
    • FTAs entrench the power of the larger and stronger partner e.g. USA and potentially Japan and China.
    • They increase the cost of doing business because of complex ‘rules of origin’.  A tangled and complex web of FTAs increases the cost of implementing and administering diverse FTAs.
    • They marginalise peripheral countries with smaller markets, and polarise regions.
    • Most importantly, they divert time and energy of governments, ministers and officials, from the more important issues of multilateral negotiations, which, for us, as a small to medium sized country is more likely to serve our interest.

    The FTA concluded with the US in 2004 is an example of the limited economic and trade benefits of bilateral agreements. The agreement with the US was politically hyped up but the outcome was very marginal for Australia

    • The outcome in agriculture was far less than Australia hoped and sugar was excluded completely. The US Farm Bill which subsidises US agriculture across a wide field was untouched.
    •  Australia effectively conceded that agricultural trade is different to other trade, something that Japan has always maintained.
    • Our export growth has been minimal

    Australian officials recommended that the government not sign the agreement with the US, but John Howard over-rode their objections because he wanted a deal that would be politically and strategically useful for him in Australia’s domestic politics and in our relations with the US.  Australian trade policy was subordinated to electoral, political and strategic concerns. It may happen again with Japan and China.

    A survey undertaken by the Australian Industry Group found that”5 years after the much heralded Australia-US FTA the US market remained difficult for Australia. Almost 80% of respondents said the FTA was not very effective in improving export opportunities and 85% said it had failed to help in setting up an operation in the US”.

    Rod Tiffin the Professor of  Government and International Relations at Sydney University described the agreement with the US as “a dud”( SMH March 3 2010)  He commented that “Australia’s exports to the US in the 5 years(since the agreement was signed) grew by only 2.5 % compared with double digit growth for exports to all the major Australian trading partners. America has slipped from third to fifth among Australia’s export destinations.”

    The previous government was aware of the poor quality of a lot of earlier FTA’s and was trying to improve the quality. That was a reason for slow progress. But the Abbott Government seems more intent on a rush to a good media headline than making real progress in trade liberalisation and the quality of trade agreements.

    Andrew Robb is showing inexperience and naivety about FTA’s He said he is giving priority to concluding an FTA with Japan and doesn’t want the whaling dispute to get in the way.  Furthermore in being so politically anxious he is undercutting our bargaining position.

    Tony Abbott should use his position as Chair of the G20 to breathe some life back into the stalled MTN (Doha) round. That is where our best interests lie and where we should put our effort .There is not mush political glamour in messy and lengthy international negotiations but that is where we should put our effort both in our own interests and also in the interests of other agricultural exporters.

    A second-best approach would be to unilaterally reduce our own trade barriers. That makes sense for consumers who would pay lower prices. It promotes competition, innovation and productivity.  The Productivity Commission in 2010, in examining regional and bilateral agreements said that the economic gains from trade come more from access to cheaper imports rather than from increases in exports.

    The third and least satisfactory way is to keep pursuing FTAs where the trade benefits are quite modest. These agreements are politically hyped out of all proportion to the benefits they secure.

    Few trade experts take a rosy view of bilateral FTA’s. Unfortunately governments see them as political trophies.  John Howard hailed the FTA with the USA as a great political success but it was a dud in economic and trading terms. Just wait for a lot of political exaggeration on the upcoming “agreements” with Japan and China.

  • John Tulloh. Iraq’s road to disintegration.

         As far-fetched as this scenario was until recently, it is just possible that international governments may one day face an unprecedented dilemma: whether to recognise a caliphate as an independent country. The newly-declared Islamic State (IS) – formerly the Islamic State of Iraq and Syria (ISIS) – is indicating it is separate to the Baghdad and Damascus regimes. It is its own state, though the U.S. has scoffed at the very idea. Then again, there is growing indecision in Washington in how to deal with these unwelcome developments.   

    The IS jihadists have overrun and carved out a sizable chunk of land straddling the Iraqi and Syrian border for themselves and scrapped the border itself. Welcome to IS. Both countries may decide they have enough problems as it is without trying to crush this act of geographical hijacking. More than three years on, President Bashar al-Assad of Syria is still fighting rebels elsewhere in his country, while Iraqi Prime Minister Nouri al-Malaki is beset by jihadists running rampant in his disintegrating nation.

    IS, of course, has no history in governance let alone a currency. The only law which concerns it is Sharia. Initially, its interpretation of the Islamic legal code has been harsh and brutal with beheadings, crucifixions and the mass execution of Iraqi soldiers. It has even banned smoking.

    Curiously, no one has any idea where its leader is or really what he looks like apart from a fuzzy photo. Shades of Mullah Omar, the elusive Taliban leader in Afghanistan! The caliphate leader is Abu Bakr al-Baghdadi, now renamed Caliph Ibrahim. He has been rumoured to be in either Syria or Iraq. He is said to lead his followers from the front on the battlefield and to be a smart tactician. With a $10 million bounty on his head, he will certainly be making sure he’s well out of sight of snooping U.S. drones.

    We have had nothing in modern times to compare our relations with a caliphate. The last one – belatedly enshrined in the Ottoman Empire’s constitution – was abolished by Turkey’s Kemal Ataturk in 1924.

    Caliph Ibrahim may have trouble explaining on what basis he was entitled to such a title. A caliph means ‘successor’ and for the Sunnis like him that is supposed to mean being chosen by the Moslem community. As far as we know, his only authority is as leader of a fearsome terrorist group – ISIS – which usurped the standing of al-Qaeda.

    That aside, the fact is that IS is under the rule of an extreme Sunni fanatic who, like most religious zealots, probably has a closed mind and is beyond persuasion to look at life differently, especially towards Shiites. But at least he has tempered the actions of his followers in some areas under his control for fear of alienating all Sunnis.

    Even so, daily life in the area which represents IS must be nerve-wracking for those residents who haven’t fled because of the draconian new Sharia rules. Tourek Masoud, an Islamic scholar at Harvard University’s Kennedy School, says the concept of a caliphate is not something most Moslems think about. ‘The majority of Moslems and the majority of Arabs generally accept the legitimacy of the nation-states they inhabit’, he says.

    Caliph Ibrahim is surprisingly well set up. He has plundered military bases of equipment and looted banks of gold and cash. He already pumps oil to customers and is even reported to sell electricity to the Assad regime which his group is trying to overthrow. He gets income from taxes and is said to be running mafia-like activities in the areas under his control.

         He may find himself presiding over a rump state as Iraq and Syria are too preoccupied with other pressures and may care little about losing some desert territory even if it is festering with terrorists. As it is, IS jihadists have a foothold elsewhere in Iraq.

    So what to do? Popular opinion is to start by getting rid of Prime Minister al-Maliki and replace him with a respected figure who will reach out to the Iraqi Sunnis. Al-Malaki, a Shiite, is loathed by them for neglecting their interests and ridding the government and military of their numbers. An IS spokesman once dismissed him as ‘an underwear merchant’. He is running for a third term as PM and showing no signs of wanting to step down for the good of his stricken country. Finding a suitable replacement is unlikely.

    That may well lead to a wholesale conflict between the Sunnis and Shiites, even more refugees and the disintegration of Iraq as we know it. The Shiite majority would remain concentrated in the oil-rich southern half and the Sunni minority would share the northern half with the Kurds. Indeed the Kurds might want to exploit the chaos to form their long-sought independent homeland to supersede their current autonomous region. They and Turkey – unlikely partners not too long ago – might then form a buffer to protect the northern approaches to Iraq.

    Viewing all this with alarmed interest will be not only the U.S., but also Iran, the most powerful of the Shiite states. Both countries might astonish themselves by realising they now share common interests just as Washington once did with Saddam Hussein in Iraq’s war against Iran.

    All this is not the fault of George W.Bush and his allies who invaded Iraq in 2003. We should blame Mark Sykes, a young British politician, and François Georges-Picot, a former French official in Beirut. Back in 1916, with the Ottoman Empire tottering, they agreed to break up the Levant to suit Western goals. They drew a diagonal line across the region and divided the empire between their countries, creating artificial states irrespective of religious, tribal and cultural differences.

    As far as Australia is concerned, we might be relieved that our nearest Moslem nations, Indonesia and Malaysia, have never been under the influence of a caliphate. The closest has been the introduction of Sharia law in Indonesia’s Aceh province in Sumatra.

    John Tulloh had a 40-year career in foreign news.  

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

  • Japan and comfort women.

    In 1993 the Japanese government issued an apology to comfort women who had suffered sexual abuse by the Japanese military during WWII. This apology was called the ‘Kono Declaration’. Kono was the chief cabinet secretary.

    Japan’s Prime Minister Shinzo Abe has been trying to undo the words of the Kono Declaration without officially withdrawing the declaration. In an article published in the Canberra Times on June 29 2014, see link below, Tessa Morris-Suzuki describes how Japan is going about ‘the art of un-apologising’.

    Tessa Morris-Suzuki is an Australian National University College of Asia and the Pacific Japanese history professor and an Australian Research Council Laureate Fellow.

    The Yonhan News Agency in Korea has just announced that Pope Francis has invited Korean comfort women to a Mass that he will celebrate in Seoul on August 18. Pope Francis is expected to deliver a message to the comfort women in the Mass at Myeongdong Cathedral in central Seoul and to pray for peace on the Korean peninsula.

    Japanese PM Abe who was striving to undo the apology to comfort women in the Kono Declaration will visit Australia next week.

    John Menadue

    http://www.canberratimes.com.au/comment/japan-and-the-art-of-unapologising-20140627-zsjv3.html

  • Bruce Duncan. The Coalition: how to lose friends and alienate people

    Mr Abbott in his 2013 book, Battlelines, wrote that in government he would balance social values with pragmatic policy for the common good of the country.

    Yet one could be forgiven for thinking government policy is being driven by neoliberal ideologues, with a very heavy stress on policies of privatisation of public assets, further deregulation (including in banking and finance), expanding free trade agreements, and creating more flexible labour markets (reducing wages and conditions).

    Mr Hockey’s budget has created a toxic reaction for its astonishing unfairness to the most vulnerable groups, most notably the 600,000 unemployed, while doing nothing to wind back the tax subsidies and other ‘entitlements’ for higher income groups. Election promises were broken like plates at a Greek wedding. Even many Liberal supporters were dismayed at the brazen effrontery of this.

    Mr Abbott might reflect on his own words in Battlelines: Australians “rarely forgive a government that makes promises before an election to win votes, but abandons them afterwards to hold power.” (p. xiii).

    Budget exaggerations

    Many of the claims made in the 2014 budget speeches have been shown to be misleading or simply wrong (see John Legge, The Age, 29 April). Most contentious is the view that the economy was facing an economic crisis that justified severe cuts to the welfare sector.

    Various leading economists have insisted there is no need for panic about Australia’s debt, which can be managed over time. Merrill Lynch chief economist, Saul Eslake, said it would involve serious risks to move too quickly. His views were supported by Chris Richardson of Deloitte Access Economics, Paul Bloxham, HSBC chief economist, and Kieran Davies, Barclays Australia chief economist. Michael Pascoe in The Age (20 June) called for the Treasurer to stop “scaring people with dire warnings of economic disaster unless the lower classes keep their place.” The economist, John Edwards, has outlined the way forward for Australia by increasing exports in services, farm products and manufactures (AFR, 27 June).

    The Coalition government appears to have gone out of its way to alienate and antagonise vast sections of the population, from pensioners to university students, State governments with the unprecedented withdrawal of $80 billion of funding for schools and hospitals, migrant communities (Senator Brandis’s right to bigotry views and the $100,000 fee needed to bring parents to Australia), the Aboriginal constituencies, social welfare networks, lifting the pension age to 70, introducing co-payments for medical care, cutting $7.6 billion from overseas aid over five years (while spending billions to fund offshore detention centres), along with cuts to university funding and research organisations like the CSIRO. At least Clive Palmer has saved the renewable energy industry.

    No wonder support for the Coalition has fallen so dramatically. Are these really the policies the Prime Minister wants? It is a far cry from what he wrote in Battlelines:

    I‘m a Liberal because our party has always stood for the decent, the humane and usually for the practical too… We know that without honesty there is no trust and without trust there is no fairness and without fairness civil society cannot long survive. (p.19).

    Growing inequality

    As everyone knows, the richer are getting far richer, astronomically so at the top end, far beyond imaging in earlier ages. Nobel laureate and former chief economist at the World Bank, Joseph Stiglitz, captured the extent of extreme inequality in his Vanity Fair article of May 2011, “Of the 1%, by the 1%, for the 1%”, and chronicled in his books the corruption and mismanagement propelling the Global Financial Crisis. In his mind, the crisis is fundamentally a moral one, with the collapse of values into a free-market mindset as a relentless pursuit of wealth, without acknowledging that economies are meant to serve all human beings, not just the rich. In the United States, the real median income of full-time male workers is lower than it was 40 years earlier. So much for ‘trickle-down’ economics.

    The worst of it is, in Stiglitz’s view, that financial markets have not learnt the lessons or changed their ways, and the GFC may well be repeated. Currently lecturing in Australia, Stiglitz draws on his extensive experience at international institutions to stress the need for adequate oversight of markets to ensure they do not fall prey to powerful sectional interests.

    It would seem little has changed since Adam Smith warned two centuries ago about manipulation of markets by powerful business interests, as he campaigned to advance the living standards of the ordinary people as much as possible. Neoliberals, please read your Adam Smith.

    Banking and finance: “fear versus greed”

    The neoliberal problem has infected Australia. Though we escaped the worst of the financial contagion because of our better bank regulation, our four big banks earned over $27 billion last year, exceptionally high cash profits; and the enquiry into the Commonwealth Bank shows how badly ethical standards declined in recent years.

    The chairman of the Australian Securities and Investments Commission, Greg Metcraft, stressed the need for closer regulation by ASIC. “As a former investment banker, unfortunately it is fear versus greed” that is needed to police financial planning (AFR, 28-29 June). Thousands of Australians lost financially because of corrupt advice from CBA personnel, some even losing their homes. Yet financial interests have been pressuring the government to wind back Labor’s Future of Financial Advice laws introduced to protect investors against conflicted advice not in their best interest.

    According to Philip Dorling in The Age (20 June), WikiLeaks documents show that the government is in secret negotiations aiming at radical deregulation of our banking and finance sectors, which could allow foreign banks to set up in Australia, and undermine our ability to respond appropriately to financial crises.

    The policies of the Abbott government are difficult to reconcile with the Christian convictions of many of its members, especially with church leaders, including Pope Francis, appealing for greater fairness and social equity in economies, and a focus of alleviating poverty.

    The budget has been a disaster for the Abbott government, and one hopes that its leaders move aside their neoliberal advisers in favour of sounder economists and the professional advice of seasoned public servants.

    Bruce Duncan is a Redemptorist priest lecturing in social ethics at Yarra Theological Union in Melbourne. He is one of the founders of the advocacy organisation Social Policy Connections.

  • Thailand – toppling a democratically elected government.

    The best article I have seen recently about the confused state of politics in Thailand was in the London Review of Books. It was written Richard Lloyd Parry. See link below.  John Menadue

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    http://www.lrb.co.uk/v36/n12/richard-lloydparry/the-story-of-thaksin-shinawatra

  • Walter Hamilton. A Death in Tokyo

    A bespectacled, middle-aged man wearing a suit and tie climbed onto the steel rafters above a footbridge in Tokyo’s busy Shinjuku district and, using a megaphone, began to address passers-by below. According to witnesses, he spoke out against the Japanese Government’s impending decision to embrace the right of ‘collective defense’, which until now has been considered outside the bounds of the nation’s pacifist constitution.

    After squatting on the steel girder speaking undisturbed for almost an hour, the man poured accelerant over his body and set himself alight.

    In the aftermath of this horrific incident, Japanese police refused to release details about the protestor: his identity or his medical condition. Video evidence showing him falling, still fully alight, onto the walkway below suggests he would be unlikely to survive.

    Despite street protests––the anonymous self-immolation being the most dramatic––and opinion polls showing more Japanese oppose than support the constitutional reinterpretation, Prime Minister Shinzo Abe has got his way in Cabinet. After months of coaxing––and, according to one source, a little blackmail––Abe has convinced his coalition partner, the New Komeito, to support the Liberal Democratic Party’s agenda.

    But consider this. As of today, according to the Defense Ministry’s official website, ‘It is…not permissible [for Japan] to use the right [of collective defense], that is, to stop armed attack on another country with armed strength, although Japan is not under direct attack, since it exceeds the limit of use of armed strength as permitted under Article 9 of the Constitution’. Tomorrow, or very soon, this statement will disappear and be replaced by one staying the exact opposite.

    How can this be possible?

    Normally, in advanced and orderly nations, a constitution is interpreted over time by administrative dialogue, the passage of new laws and associated court rulings, all of which must be supportable with reference to the original text. Should a state come to adopt attitudes or values unsupported by its basic law, a formal process allows for constitutional amendment.

    In Japan’s case, an amendment requires two-thirds’ support in a vote of the combined houses of the Diet and majority support in a referendum. This has never happened since the present constitution was adopted in 1947. Instead, there has been something of a tradition for the executive branch of government to determine what the constitution does and does not allow, and Japanese courts­­––particularly the Supreme Court­­––have tended to defer to the political judgement of the Cabinet of the day. Hence, although the constitution states that Japan will ‘never’ maintain land, sea and air forces, it has reacquired all three; and now, even though the constitution disavows the use of force to settle international disputes, the Cabinet is preparing the way to send military forces into a conflict regardless of whether a direct threat to Japan exists.

    The move is supported by the United States (that already has strategic plans and weapons systems in place in and around Japan that cannot be effectively engaged unilaterally) and, most recently, was applauded by the government of the Philippines, which is embroiled, like Japan, in a territorial dispute with China. From such indications, we can see where this business may be headed.

    While it is likely that dissent groups in Japan will challenge Abe’s policy shift in the courts, precedent suggests the Supreme Court will not accept a case until after a concrete situation has arisen, i.e. after Japan has forces engaged in a conflict. The Supreme Court’s timid track record on constitutional issues does not inspire confidence that it would defy a government in the midst of a security ‘crisis’.

    Prime Minister Abe has argued the need for Japan to embrace ‘collective defense’ because of a changed security environment in the region. Though this assuredly relates to the rise of China and a wish to support a continued military engagement by the United States in East Asia, Abe has devoted more effort to explaining the policy shift to his coalition partners than to the general public––having earlier decided that the public could not be trusted to pass a constitutional amendment. Abe has assumed the right of ‘final authority’ on this fundamental issue. He considers the notion that constitutions exist, in part, to restrict state power to be an obsolete one.

    The New Komeito is the political arm of the lay Nichiren Buddhist movement Soka Gakkai, which has traditionally opposed military entanglements, especially anything that would risk spilling Japanese blood abroad. With nine million loyal members, Soka Gakkai is a powerful force at the ballot box in a country where voting is not compulsory. The importance of the New Komeito for the LDP-led governing coalition is greater than the party’s Diet representation alone might suggest.

    Abe’s tactics in winning over the New Komeito have mimicked the line of argument used by the Supreme Court when acquiescing with past constitutional ‘re-interpretations’. Abe began by stating a general principle that the New Komeito could not dispute: that, like any sovereign nation, Japan had an obligation to defend its citizens. In an increasingly unstable world, he went on to argue, this required Japan to co-operate with like-minded nations to secure the peace. When he suggested this could be achieved by sending military forces into foreign conflicts, Abe met resistance; but his response then was to ‘salami-slice’ the principle of ‘self defense’ into a myriad of scenarios until he found some that the New Komeito could live with. For instance, might not Japanese naval vessels participate in U.N.-sponsored minesweeping operations? ‘OK’ says New Komeito. ‘And what if…’ says Abe. And so it went: constitutional change achieved through a maze of hypothetical scenarios that can, and surely will, themselves be reinterpreted to fit whatever real-life situation emerges down the track. (The Supreme Court similarly has started out by avowing a motherhood principle before going on to find reasons for granting politically convenient exceptions to it.) Abe’s promise to the nation that the government would use only the ‘minimal force’ necessary for collective defense rests on nothing more solid than political expediency.

    According to an Asahi group magazine, the LDP used other methods of persuasion on New Komeito, including a little blackmail. The party was reminded that its links to Soka Gakkai could also be considered a breach of the constitution––the guarantee of separation of church and state––if a ‘black letter’ interpretation of the law were applied. ‘So, lighten up, why don’t you?’

    On the eve of the Cabinet meeting expected to adopt Abe’s resolution, official reports said that the lone protestor in Shinjuku who set himself alight was still alive. Most probably he was being kept on a life-support system until after the Cabinet decision, as a confirmed fatality would not sit well with the politicians in Kasumigaseki. His desperate act will be explained away as an isolated moment of madness. Who will even remember his still-undisclosed name in coming days? Forgotten, like the click of the keyboard that will consign the Defense Ministry’s soon-to-be obsolete web document to oblivion.

    Walter Hamilton reported from Japan for eleven years for the ABC.

     

     

     

     

     

     

     

  • The rich are inheriting the earth … our earth

    The last budget kept our Overseas Development Assistance (ODA) unchanged at a nominal amount of $5.03 billion. In real terms that was a cut of 2.25% or over $100 million.  Julie Bishop told us that it was a contribution that ODA would have to make to repair our budget deficit.

    At the same time the government is abolishing the mining tax. We are obviously expected to believe that we cannot continue helping the world’s poor. It is more important to give money back to the miners.

    The mining lobby keeps telling us about the great contribution it makes to the Australian economy. There is a lot of exaggeration in this and often much worse.

    • As Ross Gittins in the SMH and others point out mining accounts for about 10% of our national production, but only 2% of employment. The large increase in mining investment in recent years has mainly been to purchase equipment from overseas.
    • About 80% of our very profitable mining industry is foreign owned. BHP/Biliton is 76% foreign owned, RioTinto 83% and Xstrata 100%. This means that 80% of mining profits accrue to foreign shareholders and not to Australians. In this situation it is important for the owners of the minerals; we Australians, that we get some worthwhile return either in taxes or royalties.
    • The Coalition government is planning to abolish the mining tax, just when it is likely to produce some worthwhile revenue. See my blog of May 6, 2014, ‘The cost of abolishing the mining tax’.
    • State governments do receive royalties from mining companies for the exploitation of our national resources, but they hand a lot back to the mining companies. According to the Australia Institute, the states gave the mining companies $3.2 billion in concessions last year – mainly in providing railway infrastructure and freight discounts. In Queensland, these concessions or subsidies were equivalent to about 60% of the royalties the Queensland government received.
    • We would expect that even if mining companies could dodge the mining tax, they would at least pay the 30% company tax. But not so. Michael West in the SMH on 27 April 2014 points out that Australia’s largest coal miner, Glencore/Xstrata paid no company tax at all over the last three years despite an income of $15 billion.( In response Glencore has said that over those three years “it paid $3.4 b in taxes and royalties”. But royalties are not taxes. They are a cost of production. So in my view Michael West’s assessment that Glencore did not pay company tax in the three years stands.) According to West it achieved this remarkable result of paying no company tax by paying 9% interest on $3.4 billion in loans from overseas associates.  This 9% incidentally was about double the interest it would have had to pay in the open market or from a bank. Having paid 9% on these borrowings to load up its “costs” in Australia it then lent money to ‘related parties’ interest-free. We are not told who these related parties were. But there is more. Apparently there has been a large increase in Glencore’s coal sales to ‘related companies’ from 27% to 46%. This would seem to indicate transfer pricing to shift income to lower tax countries. In this regard Michael West reported on the complex Glencore company structure. ‘The Glencore structure is now run as a series of business units controlled by one company [Glencore/Xstrata Plc) which is incorporated in the UK, listed on the London and other stock exchanges, with its registered office in Jersey (a tax haven) and its headquarters in Baar, Switzerland. It is probably all legal but is it right?

    The latest BRW 200 Rich List ranks Ivan Glasenberg, the CEO of Glencore Xstrata, as the fifth wealthiest Australian with $6.63 billion in wealth – up from $5.61 billion in the last twelve months. His current wealth is $1.1 billion more than we spend each year on ODA to help the poor of our region and the world.

    The BRW top 200 richest people in Australia have a combined wealth of $194 billion. That is almost forty times more than we spend each year in ODA.

    The poor of the world will just have to put up with a cut in our ODA. We can’t help the poor when we need to dole out enormous benefits to foreign-owned mining companies.

    The rich are really inheriting the earth – our earth!

  • The disastrous outcome on climate change and the Greens’ culpability

    As a result of the Clive Palmer intervention, we are now unlikely to have any carbon reduction policy in place. In a few weeks’ time it is likely the Senate will vote down the Carbon Tax, its successor an Emissions Trading Scheme and Direct Action.

    The party that is chiefly responsible for this fiasco is the Greens. The same is true of its holier-than-thou approach on asylum seekers, but I will leave that for another day.

    I set out my views on the enormous damage that the Greens have done in my post of September 2 last year ‘Holier than thou … but with disastrous results’. That blog is reposted below. As Gough Whitlam put it in a different context ‘Only the impotent are pure’. The Greens have been giving us policy purity in truckloads, but on a sensible policy on climate change they have given us ‘a big fat nothing’.

    That quote is from an article today by Phillip Coorey in the AFR, page 55. The article is headed ‘Green opportunism leaves carbon policy at zero’.

    Coorey writes

    ‘The only mainstream party never to have taken a risk, never to have put any skin in the game and never to have lost a vote [over climate change] is the Greens. Throughout the entire eight year saga they have chained themselves to the altar of policy purity and watched others suffer for their ideals. The result is a big fat nothing. … Because they believed the Carbon Pollution Reduction Scheme introduced by Rudd to be inadequate, they voted it down twice. The second time was the day after Abbott knocked off Turnbull. Liberal senators Judith Troeth and Sue Boyce realising the need to establish a foothold for carbon pricing, crossed the floor to vote with Labor. The Greens helped the Coalition kill it. … Even when Labor was dying last year and Abbott was at the gate of the lodge, vowing the carbon tax would be the first policy put against the wall and shot, the Greens attacked Rudd for cowardice when he announced … that if he was elected the fixed price would move to a much lower European linked floating price on July 1 2014, one year earlier than scheduled.

    As I mentioned in my blog of September 2 last year, the defeat of Rudd’s CPRS brought on an acrimonious and divisive debate and a denial of the science of climate change. As a result public support for a carbon tax on an Emissions Trading Scheme has plunged from 75% in 2007 to less than 40%. The Greens cannot wash their hands of this debacle. They triggered it in the Senate.

    Whether on climate change or asylum seekers, Australia is paying a heavy price for the Greens’ policy purity. They have played into Tony Abbott’s hands.

    But for the Greens an ETS would have been done and dusted five years ago.

  • Repost. Holier than thou … but with disastrous results. John Menadue

    The posturing of the Greens on the two big issues of this election, asylum seekers and climate change has given us two appalling policy outcomes. They sided with Tony Abbott in the Senate on both critical issues to defeat improved policy. The country is now paying a very heavy price. The perfect became the enemy of the good.

    The Malaysian Agreement was not ideal and needed improvement but it was an important building block towards a regional arrangement. In opposing   the processing of asylum claims in Malaysia the Greens were unremitting in their bashing of Malaysia. The collapse of the Malaysian arrangement gave oxygen to people smugglers in persuading desperate people to take dangerous sea voyages. The evidence is clear. When the High Court rejected the Malaysian Agreement in August 2011 irregular maritime arrivals were running at less than 300 per month. By May2012 they had increased to 1200.They have been rising rapidly ever since, reaching  over 14,000 in the six months to June 30 this year The rot set in with the collapse of the Malaysian Agreement. We have been in a downward policy spiral ever since…. Nauru, Manus, PNG, TPV’s, turn backs at sea and even buying clapped out vessels in Indonesia. The madness continues. The Greens cannot wash their hands of the havoc they have wrought. The Government attempted to amend the Migration Act to correct the problems identified by the High Court but the Greens colluded with Tony Abbott and Scott Morrison to block the amending legislation.

    Yet that Malaysian Agreement was actively supported by the UNHCR. The Director of UNHCR in Australia told the Australian Parliament on 30 September 2011 that

    “Many persons of concern to UNHCR stand to benefit from the programme (with Malaysia) by having their status regularised. It could mean all refugees in Malaysia would, in addition to their registration and ID documents from UNHCR, be registered with the government’s immigration data base and thus protected from arbitrary arrest and detention. It would also mean that all refugees in Malaysia would have the right to work on a par with legal migrants in the country. This would also entitle them to the same insurance and health schemes as documented for legal migrant workers.”

    This agreement could have been quite historic, a first between a refugee convention signatory country and a non-signatory country in our region. For Malaysia, this agreement was also quite remarkable progress. This is in a country that has a burden of much larger numbers of refugees than we have. But because the agreement with Malaysia was not enshrined in law it was discounted by the High Court. What that means is that if it wasn’t enshrined in law we could not trust the Malaysian government. What an awful outcome for refugees and our relations with the Malaysian government.

    It is true that the numbers of boat arrivals who seek asylum in Australia are miniscule in world terms. . But we have a political problem with boats that is exploited by Tony Abbott and Scott Morrison. The Greens abetted the coalition in the name of policy purity. Then the Labor government joined the rush to the bottom.

    The Greens must also accept major responsibility for the decline in public support for effective action on climate change. They opposed in the Senate the Carbon Pollution Reduction Scheme of the first Rudd Government. Belatedly the Greens then supported the Gillard Government’s legislation including the carbon tax which is much inferior to the CPRS. In the intervening years we have seen acrimonious and divisive debate and a denial of the science on climate change. As a result, public support for a carbon tax or Emissions Trading Scheme has plunged from 75% in 2007 to less than 40% today. The Greens cannot wash their hands of this debacle. They triggered it in the Senate.

    Whether on climate change or on asylum seekers, Australia is paying a very heavy price for the Greens’ policy purity. Asylum seekers are paying an even heavier price.

  • Michael Kelly SJ. The banality of evil

    Denial has many faces. Some of them are necessary. If any of us entertained what might befall us each day and the harm we could come to, we would never get out of bed. But denial also has corrosive and destructive effect if we deny the facts of our experience or refuse to be honest in questioning our own behavior.

    Watching Scott Morrison behaving like an outdated school master in telling asylum seekers what their fate is to be, as reported with the original video in the The Guardian http://www.theguardian.com/world/2014/jun/25/morrison-asylum-seekers-should-go-home-or-face-very-very-long-detention is about as complete an example of one human being bullying and brutalizing others as you need to see.

    But what makes it even worse is the abject failure of the Minister to realize that this is not just Australia’s problem but one shared with many countries in the Asian region which needs a regional solution – something in the Australian Government’s power develop.

    Witnessing such inhumanity is not a pretty sight. It’s not so much that such behavior is the work of some calculating monster. Scott Morrison is just following Government orders and telling Australia’s armed forces and immigration officials to do the same.

    The dehumanization involved in such behavior echoes what exercised Hannah Arendt said http://en.wikipedia.org/wiki/Hannah_Arendt when she witnessed first hand the Jerusalem trial the Nazi mass murder, Adolf Eichmann

    A Jewish escapee herself from a Nazi camp in France, Arendt earned the opprobrium of Jews around the world for her assessment of Eichmann http://en.wikipedia.org/wiki/Eichmann_in_Jerusalem

    She thought that the common understanding of Eichmann had missed the most important fact. What upset most of her critics was her claim that anti-Semitism was not the primary motivation for his villainy.

    After observing Eichmann’s trial in Jerusalem, she formed the view that the man was a simple mediocrity, a bureaucrat with nothing more than ambition to progress through the Nazi hierarchy to motivate him and a complete absence of any sense of personal responsibility for the heinous acts that filled his days.

    Arendt came to believe that ideologically based interpretations of his behavior and motivation greatly exaggerated his significance and capacity and missed the most obvious fact about Eichmann: he was simply a nobody who became somebody through being part of something which just happened to be the SS murder machine.

    Far from being the monster he was made out to be, Eichmann was an instance of what Arendt called “the banality of evil.”

    His condition is something that extends well beyond the obvious infamy of Adolf Hitler and the determination of Heinrich Himmler to provide the “final solution” to the “problem” of the Jews.

    She explained the conclusion she came to about Eichmann’s banality in terms that she learnt from her professor, lover and mentor, Martin Heidegger, who described human beings as human beings if they can connect head and heart in searching thought.

    The absence of that connection is the abject inability to connect human passion and reflective thought in consciousness. The self-conscious and objective evaluation of actions according to a standard of good and bad, right and wrong defines the difference between humans and animals.

    Eichmann failed the test because, as he repeatedly said, he was “just following orders” and accepted no personal responsibility for the moral quality of the orders. In other words, Eichmann was not smart or even very efficient. He was just a bureaucratic automaton.

    Minister Morrison is getting and giving orders. He is following his orders that come from Prime Minister Tony Abbott and his Cabinet. The Coalition endorses them and the Labor Party has complied with them. The military and Departmental officers are implementing a set of orders that consign 30,000 people to life destroying experiences that are justified by being “policy”.

    It’s the banality of it all that fails to raise objections from enough Australians to see the policy and the orders changed. We know what Hannah Arendt would say. But spare a thought for Harold Macmillan a British Prime Minister in the 1950s and ‘60s who observed in the 1930s that when the Establishment is of one voice about anything, you can bet they’re wrong.

  • Tony Abbott’s negotiating skills.

    With the unpredictable and confusing state of the new Senate, Tony Abbott will have his negotiating skills tested. So far negotiating skills have not been part of his political success.

    Thanks to the Palmer United Party and five other  cross-benchers in the Senate from July 1, the situation could become even more chaotic than the House of Representatives was after the 2010 election- a situation that Tony Abbott did his best to make even more chaotic.

    If Tony Abbott had revealed good negotiating skills, he may have been the prime minister after the line-ball election result in 2010. But it turned out that Julia Gillard won hands-down in persuading Tony Windsor and Robb Oakeshott to support an ALP government. Tony Abbott was no match for Julia Gillard in winning over the Independents.

    Will he do any better with the senators after July 1?

    In the new Senate the Coalition will have 33 seats, the ALP 25 seats, the Greens ten seats, with ‘others’ having eight seats. If the ALP and the Greens oppose legislation, the Coalition will need the support of six out of the other eight senators.

    These eight ‘other senators’ are a very mixed bag. Three are from the Palmer United Party. There is one independent, Nick Xenophon; one from the Democratic Labor Party, John Madigan; one from the Liberal Democratic Party, David Leyonhjelm; one from Family First, Bob Day. And one from the celebrated Australian Motoring Enthusiast Party, Ricky Muir.

    But Tony Abbott doesn’t have a good record of compromising and doing deals. In his recently published memoirs ‘The Independent Member for Lyne’, Rob Oakeshott is quite critical of Tony Abbott’s negotiating skills. He points to this in many ways. In his memoirs he says

    • ‘I am now both curious and frustrated by Tony Abbot’s negotiating style or lack of it … The door is always open, the mood is always civil, but nothing is progressing. He always indicates he is available if required, but doesn’t pursue anything.’
    • ‘Abbott has all but run dead in the first 15 days of negotiation.’
    • Oakeshott says that he doubted Abbott’s genuineness and sincerity about running a three-year term. He says that his intuition was later confirmed when Bronwyn Bishop told Sky News in October 2012 ‘Of course we would have gone to another election.’
    • ‘For reasons I couldn’t understand, I felt Tony Abbott hadn’t even been trying throughout the entire process to date.’
    • The sincerity of Tony Abbott’s offer ‘just doesn’t feel real’.
    • ‘I was pissed off’ with Tony Abbott.
    • He described Tony Abbott as ‘the master of negativity we’d all come to know’.
    • Abbott laid his cards on the table ‘Climate change and the NBN are non-negotiable – Look, if you want to support one or both of these issues, go with the other mob.’

    Will Tony Abbott do better this time with the Senate? He needs to learn a lot.

    He has apparently written to all the eight cross-bench senators and the micro-party leaders requesting meetings. Apparently the letter said that he is not going to be held hostage and that he expects the parliament to respect his mandate on the carbon and mining taxes and pass his budget. The AFR journalist Phillip Coorey suggests that the same old Tony Abbott is still at work. Coorey said ‘This week [Senator] Madigan was scathing, telling this column he had received a letter from Tony Abbott but he did not believe that Abbott was serious about wanting to engage.’

    On top of the doubts about Tony Abbott’s negotiating skills we now have the unpredictable Clive Palmer and his bombshell on climate change.

    Tony Abbott’s representative in the Senate is Eric Abetz who is not known for his finesse and mediating skills. Before the last election Abetz said that asylum-seekers living in the community should be named and shamed like paedophiles.

    After July 1, the Senate is really going to test Tony Abbott’s negotiating skills.

  • All at sea again.

    Lt Gen Angus Campbell, the Commander of Operation Sovereign Borders is at it again highlighting the policy and political achievements of the Coalition government on asylum seekers rather than sticking to his last, and ensuring that Australian naval vessels don’t stray into Indonesian waters.

    Gen. Campbell says that as a government employee, he doesn’t comment on government policy. But apparently he has no constraint about commenting when it suits him. He declines to comment when there are embarrassing political questions. He then says they are ‘on water’ matters.

    On Tuesday this week at a speech to the Royal United Services Institute of NSW  he made two political points as reported by the Guardian.

    The first was that Australia was among the top three nations resettling refugees, according to the UNHCR. That is technically correct, but it is quite misleading. A little knowledge can be a dangerous thing.

    There is a UNHCR resettlement program which resettled 88,578 refugees in 2012. We were ranked third behind the US and Canada in this program. This is a useful program but it is quite minor when set against the total refugee problem. In 2012 there were 15.4 million refugees in the world. There were another 28.8 million displaced persons. The numbers would have increased since then particularly with the disasters in Syria and Iraq.

    Of the 15.4 million refugees in 2012, the top five hosting countries were Pakistan 1.638 million people, Iran 868,000, Germany 590,000, Kenya 565,000 and Syria 477,000. Australia ranked number 49 in the world in hosting 30,000 refugees. Taking into account our population, we had a world ranking of 62 and on a wealth/GDP basis, we were ranked 87. That is all a long way from the third ranking that Gen. Campbell tells us about. His claim just does not bear close examination when we consider the total problem.

    The second thing that Gen. Campbell said to the Royal United Services Institute was that the policy that he was implementing in OSB had saved lives. He estimated that without OSB, up to 180 more people might have been drowned.

    Is he really suggesting that the purpose of OSB is to stop drownings? It may be a consequence but it is not the objective of OSB. The objective of OSB as Tony Abbott and Scott Morrison cannot help telling us is to ‘stop the boats’. It is not to stop drownings. Gen. Campbell’s public relations gloss is designed to hide immoral and cruel policies. If it was about saving lives at sea, the government would be nominating him for a human rights award.

    The Director General of UNHCR, Antonio Guterres, has recently spoken of our ‘strange’ phobia about boat arrivals when we ignore the 8,000 plus asylum seekers who come by air each year and, in world terms, the few asylum seekers that come to Australia. As with refugees, Australia ranks well down the list in the number of asylum seekers coming to our shores and seeking protection. That is one of the benefits of our remoteness. In 2012 the five top countries receiving asylum seekers were Turkey 325,000, Jordan 136,000, Lebanon 135,000, South Sudan 101,000 and France 98,000. Australia ranked number 20 with less than 30,000 asylum seekers coming to our shore either by boat or by plane. In relation to our population our world ranking was down at 29 and in relation to our wealth/GDP we ranked 52 in the world.

    We are nowhere near as generous as Gen. Campbell suggests in trying to justify the immoral policies which Australia is pursuing and which he is helping to implement.

  • Bill Van Esveld. Dispatches: What’s in a Name? A lot, in the West Bank.

    Is it occupied, disputed, or contested? Some are finding it hard to find the right words to describe the West Bank.

    In a move widely seen as an effort to demonstrate its pro-Israel bona fides, Australia’s attorney general said on June 5 that the Australian government would stop referring to East Jerusalem – which is part of the West Bank – as “occupied” territory. Attorney General George Brandis explained the change was being made because the term is “freighted with pejorative implications,” relates to “historical events,” and is “neither appropriate nor useful” to “describe areas of negotiations” in the peace process. On Twitter, Israeli Prime Minister Binyamin Netanyahu welcomed Australia’s statement, calling “eastern Jerusalem” an “area in dispute” and condemning “the chorus of hypocrisy and ignorance of history” around the issue.

    Australia’s announcement sparked substantial criticism in its domestic media. Meanwhile, in the United States, mainstream media outlets frequently choose to avoid the “occupied” label, even though the US government officially regards the West Bank as “occupied.” The New York Times, in an unrelated article on June 6, referred to the entire West Bank as “contested” territory, while MSNBC’s Hardball recently aired a graphic about “disputed” territories.

    Regardless of whether “occupation” and “occupied” are considered pejorative, they relate to a broadly recognized and specific international legal standard. Whether or not a territory is occupied is a legal question determined by facts on the ground: under laws of war dating back at least a century, territory is occupied when a hostile army has established and exercises authority. It is important to get this right because the international law of occupation, codified in The Hague Regulations of 1907 and the Fourth Geneva Convention of 1949, places certain obligations on the occupying power toward the local population and the territory’s resources. Of particular importance in the case of Israel, the Fourth Geneva Convention, which Israel has ratified, makes it a war crime for an occupying power to transfer parts of its population to occupied territory, as Israel has done in facilitating the growth of its settlements.

    The Israeli government’s position is that the Fourth Geneva Convention does not apply to the West Bank, because the territory was not the sovereign territory of a state party to the Geneva Conventions (Jordan) at the time Israel occupied it. However, not only has Israel’s interpretation of the convention been universally rejected, it is also at odds with the convention’s purpose of protecting people under the rule of a hostile military. To our knowledge, every court, foreign government, agency, and international body that has addressed the issue – from the UN Security Council to the International Committee of the Red Cross – refers to the West Bank as occupied territory. In fact, in scores of judgments, Israel’s own Supreme Court has applied the law of occupation to determine the lawfulness of actions by Israeli forces in the West Bank.  For decades, it has ducked review of the legality of Israel’s current settlements policy.

    So when the Israeli government or others assert that the West Bank is “contested” or “disputed” territory, it’s worth remembering that these terms have no recognized legal meaning, and are nothing more than an attempt to avoid the laws that govern Israel’s military rule there. As a general rule, when an occupying power complains that the term occupation doesn’t apply to its situation, journalists and policymakers should take a deeper look.

    Bill Van Esveld is an Israel and Palestine researcher at Human Rights Watch.

     

  • The widening wealth gap

    Oxfam Australia has just released a report ‘Still the Lucky Country?’ which highlights the widening gap in wealth and incomes in Australia.

    It found that the nine richest people in Australia have wealth that equates to the poorest 20% of the community. That 20% represents about 4.5 million people.

    The nine richest people have a combined net worth of $67.7 billion. They are: Gina Rinehart, $17.7 billion; Anthony Pratt, $7 billion; James Packer, $6.6 billion; Ivan Glasenberg, $6.3 billion; Andrew Forrest, $5 billion; Frank Lowy, $4.6 billion; Harry Triguboff, $4.3 billion; John Gandel, $3.2 billion and Paul Ramsay (now deceased), $3 billion.

    The top three wealthiest in Australia inherited most of their wealth. As American devotees of baseball would say ‘They were born on third base’.

    Oxfam took a national poll of 1,000 people which revealed that Australians were concerned about inequality.

    • 76% said that the wealthy don’t pay enough tax.
    • 75% want the government to close the wealth divide.
    • Two thirds of people said that it is unfair that the richest 1% of Australians own more than the poorest 60%.

    Oxfam noted that inequality in the world is growing with 68 billionaires. They are as rich as a half of the rest of the world.

    Pope Francis has been denouncing inequality as ‘increasingly intolerable’ and the ‘seat of social evil in the world’. But it is not only the Pope who is expressing major concerns. The plutocracy has been joining him.

    Paul Pulman, the CEO of Unilever, describes this growing inequality as a ‘capitalist threat to capitalism’. The Lord Mayor of London Fiona Woolf warned that capitalism needed to be ‘for all and not just the gilded few’.

    Prince Charles said ‘The long term job of capitalism is to serve people, rather than the other way round’.

    The managing director of the IMF, Christine Lagarde, and a former Conservative French minister called for ‘more progressive income taxes and greater use of property taxes’.

    The Governor of the Bank of England, Mark Carney, said that ‘rising income inequality was real and international … just as any revolution eats its children, unchecked market fundamentalism can devour the social capital essential for the long-term dynamism of capitalism itself’.

    Mark Carnegie an Australian venture capitalist puts it this way ‘The enemy that we face at the moment is growing inequality, growing divisiveness, growing disengagement….in America you see society just absolutely sheering because the rich and the poor are just getting further and further apart.’

    A wide range of people are now raising serious concern about growing inequality. We are all being called to account for this growing inequality and the economic and social consequences that it will inevitably bring. We need to consider wealth and property taxes as well as raising the rate of personal tax on high income earners, like the CEO’s of our banks.

  • Is Tony Abbott still a climate change denier?

    Tony Abbott claimed on his recent overseas trip that he takes human induced climate change “very seriously” Or was it just a diversion before his meeting with President Obama who does take the issue seriously.

    I hope he is no longer a climate change denier but I have my doubts.  I suspect it is mainly window dressing with no serious new understanding of the urgency of the issue and what further action must be taken.

    There are several reasons for my doubt.

    • He has not outlined in any serious way why he now takes the issue “very seriously” It has been a one liner and nothing more with no explanation or elaboration. His key supporters still want to relegate science to the dark ages.
    • He keeps saying that any action to cut greenhouse gases should not “clobber the economy” But if the climate is seriously damaged as seems likely by carbon pollution then our economy will also be seriously damaged. Or as it is colloquially put there will be “no jobs on a dead planet”, like there will be no jobs on a polluted or dying Murray River. Where appropriate we need to intervene to wind back our old and polluting economy and in its place encourage a new economy based on new energy-renewables, wind and solar. That is the best way to stop our economy being clobbered. It is the way capitalism renews itself, not clinging to the old that threatens the future of our planet and our future economy but embracing necessary change.
    • Tony Abbott is also ignoring his Chief Scientist Professor Ian Chubb who told us in February this year that the scientific evidence for human induced global warming is so overwhelming that those who reject it are usually forced to impugn the messenger with stupid expressions like “group think” or silly arguments that global warming is a “delusion”

    But other tests of Tony Abbott’s seriousness about climate change are what he does on the issue and the company he keeps. As Professor Rod Tiffen in the following extracts from Inside Story of 5 June 2014 points out the actions of Tony Abbott and the company he keeps are cause for concern.  John Menadue

    “Whether or not Abbott really does believe in anthropogenic climate change, it is “extraordinary,” according to Professor Ross Garnaut, that the four business leaders the government has appointed to senior advisory roles – Dick Warburton on the inquiry into renewable energy, David Murray on the financial system inquiry, Maurice Newman to chair the PM’s Business Advisory Council, and Tony Shepherd to head the Commission of Audit – all share a strong view that the science on climate change is wrong.

    Since the election, writes leading business journalist Giles Parkinson, the government has sought to close or reduce funding to many of the agencies whose work relates to climate change. Its first, and highly symbolic, move was to disband the Climate Commission, whose main purpose was to communicate facts about climate change to the public.

    Its next target, the Climate Change Authority, might prove more difficult to get rid of. As a statutory agency established by parliament, it can’t simply be closed. “The CCA was intended to be a non-partisan, expert body,” wrote New Matilda’s Ben Eltham, “a little like the Reserve Bank or the Productivity Commission, that would review the best available scientific and economic evidence and recommend a consensus position on Australia’s carbon reduction targets.” When it handed down its report on how Australia should address global warming – by cutting emissions to 19 per cent below 2000 levels by 2020 – environment minister Greg Hunt didn’t hold any sort of event to mark the report’s release. He simply issued a media release, full of misleading statistics and claims, whose key point was to rehash Coalition criticisms of Labor’s carbon tax.

    Earlier, the Climate Change Authority’s review of Labor’s renewable energy scheme had concluded that the current targets should be kept. Although it had the statutory obligation to undertake the next review, the government moved quickly to appoint its own inquiry. Its members included a climate change denier, a fossil-fuel lobbyist and the former head of a coal-and-gas generation company, all with an “antipathy to renewable energy,” according to Parkinson.

    Environmentalists’ fears that this inquiry was set up to reach a predetermined conclusion were strengthened by the government’s rapid moves to cut funding in this area. The budget recommended the abolition of the $3.1 billion Australian Renewable Energy Agency, or ARENA, an institution formed to help bring new technologies into production and deployment, and to fund Australia’s world-leading solar research. While it retained funding to meet its existing contracts, it had almost no funds to enter into any new agreements. Abolishing ARENA requires Senate approval.

    The most tangible effect of these measures is to dampen activity in the area. But they will also minimise the flow of information about climate change and policy responses. The government’s resolve even extends to organisational names: the Australian Cleantech Competition was renamed Australian Technologies Competition, and the words climate, clean energy, or clean tech are considered non grata.

    Unusually, Australia was not represented at ministerial level at the UN climate summit in Warsaw in November, which was working towards the global agreement to replace the 1997 Kyoto Protocol. Australia’s recent performance and changes drew some criticism at the meeting. The government also decided not to send a representative to the World Bank–supported Partnership for Market Readiness assembly, despite the fact that Australia had previously co-chaired three assemblies. Some EU diplomats have criticised Australia for “not including environment issues on the G20 conference it is hosting later this year,” reported Parkinson.”

    – See more at: http://inside.org.au/the-abbott-governments-war-on-transparency/#sthash.k0nLtgsq.dpuf

    I suspect that Tony Abbott has not changed his mind on climate change.

    Professor Tiffen is Emeritus Professor of Government and International Relations at the University of Sydney

  • Joe Hockey on welfare dependence

    Surely Joe Hockey must soon become more careful about preaching to us about ending the age of entitlement and the need for Australians to be less reliant on welfare.

    Facts are getting in his way.  The latest reality check has been the release of the Melbourne Institute of Applied Economic and Social Research’s Household, Income and Labour Dynamics in Australia (HILDA) which surveys 17,000 people each year in Australia. The HILDA report found that Australians are becoming less dependent on welfare.

    • In 2001, 23% of Australians aged 18 to 64 received weekly welfare payments. It has now fallen to 18.6%.
    • The proportion of retired people who relied on welfare benefits as their main source of income has declined over the last decade from 68.5% to 65.8%.
    • In 2001, there were 7.1% of Australian households where more than 90% of income came from welfare. A decade later the figure has fallen to 4.8%.

    Professor Roger Wilkins, the report’s author, said ‘The long-term trend away from welfare reliance was largely the result of the long boom, although a succession of welfare reforms, tightening eligibility, had also contributed.’ Professor Wilkins added ‘I’m absolutely bewildered by Hockey’s obsession on welfare reliance in Australia. It’s lower than it’s been in a couple of decades, possibly longer.’

    I have pointed out in earlier blogs that Australian government expenditure by all levels of government as a percentage of our GDP is one of the lowest in the OECD.

    The major problem is the erosion of our tax base by deductions, or as economists calls them, tax expenditures that favour the wealthy. The higher the marginal rate of tax, the greater the benefit of these deductions. These deductions include superannuation, negative gearing and the discount on capital gains.

    The “debt and deficit” crisis has been wildly overplayed. Now the facts on welfare dependence are running in the opposite direction to what Joe Hockey is telling us.

  • Out-of-Pocket Costs in Australian Healthcare and the $7 Co-payment.

    In my blog of  May 12 on health co-payments I set out my objections to the proposal including that we already have a very high level of co-payments, that they are a “dogs breakfast” and that the proposal on its own would be unfair. The debate has moved on since then which raises further concerns about a proposal which covers not only GP consultations but pathology and radiology tests and pharmaceutical prescriptions as well.

    My first concern relates to process and where this co-payment issue might be headed. Minister Dutton has repeatedly said that he wants ‘to start a national conversation’ about health. I agree. But the minister doesn’t do what he has promised. He has barged in with a ‘solution’ to the “unsustainability of Australian healthcare”, without any ‘conversation’. In practice what he is proposing in the budget is a mechanism to kill bulk billing and clear the ground for Private Health Insurance to fill the gap. Minister Dutton has said repeatedly that the government has an interest in greater involvement of PHI in primary healthcare. He said ‘we will be… looking over the next few years at new and innovative ways in which we might fund and deliver primary healthcare, including through partnerships with private insurers’. He has expressed interest in trials of PHI in primary care in Queensland.

    In terms of equity and efficiency it is remarkable that the government proposes a $7 co-payment, but maintains the $5 billion p.a. subsidy for PHI. That is real corporate welfare at the expense of low income earners and our health service in general.

    The intrusion of PHI into primary healthcare should be strenuously resisted. The experience with PHI around the world is clear, particularly in the US. It pushes up costs dramatically and does not improve health outcomes. There is no benefit to the Australian community if the government saves $1 in official taxes, only to turn round and for the community to pay  a lot more  in ‘taxes’ to BUPA, Medibank Pte or NIB, for the same or an inferior service. Because of its intrinsic inefficiency PHI will always be more expensive than Medicare. Since 1999 average PHI premiums have increased 130% whilst the CPI has increased by only 50%. PHI administrative costs are about three times higher than Medicare’s.

    I have written extensively about the damage that PHI does wherever it gets a foothold. The encroachment of PHI into primary healthcare as suggested by the minister is a much more serious threat to our universal system of healthcare than the co-payment in itself.

    Warren Buffet has described PHI as ‘the tapeworm in the US health sector’. It is also true in Australia. Its expansion here should be resisted. Minister Dutton is quoted as saying that he ‘will never go down the path of a US style healthcare system’. But allowing PHI into primary healthcare would take us down the American path.  Private doctors and private hospitals have enormous power to set prices unless there is some effective counter. Multiple private insurers have little power to control these prices as the US shows. Only a single payer, usually a public payer has the power to control prices

    My second concern is that co-payments could discourage disadvantaged patients from seeing their GP. The COAG Reform Council has just reported that 5.8% of Australians delayed or did not see a GP because of cost and 8.9% delayed or did not fill a prescription from their GP because of cost. A co-payment will make that worse. It will force some patients to use more expensive and less appropriate emergency department services in public hospitals which are already under great pressure.

    Third, the proposed co-payment will undermine preventive health services and continuity of care for people with chronic conditions. The best place to focus on prevention and at an early stage is in primary care. Any discouragement of access to GPs because of the co-payment would be detrimental to preventive healthcare. The decision by the government to abolish the National Preventative Health Agency is an indication of the government’s lack of concern on health prevention. The tobacco, alcohol and the junk food industries will be pleased with that abolition decision. A strong primary health care sector is the key to an equitable and efficient health care system anywhere in the world.

    Fourthly, the best way to reduce costs and pressures in primary care is not through a co-payment but to move away from fee-for-service remuneration. This type of remuneration promotes ‘turnstile medicine’. FFS may be appropriate for occasional and episodic care but it is not appropriate for long-term and chronic care. We need a major review of remuneration practices in primary care with more emphasis on capitation and bulk-charges for chronic care to keep people well at minimum cost. The British single payer system has many advantages. One advantage is as the Economist of May 31 2014 put it, “doctors are paid to keep people well, not for every extra thing they do so they don’t make money performing unnecessary tasks and tests.” Addressing this remuneration question is far more important than a co-payment.

    Fifthly, there will probably be unintended consequences for the $7 co-payment. If the co-payment takes effect, it is likely to result in an increase in doctor’s fees. The attraction of bulk billing for the doctor is that it removes the cost of handling and accounting for transactions. An invoice is sent directly to Medicare. Once the doctor is obliged to handle the $7 co-payment, another transaction occurs, either by cash or probably credit card. This inevitable patient/doctor money transaction will provide the doctor with an opportunity to charge above the bulk billing rate. As soon as doctors stop bulk billing, we can expect a rapid rise in doctors’ fees on top of the $7 co-payment.

    Sixthly there are numerous other ways to reduce health costs and by billions of dollars e.g. the duplication and gaps in health care between the Commonwealth and the States, the out of date list of medical services funded under the MBS,, adverse events, archaic workforce structures and high drug costs resulting in us paying more than $2b pa than our New Zealand friends for equivalent drugs. But real savings in these areas means tackling vested interests like the AMA. The Pharmaceutical Guild, Medicines Australia, State health departments and the PHI sector. It is politically easier to attack the less powerful by a co payment.

    Far from having a sensible and informed public discussion about health, Minister Dutton has embarked on an ill-considered and ideologically driven course.

     

  • Debt and negative gearing

    Many have grown tired of the exaggerations by the Coalition about debt and deficits. The fact is that, as least as far as public debt is concerned, we don’t have a problem. The public debt emergency is confected. Our public debt is about $300 billion which in world terms is a very low figure.

    But the real debt we have is household debt which is approaching $2 trillion, one of the highest in the developed world. Our household debt is 1.8 times household disposable income. This compares with 1.1 times in the US.

    A contributor to this enormous household debt is negative gearing. Under our tax system an investor can borrow on a property or asset even if the income generated is unlikely to cover the interest on the loan. Losses on the so-called ‘negatively geared’ properties are income tax deductable. These deductions are estimated to cost the budget about $15 billion p.a. The main beneficiaries are people on higher incomes. The Abbott Government didn’t go near this problem in his budget. Successive Labor governments have also avoided it.

    There is not only the loss to the budget of about $15 billion p.a. Negative gearing also skews the market. According to the Reserve Bank, almost 95% of investors in dwellings buy existing and not new dwellings.  This results in increased prices for existing dwellings.  The proportion of investors buying new dwellings has fallen spectacularly since negative gearing was introduced I 1987.This makes it very difficult for first-home buyers to afford a home. With so little negative gearing going to new buildings, there is little boost to the supply of new houses.

    This issue must be addressed on both budgetary and equity grounds. Politically it should be possible to ‘grandfather’ arrangements for existing investors and only allow negative gearing in future on new dwellings. This wouldn’t save the $15 billion mentioned above but there would be a saving to the budget in the early years of about $4 billion pa.

    Negative gearing makes big calls on the budget. It forces up prices of existing buildings and it makes it very difficult for new home buyers to get into the market.

    Domestic household debt, encouraged by negative gearing financed by the banks, is a far greater problem than the low level of public debt that the Coalition keeps telling us about.