Category: Politics

  • Jennifer Doggett. Budget 2014 – Primary Health Care

    While some commentators are calling this Budget ‘The end of universal health care’ others are seeing some opportunities to improve health system performance, in particular through better collaborations with state-funded health services and programs.

    The most high profile Budget measures in the primary health care sector are the introduction of new co-payments for bulk billed GP services and increased charges for related tests and medicines.  There will be caps for high level users and some support provided for people on low incomes but overall these changes will result in higher out-of-pocket costs for consumers.

    These payments have been widely criticised by consumer groups, health economists, service providers and other stakeholders.

    These criticisms have focused on the hardship the increased costs will cause to disadvantaged patients on low incomes as well as their impact on the quality and cost-effectiveness of primary health care.  Many experts have warned that there could be an increase in demand for (much more expensive) hospital emergency department services as consumers try to avoid the co-payment.  The Government’s answer to this is to allow the States, for the first time since the introduction of Medicare, to charge a payment for emergency department presentations. However, State Governments thus far appear reluctant to introduce these charges.

    Another concern about the impact of the co-payments is that it will undermine efforts to improve preventive health services and continuity of care for people with (or at risk of) chronic conditions.   This is partly because the payments will create a disincentive for consumers to access care early and also because of the likely shift of some patients to public hospitals. This will complicate already complex care pathways with an increase in the number of patients receiving care across the community/hospital interface.  It is also likely to result in care that is much less efficient, both from a ‘health system’ and consumer standpoint.

    In relation to Medicare Locals (MLs), the Government is responding to the findings of the Horvath Review which recommended consolidation of existing MLs into larger Primary Care Networks.  While the Review was broadly positive about the need for some coordination primary health care infrastructure bodies, the Government (in rhetoric at least) has moved to clearly differentiate itself from the previous Labor regime, describing MLs as “a new layer of primary health bureaucracy”. However, there is little substance about the roles and functions of the proposed new Networks and Dutton’s description of their aims “to join up patient care in the community to keep people out of hospital” appear very similar to those articulated by Labor when establishing MLs.  The key factors in determining the outcome of these changes will be if the focus on an evidence-based, population health approach to primary health care is retained.   In flagging an increased role for GPs, the Government is responding to pressure from the AMA which has been concerned about sharing control of the primary health care sector with other health professionals. However, the inclusion of GPs (which have always been integral to MLs) should not occur at the expense of input from other stakeholders, including consumers, allied health professionals, pharmacists, nurses and practice managers.

    Dutton also reiterated the Government’s interest in a greater involvement from private health insurance in primary health care saying “We will also be looking over the next few years at new and innovative ways in which we might fund and deliver primary health care, including through partnerships with private insurers.” Given the evidence that private health insurance pushes up costs for health care, without delivering improved outcomes, this proposal is not sensible policy even for a conservative government.  Its political attraction, however, is that it may offer further opportunities to shift health costs from the public to the private sector.

    Budget primary health care workforce measures included an increase in GP training places by 300, to a total of 1500, in 2015 and a doubling of the teaching payment to GPs for training medical students from $100 to $200 per three hour session.  There are also 175 infrastructure grants for GPs in rural and remote settings to build training facilities in their practices and an increase in the funding available for incentive payments under the GP Rural Incentives Program for GPs to work in rural and remote areas.  Also announced were 500 more scholarships for nursing and allied health workers (over three years).  These measures are welcome, however, the lack of any significant workforce reform within the health sector means that the inherent inefficiency of the workforce will persist and the potential benefits of new health professionals will not be realised.

    The challenge now facing the Government will be to get these measures through the Senate. With the Opposition, Greens and Palmer United parties all indicating their reluctance to pass the co-payment legislation, the Government may find that its agenda for primary health care is thwarted before it gets off the ground.

     

  • John Menadue. For some the age of entitlement continues.

    Joe Hockey talks endlessly that the days of entitlement are over. They may be over for the unemployed, students, the sick and pensioners – in fact the majority never had days of entitlement. But they are certainly not over for the miners and the financial sector. These two sectors survived unscathed from the budget. This tells us a lot about who is running this government.

    For the miners, the mining tax and the carbon tax will end at a cost to the taxpayer of at least $10 billion per annum. The rebate on diesel fuel will remain. The government tells us that it had to honour these promises.  The same commitment to honouring promises was easily discarded in the case of the unemployed and the sick.

    And then there were the promises to the financial sector and particularly to the superannuation industry and the private health insurance industry. Promises to them had to be honoured. There was no attempt to scale down the tens of billions of dollars in rip-offs in these sectors that benefit the rich. Not only is the government determined to protect the privileged position of the financial sector, but it is also trying to water down the Future of Financial Advice (FOFA) legislation to advance the position of the banks and AMP. Senator Sinodinis and the government are obviously determined to allow the conflict of interest by the banks and the AMP and their financial planners to continue.

    The $5b p.a. corporate welfare subsidy to private health insurance sector will continue. But not content with this corporate handout PHI will seek to get a foothold in the new Primary Health Organizations, formerly known as Medicare Locals.

    Just look at who is untouched in this budget – the miners and the financial services sector. That tells us a lot about who is pulling the strings. This is crony capitalism. As Paul Keating put it the Liberals are about business, not markets. Or as Tony Abbott put it on election night – ‘Australia is open for business’ – the business of the miners and finance sector. Their entitlements will continue.

  • John Menadue. Seven dollar GP co-payment – and an unintended consequence

    If the co-payment takes effect, it is likely to result in an increase in doctor’s fees. As Ian McAuley has pointed out, the attraction of bulk-billing for the doctor is that it removes the cost of handling and accounting for transactions. The 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 doctor’s fees on top of the $7 co-payment. And the $7 co-payment may be just the beginning!

  • John Menadue. The Budget: Robin Hood in reverse.

    There was a real risk that Tony Abbott and Joe Hockey believed their windy rhetoric of the last two years about debt and deficits. Having won the election they have had to face the reality that they have been grossly exaggerating our economic problems.

    The real risk was that Tony Abbott and Joe Hockey would act on their own exaggerations and savagely attack the economy. Fortunately, the Budget tells a very different story. In terms of managing the macro-economy, the government has got it about right in the budget. It hasn’t cracked down in the way many feared.

    But what the Budget has done is to inflict pain on the poor and the vulnerable in our society; the unemployed, young people, the sick and the poor. Unlike Robin Hood, Joe Hockey robs the poor to protect the rich. And more pain is to come for the disabled and pensioners. The $80 billion cutback in health and school funding for the states will also result in severe problems. State Premiers are already protesting. This hit on the states will probably force them to press for a broader and/or an increase in the rate of the Goods and Services Tax. Perhaps that is what Joe Hockey intends.

    The most glaring example of cruel policies is the cut in our overseas development assistance program.  It is the largest single saving in the Budget. The political logic must be that the poor in the world that we should help can’t vote in Australia and can’t protest. They are an easy target, like vulnerable asylum seekers. As a wealthy country we should hang our heads in shame.

    I have written before about the need to address our revenue shortfall and the enormous advantages that flow to rich taxpayers in Australia. Our tax as a percentage of GDP has fallen steadily since 2002 from 30% to 28%. This is well below the OECD average of 34% of GDP. We need to fix our revenue base and not punish the poor and vulnerable.

    A major reason for our revenue shortfall is not so much our low tax rates but the high level of tax expenditures or tax deductions that we have. In 2012-13, Treasury reported that there were 363 ‘tax expenditures’ under our tax system. Those tax expenditures had a total value of $115 billion. These tax expenditures range across the field – deductions for charities, religious, scientific and community organisations. The largest of all tax expenditures is for superannuation. This ‘tax expenditure’ costs the Budget over $30 billion per annum. About 30% of these superannuation tax deductions or concessions go to the top 5% of income earners.

    The IMF has reported that Australia forgoes more revenue as a proportion of GDP from tax expenditures than all other OECD countries. It is in this area of tax expenditures that we need to direct our attention.

    Quite apart from the scale of these tax expenditures or deductions and loss to revenue, there is very little transparency. Direct welfare payments for example are easily identified. The IMF points out those tax expenditures are often granted as a result of secret lobbying. The IMF recommends regular and systematic reviews of tax expenditures in the same way we review direct government expenditures, like unemployment benefits. Parliament and the Parliamentary Budget Office would do a great service if they conducted and published such a regular review. If they did, a large number of these expensive tax expenditures like superannuation, negative gearing and subsidies for private health insurance would be brought to public attention and curbed or abolished.

    The ‘welfare cheats’ and ‘dole bludgers’ which are so much part of the stock in trade of tabloid newspapers and talk-back radio are easy game. The real rackets are run by vested interests that reap enormous benefits from tax expenditures which are often largely hidden from view.

    We badly need revenue reform and of tax expenditures in particular.

    Taxes are the price we pay for a civilised society. We need to face up to the need for adequate tax revenue to ensure that all Australians can live in a civilised way.

  • Ian McAuley. Ignored Budget issues.

    ​Lobby groups and community organizations have provided their take on the Budget – some with a “what’s in it for me” approach, others with a more analytical line.  My contribution from the stands is to draw attention to a few aspects which aren’t getting a great deal of attention.

    1.  Pension indexation.

    I’m surprised that this hasn’t been the subject to outrage. Perhaps people don’t appreciate the difference between indexation to average earnings and indexation to consumer prices.

    As a rule of thumb, earnings rise about one percent faster than inflation. That’s why, over the last 50 years, our material living standards have more than doubled.

    Currently the two person age pension is held to around 42 per cent of average male earnings. If real earnings continue to grow as they have in the past, while pensions are held to CPI, in 30 years time the age pension will be only around 30 per cent of earnings. Someone now 40, contemplating retiring at age 67, and who holds only a small superannuation balance, has suddenly been told his or her retirement living standards will fall by almost a third from what was expected.

    The notion that relative standards don’t matter is bunkum. Social inclusion is about not being left behind.  If you’re old enough, or if you know someone who can recall the 1950s, ask yourself how you would enjoy what in the 1950s was a reasonable standard of living.

    2. Inequality.

    As so many are pointing out, this budget entrenches and extends inequality. Besides the moral aspect of inequality there is a problem well-understood by hard-nosed economists.

    In a few words, if people do not see that the rewards from economic activity are being shared fairly, they will reject the economic system. That rejection won’t be a 1917 revolution – we live in a democracy and people have to be driven to starvation levels before they storm the Winter Palace or the mansions of Mosman.  But the reaction won’t be a move to sensible public policy either, particularly when we have a Labor Party lacking an economic vision and  a Green Party which just cannot understand the needs of anyone living more than a train stop away from the CBD. The reaction will be a move to populist policies – protectionist, anti-enterprise, anti structural change (ironically leading to economic stagnation and therefore worsening inequality).

    3.  Wages.

    The government is determined to get more people into the labour force. Hockey says it’s about getting people into work, but it’s really about getting people into the labour force.  There’s a difference between being in the labour force and having a job – just ask someone who’s unemployed. This policy is on three fronts – making it much harder for young people and people with disabilities to get government benefits, restricting  family tax benefit  B (thereby encouraging women to re-enter the labour force), and incentives (carrots and sticks) for older people to stay in the labour force.

    Unless there is a corresponding demand for labour, the inevitable consequence of an increase in labour supply is a compression of wages.

    If that support for participation were accompanied by investment in skills and education, it would provide a sound path to future prosperity, because while there are few jobs for the unskilled, there is an economy-wide shortage of skilled labour, and as our receipts from coal and iron ore fall away, we will need to rely more on our human capital as a source of competitive strength. But the budget measures, in increasing the burden on young people seeking either trades or university qualifications, and its foreshadowed cuts to school funding, go in the opposite direction. The only compelling explanation for this policy combination is that it is a response to those businesses which see their interests in terms of suppressing wages rather than in innovating and improving productivity.

    4. Foreign aid

    By cutting foreign aid we’re reducing flows to poor foreigners, but in abolishing the mining tax we’re being generous to rich foreigners.

    5. Bulk billing

    The $7 medical co-payment isn’t just about $7. It’s also about removing any incentive for medical practitioners to use direct billing (disparagingly called “bulk billing”).  The attraction of direct billing is that it removes the cost of handling and accounting for cash transactions.  Even a dollar co-payment removes that attraction.

     

  • Michael Kelly SJ. A powerful minority or an elected majority!

    In a process that shows no sign of ending soon, Thailand’s unstable governance has reached another crisis.

    The Acting Prime Minister has been tipped out only to be replaced by an Acting Acting Prime Minister who is himself to face judgment for his part in the failed scheme to stabilize the price of rice.

    These judicial decisions – seen by many to be actions of courts tainted by their association with the anti – Shinawatra, Royal establishment – are now the trigger needed to bring the opposition back onto the streets of Bangkok. However, more prosecutions to come will now follow these latest incidents. Ousted Acting Prime Minister Yingluck Shinawatra is to face proceedings over up to another dozen alleged misdeeds.

    But a situation that supplies ample opportunity for a Thai version of an operetta worthy of Gilbert and Sullivan’s satire of the British in the 19th Century could turn darkly unamusing over the next week. It is now time for the long–frustrated forces of the two sides – those loyal to Thaksin Shinawatra and his sister Yingluck arrayed against those claimed by the leader of the opposition parties, Suthep Thaugsuban – go on the streets. They may engage and the whole situation could descend into anarchy. That will trigger military intervention to prevent what would become a civil war.

    In the meantime, the big cloud handing over the current government is its next meeting with destiny when there is a court assessment of the failed rice purchasing scheme. In what looked like a masterstroke in the use of public funds to sustain the loyalty of rice farmers who are mostly supporters of the Shinawatra family, the government agreed to pay a fixed price to the farmers for their produce irrespective of the global market price  for the commodity.

    The Government has not only sluggishly complied with this deal. Its full honoring jeopardizes the country’s economic viability. It could send the government into bankruptcy.

    The numbing reality is that both sides of the contest are riddled with what is part of doing business in Thailand – corruption. Both parties are incredible; neither proposes anything approaching a sustainable vision for Thailand’s future; neither has leadership that offer comfort to investors that the rule of law and the practice of honest politics will be followed; the courts seem the plaything of interest tied to one side of politics.

    Without the Royal intervention that is unlikely, a divided society and paralyzed political processes look seem set to get worse. In the past, Royal intervention has brought an end to civil disturbance through the imposition of martial law. But in the King’s physical state, with advanced if undeclared diseases in his old age, such magic solutions that resolved conflicts that would only recur later appear to be too fantastic to expect.

     

  • Peter Menadue. Should corporations have political rights?

     

    There is an old legal saying that a corporation has no body to be burnt or soul to be damned.  In other words, it is just a legal fiction designed to confer limited liability upon its shareholders.

    Despite that, there is an insidious and very dangerous notion abroad that corporations have political rights and should be allowed to make political donations and engage in political advertising.  That notion is a terrible threat to the health of our democracy.

    The United States Supreme Court recently gave that idea a massive boost in the Citizens United case, when it decided (5-4) that the First Amendment right of free speech allowed corporations to engage in as much political advertising as they liked. In dissent, Justice Paul Stevens, one of the great justices in the history of the court, wrote that the First Amendment did not protect corporations.  He said that corporations were not “We the People” for whom the Constitution was established.  Rather corporate spending on politics should be viewed as a business transaction designed by the officers or the boards of directors for no purpose other than profit-making. Stevens called corporate spending “more transactional than ideological”.

    In Australia, we have recently seen what happens when corporations are allowed to engage in such transactional politics.  When the Rudd government tried to introduce a mining tax, major corporations (mainly foreign owned) funnelled huge sums into an advertising campaign to force the government to back down – which it did.

    Corporations must be pushed out of our political system and denied any political rights.  They should not be allowed to use their balance sheet to either make political donations or engage in political advertising.  Only citizens (including, of course, those who are employees or shareholders of corporations) should be allowed to do either.  Further, there should be a cap on how much individual citizens can spend (say $1,000 a year).  Indeed, one option is for the government to give each citizen a political donation voucher which he or she can direct to the party of his or her choice.

    However, that does not mean there will be no role at all for business organisations (like the Mining Council), trade unions or even corporations.  They should be allowed to collect money from citizens (up to the prescribed limit) on behalf of political parties.  However, all donors must be identified (to ensure they are citizens).  That would mean that, to fund its attacks on the Rudd Government, the Mining Council would have had to attract contributions from individual citizens (presumably in the mining community) who felt strongly enough about the issue. My guess is that the money collected wouldn’t have bought the council a 3am advertising slot on a regional TV station.  However then, at least, the citizenry would have spoken through their wallets, not major foreign-owned multinationals.

    The next time a progressive party takes power in Canberra,  the very first item on its agenda should be amending our electoral laws to exclude corporations from politics and to cap donations.  If it doesn’t, it might as well throw away the rest of its agenda.

  • John Menadue. Increasing the petrol tax is good policy.

    It may not be good short-term politics for the Abbott Government but it will be of long-term benefit to Australia if we lift the excise on petrol which has been frozen since 2001.

    The motor industry will protest. It should be faced down, just as we should have faced down the mining lobby when it was being asked to make a fair return to the public for its depletion of our national endowments.

    Our petrol prices are amongst the lowest in the world. That results in less revenue for the government, reduced fuel efficiency, increased congestion in our cities and more carbon pollution. I have reposted below a blog that I posted on November 20 last year ‘Cars are killing our cities’.

    In the December quarter 2013 our petrol prices were the fourth lowest amongst the 28 OECD countries. Only Canada, US and Mexico had lower prices. Our diesel prices were the sixth lowest amongst OECD countries.

    The action of John Howard in 2001 in freezing the indexation of fuel excise has cost us about $24 billion in cumulative losses of revenue. It has also been a contributor to the long term structural budget deficit we face. The IMF has made it clear that the Howard Governments were the major contributors to the structural deficit and not the Rudd/Gillard Governments. The Howard Government decision to freeze the indexation of the fuel excise and more importantly the income tax reductions year after year during the mining boom, were the major contributors to the structural deficit we now face. Unfortunately the Rudd/Gillard Governments didn’t act quickly enough. For example the Henry Tax Review recommended an end to the freezing of the fuel excise but the Rudd/Gillard Governments took no action.

    The increase in fuel prices does make good budgetary sense. As Dr Paul Burke from the ANU has pointed out, allowing the excise to rise with inflation could generate enough revenue to fund Gonski.

    Higher fuel prices will also encourage people to purchase smaller and more fuel efficient cars. As Dr Burke has pointed out ‘Higher fuel prices lead to consumers using less petrol and also consumers deciding to purchase cars that are more fuel-efficient’. He added that we are probably using about 3% more petrol as a result of the Howard Government’s decision in 2001.

    It would be a mistake if Tony Abbott decides to try to placate the motor lobby by building more roads. That will just increase the damage. We need more and better public transport rather than more roads and cars. We need to break free from the addiction we all have to the car and the power of the motor lobby. Cars are destroying our cities and damaging our planet.

    The Abbott Government decision on fuel excise looks like being a sensible and good start for a whole range of reasons. Can road congestion taxes be next!

    Repost: Cars are killing our cities.

    Congestion and pollution are killing our cities. The automobile is so convenient for all of us that we put aside the enormous problems that the automobile is creating. This is not just a problem for the industrialised and wealthy western countries. It is a problem for developing countries as they upgrade from bicycles to motor cycles and then to cars.

    A constant message that we all generally endorse is that public transport, particularly trains in various forms, are the answer. But it is likely to be only a partial answer. Cities like London and Paris have excellent metros or underground public transport systems, but road congestion is still horrific and it is getting worse.

    Some hard-headed political decisions will have to be made about automobile congestion and that will involve decisions to curb the use of cars in our cities. This will not please the very powerful motoring lobby. It won’t please Tony Abbott who wants to build more roads as a major plank in upgrading infra-structure.

    One inevitable decision would be severely restrict any more new freeways… Such an approach would have to be accompanied by a congestion tax with the revenue hypothecated to public transport. With a congestion tax system the higher the level of congestion the higher the rate of tax. It would provide a clear incentive/penalty for motorists not to travel at peak times.

    I just cannot see our cities surviving without congestion taxes to limit the number of cars. With such congestion taxes, we will all be forced to make decisions whether our use of the car/van is worth it, whether for private or business purposes.

    We will also need to address other options to reduce the number of cars on the road including increased sales taxes, registration fees and the fuel excise. In almost every respect these imposts are much lower in Australia. In Denmark the sales tax on motor vehicles is 143%, in Finland 53%, the Netherlands 48% and Sweden 30%.  In Australia it is 10%

    One feature of most European cities is that their cars are much smaller than ours. That reduces both congestion and pollution. To take a local example, a Toyota Hilux 4×4 emits on average 4.6 tonnes of CO2 each year compared with a Toyota Corolla of 2.3 tonnes of CO2 each year. These larger cars not only pollute more and congest our roads, but also dominate parking facilities.

    We can’t keep putting off the debate about limiting the growth of cars in our cities. They are making city life more and more difficult and unsustainable. Public transport is only part of the solution. We have to limit cars on the road. Only in quite exceptional reasons should any more freeways be built. It is a vicious circle with more freeways encouraging more car use and really only shifting the bottlenecks.

    We need to break free from our own addiction to the car and the power of the vested interests in the motor lobby.

    We need to limit cars on the roads at peak times as well as building public metro systems. Paris and London show us that we need to do both

    When the Mayor of London directly tackled the gridlock on London’s roads many years ago he gained wide support.

  • John Menadue. Penalty rates and Liberal lobbyists.

    There is a campaign underway to cut weekend and holiday penalty rates particularly in the restaurant and hospitality industries. True to form the Australian Financial Review says that weekend penalty rates are a relic of times past.

    A report leaked to the ABC indicates that the government will ask the Productivity Commission to undertake a comprehensive review of workplace laws. This will include penalty rates, pay and conditions, unfair dismissal, enterprise bargaining flexibility and union activities. It is proposed that this review by the Productivity Commission will consider the performance of the Fair Work Act. The Commission is expected to report to Joe Hockey by April 2015. He is ministerially responsible for the Commission. He makes the references to the Commission.

    What is of concern is the political relationship between Joe Hockey and John Hart, the CEO of Restaurant and Catering Australia who is pressing for a review of penalty rates by the government. John Hart is also the Chair of Joe Hockey’s North Sydney Forum which has featured prominently in Fairfax media in recent days.

    According to the SMH of May 5, 2014, membership fees are paid to the North Sydney Forum, chaired by John Hart, as part of the North Sydney Federal Electorate Conference. Joe Hockey is the Member for North Sydney. A full member pays $5,500, a corporate business member $11,000 and a private patron $22,000. Depending on the package, there are membership benefits which include board room events, end-of-year receptions, private VIP board room functions and policy forums and receptions. There is also provision for memberships of “Friends of Joe”.

    John Hart is clearly a key man for Joe Hockey and John Hart wants action by the government on penalty rates.

    Most of us would agree that we would rather not work at weekends, but if there is a need for such work, people should be fairly compensated for loss of time away from friends, family, recreation or church. Even God rested on the seventh day. Having forced governments to extend shopping hours and arguing that penalty rates were necessary compensation we now see a campaign by the same vested interests to wind back penalty rates.

    Restaurants and catering businesses say that many are going out of business because of weekend penalty rates. But how much of the problem of those businesses is due to bad business decisions rather than penalty rates? John Hart, Joe Hockey’s fund raiser tells us that there is a 20% annual turnover of restaurant businesses.  I suspect that many of them close because they have made bad business decisions and not because of penalty rates. It is tempting to blame the “system” rather than admit a business mistake.

    With changes in lifestyle, higher incomes and with two working parents, we do eat out more. Statistics from the industry reveal that restaurant business income has grown at a rate of 5.6% annually over the last five years. The Bureau of Statistics has just told us that while total retail sales were up by only 0.1% in the March quarter, restaurant sales were up by 1.8% It is an industry that is growing rapidly despite the alarm about penalty rates. There seems to be a lot of special pleading when John Hart says that we should freeze minimum wages or restaurants will shut down.

    As Ross Gittins has pointed out, many of us see the benefits of living in a market economy, but we don’t want to live in a market society. There must be limits to anti-social intrusions by markets. We should reject any suggestion that market are supreme and can invade our private lives on a 24/7 basis. Do we really need to have so many businesses open all weekend? Clearly we need people like nurses to cover for illness seven days a week, but do we need the same access to restaurants and shops?  And if we do, employees should be properly compensated.

    If the last twenty years has taught us anything about industrial relations, it is that continual change is costly for all concerned.  In 1993 the Keating Government abandoned our centralised IR system. In 1996 Peter Reith downgraded the role of IR tribunals. In 2005 John Howard gave us Work Choices. Then in 2009 Julia Gillard gave us the Fair Work legislation. Now Tony Abbott, Joe Hockey and John Hart want more change. We need more stability in our industrial relations framework because in the end good relations at the work level depend on effective local management and employee participation.

    Industry leaders tell us that we need to lift productivity. And we need to do this. But a lot of the productivity slow-down is a statistical mirage reflecting the massive mining investment which is just now beginning to show results in increased mining production.

    The vested interests that want to cut penalty rates claim that we have an inflexible labour market which results in high wage costs. Yet at present, the annual pace of wages growth has slowed from about 4% p.a. three years ago to a record low of 2.6% in recent months. Our labour market is showing considerable flexibility.

    Clearly we need to review penalty rates and all industrial relations from time to time, but we seem fixated with the problem, mainly for ideological reasons. . We don’t want the market to intrude into all aspects of private life. Markets are to serve people and society, not the other way around.

  • A last hurrah from Graham Freudenberg on his 80th birthday

    May Day 2014 – fittingly the day of Neville Wran’s memorial service at Sydney Town Hall – may well turn out to be the day when the Labor Party began to see its way ahead.  Not because of the event itself, although it certainly was a marvellous celebration of a great Labor era.  But it was the day of the Shepherd Audit Report. It also happened to be the day when News Ltd bared its fangs and reminded the Abbott Government just who was calling the tune. I invite students of history to file away the Sydney Daily Telegraph on 1 May 2014 and its coverage of the Shepherd Audit next day. All its hatred of Labor was as feral as ever, but in page after page, the message to Abbott and Co was clear:

    “It was us wot done it last year and we can do for you too if you don’t toe the line.”

    But what is really important for Labor is that Abbott, Hockey and Murdoch, in fomenting this spurious crisis that is supposed to engulf Australia sometime in 2024 or 2034 have drawn up clear policy and political battle lines for the rest of the decade. They are surprisingly traditional lines along the distribution of wealth and the concentration of power, but they provide a basis for the restoration of a coherent two-party system, the mainstay of our parliamentary democracy.  After the first week of May 2014, let us have none of this nonsense that there is no real difference between the major parties.

    For the past eight months the whole operation has been designed to entrench three myths (1) that Labor wrecked the economy with a six-year spending spree, (2) that Australia is living wildly beyond its means because of outrageous extravagance in welfare, health and education, and (3) that the ‘productive’ sector is crippled by taxes and debt.  There is a fourth myth behind all this – that the ruinous reality was covered up until the election and kept secret from everybody, including the international agencies who praised Australia’s recovery from the GFC, and even the editorial writer of the Australian Financial Review who as recently as 4 May wrote sensibly about the tasks and challenges facing ‘one of the world’s strongest economies’.

    The Daily Telegraph on 1 May itself illustrates the hypocrisy in its page 3 story headed “Hey Joe, cut here instead of taxing us”. If any of the myths were true, why then did Abbott go into the campaign with his parental leave promise, when Labor’s fratricide had already guaranteed a huge coalition win? Since the election, the News Ltd commentators have portrayed the National Disability Scheme and Gonski on education as two glaring examples of Labor’s ‘mad’ excesses. In order to prevent these becoming election issues, Abbott signed up to them, while persisting with his parental leave proposal. Yet, the Daily Telegraph’s own list of cuts Joe should make costs NDIS at $1.563 billion in 2016-17 and Gonski at $1.120 billion in 2016-17. But the Abbott paid parental leave would cost, on the Daily Telegraph’s figures, $5.684 billion in 2016-17 – more than twice the NDIS and Gonski combined.

    Of course you can do anything with figures. All these supposedly horrific projections are being bandied about without any context.  What does it actually mean to predict that programs inherited from Labor would cost an extra $700 billion in 2050?  The Federal Budget reached an astronomical 100 million pounds ($200 million) in 1939.  Fighting the Second World War cost us a shocking one million pounds a day and today we are the children and grandchildren presumably burdened by Curtin and Chifley’s extravagance.  By 1961 Arthur Calwell nearly won the election by calling for a deficit of 100 million pounds to end the intolerable unemployment level of less than 3%. Menzies denounced it as ‘wildly inflationary’ and ‘grossly irresponsible’.  When he survived by one seat, Menzies promptly announced new spending measures costing 100 million pounds – the nominal figure for the entire Federal Budget barely thirty years previously!

    The timing, circumstances and political intentions of the Shepherd Audit are guaranteed to nullify any objective economic merits it may have. Instead of a serious examination of the role of government in modern economies, it will be seen as a more sophisticated and therefore more menacing Australian version of the American Tea Party agenda.  How far Hockey’s budget will follow News Ltd instructions and the Shepherd Audit Remains to be seen. But for years the Audit will stand as a blue-print for right wing aspirations for Australia – a kind of ‘black light on the hill’. If Labor can’t unite against this, around the development of new programs for growth and fair shares, and in defence of its fundamental achievements in health, welfare (including superannuation) and education, it won’t deserve to survive as the chief standard bearer of the progressive, liberal and egalitarian cause in Australia.

     

    Graham Freudenberg AM (born 1934) is an Australian author and political speechwriter who worked in the Australian Labor Party for over forty years. He has written over a thousand speeches for several leaders of the Australian Labor Party at the NSW state and the federal level. These have included Arthur Calwell, Gough Whitlam, Bob Hawke, Neville Wran, Barrie Unsworth, Bob Carr and Simon Crean.  In 1990 he was appointed a Member of the Order of Australia in recognition of his service to journalism, to parliament and to politics.  In 2005 he was inducted as a life member of the NSW ALP.

    He is the author of four books to date:  A Certain Grandeur – Gough Whitlam in Politics, Penguin 1977;  A Cause for Power – the Centenary History of the NSW Labor Party, Australian Labor Party, 1991;  A Figure of Speech (autobiography), John Wiley & Sons Australia, 2005; and Churchill and Australia, Pan Macmillan, 2008.  

  • Michael Kelly SJ. Why Protestants are more popular than Catholics in China

    Questions abound over the recent vicious actions of the Chinese government towards Christians in the prosperous Zhejiang Province just south of Shanghai. The actions of the government during the fortnight after Easter against both Protestants and Catholics are unprecedented in recent decades and, justifiably, have received world attention.

    As with all actions in a country as vast as China, whose government could never be accused of transparency, it is difficult to discover who is making the decisions and what they hope to achieve. But one issue that has surprised many people outside China is both the size of its Christian population and the ruthlessness, born only of fear, that the government’s violence displays.

    A recent claim by a US-based Chinese academic to London’s Telegraph newspaper – that China would have the largest Christian population in the world by 2030 – was not only exaggerated but also factually wrong. Will Brazil (200 million Christians) and Nigeria (85 million Christians), for example, simply stop producing Christians in the next 15 years?

    The reality is that no one knows how many Christians there are in China. In fact, there’s good reason why Christians do not declare their growth. Just look at what’s happened in Zhejiang in the last fortnight, where the growth of the Christian community has been declared “unsustainable” by the authorities who have command of assessments of the “sustainability” of faith communities.

    Put your head up as a Christian in China and it will be cut off. Catholics have maintained a standard figure for their own numbers for three decades. It was 12 million in 1980, 12 million in 1990, 12 million in 2000 and – surprise, surprise – it was 12 million in 2010. No one in any religion declares real figures in China. It only attracts government attention and then persecution.

    That there is a massive growth spurt among Christians in China is indisputable. What has not been addressed is what has made the exponential growth among Protestants possible, far outstripping the growth among Catholics.

    But it’s not something the officials know anything about because they have such a rudimentary and uninformed view of what Christianity is that they are the last to know what’s happening. For example, only the Chinese government thinks that Protestants and Catholics are separate religions.

    They are two of the five it recognizes along with Buddhism, Islam and its homegrown religion, Daoism. No one else in the world thinks Protestants and Catholics are anything but parts of Christianity.

    Whatever one is to make of the uninformed view that the Chinese authorities have, Protestant Christianity is growing far more quickly and extensively than Catholicism. Why?

    Maybe the Chinese authorities have something to tell us. After Mao Zedong’s victory in 1949, China was established along lines that the Communists learned about from their then friends, the Soviet Union, and the real maker of 20th Century Communism, Vladimir Lenin, the founder and first father of the Soviet Union.

    The Chinese Government manages religious groups through the Religious Affairs Bureau, a department of the Communist Party’s United Front organization for controlling the country’s disparate movements, groups and institutions such as Protestants and Catholics.

    The Catholic Church in China, divided as it remains, is caught: its strength is its weakness. Everywhere in the world and with local variations in China, its universality (with an accepted pattern of worldwide relationships), its institutions (parishes, seminaries, welfare services, publishing houses), its statuses (clergy and religious) and its ceremonies (the sacraments) are visible and remain the continuous and coherent identifications that draw or repel membership and participation.

    In a Communist country, they are an easy target for a Leninist administration intent on detailed control. And then, when some comply with government structures while other Catholics see those acting in such a way as cowardly and cooperating with the enemy, many form the view that rather than complicate their lives, they leave the established and regulated Church well alone.

    The same applied to Protestant denominations and was institutionalized through the three self- movements (self–government, self–financing and self-propagation; or no foreign missioners). This approach run through the United Front’s Religious Affairs Bureau captured the attention and controlled the practices of Protestant Christians throughout the People’s Republic.

    But the recent explosion in Protestant Christian numbers has happened outside this rubric. Most of the buildings, churches and Christian gathering points have been built on local initiative without government authorization. And most of the communities around the often triumphalist buildings that have been damaged or demolished in recent times in China began life as small communities of little more than a dozen people – gathering in friend’s homes outside the net of government supervision.

    Protestant Christianity, in contrast to the institution-based approach to community building familiar to Catholics, has thrived on its nimble, light-footed and adaptable response to local opportunities. In China, it has grown out of small communities sharing prayer, Bible study and videos at home or in a work place. At times, Christian businessmen and manufacturers have workplace Christian groups that form and meet for prayer and Bible study on their business premises.

    Meeting all over Eastern China in clusters of no more than 12, groups gather for what Catholics would call primary evangelization. Two-hour Bible study programs conducted over two to three months and often aided by a Chinese version of the Alpha Course provide a neat and compact way to introduce Christianity. The Alpha Course is a 12-part video series first created by an Anglican priest in London, Nicky Gumble, that has gone worldwide and has a Catholic version.

    These groups are unencumbered and unregulated by the Religious Affairs Bureau. Multiply the dozen members of these groups by thousands of such small groups in homes and work places and you reach hundreds of thousands pretty quickly. But when you get to that scale, as China has in the last 20 years, it’s not long until you need a larger, dedicated building – a church. That’s where these emergent communities have run into the brick wall of the Religious Affairs Bureau and the fear that the entire Chinese political leadership has had of any group, especially a religious one, that it can’t control.

    Fr Michael Kelly SJ is executive director of ucanews.com and is based in Bangkok.

  • John Menadue. The cost of abolishing the Mining Tax

    Just when the mining tax looks like raising some worthwhile revenue, the Coalition proposes to abolish the tax.

    The Rudd Government made a mess of the Resources Super Profits Tax (RSPT). We know from the Henry Tax Review and other commentators that such well-designed rent-based taxes are likely to be more efficient and even out the effects of volatile mineral prices. We also know that such taxes are superior to state government royalties.

    But the mining companies advertising and public relations campaign of $22 million scuttled the RSPT. For an expenditure of $22 million in lobbying and advertising the miners were saved about $60 billion in tax over the next ten years. Despite the fact that all surveys at the time showed that the majority of Australians supported the RSPT, the combination of the miners, the Coalition and the Murdoch media forced the government to give way.

    As Ross Gittins in the SMH of March 17 this year put it ‘A great opportunity was lost for our economy and our workers to benefit adequately from the exploitation of our natural endowments by mainly foreign companies [who own about 80% of the mining industry] our government has to ensure that it gets a fair wack of the economic rent these foreigners generate.’

    But having lost the critical battle over the RSPT, the government then introduced a watered-down mining tax called the Minerals Resource Rent Tax (MRRT). In its weakened political state, the Gillard government allowed the three big foreign miners, BHP (76% foreign owned), Rio Tinto (83% foreign owned) and Xstrata (100% foreign owned) to re-design the new mining tax – the MRRT – to suit their interests.

    And what happened? The miners were allowed to deduct the market value of existing assets instead of deducting the book value over five years. In this way the miners could maximise their deductions up front. That is why the mining tax has raised far less revenue than expected.

    As Ross Gittins has put it ‘Once these deductions are used up, the [mining] tax will become a big earner’. Gittins went on to say that abolishing the tax will be ‘An act of major fiscal vandalism’.

    According to the Greens, the Parliamentary Budget Office has advised. that a mining tax of 40%, as originally proposed ,on  all minerals with fixed state royalties and a change to depreciation will raise $35b over 4 years.

    It is also interesting to see the continuing strong hold which the miners have over the coalition, indeed over all major parties. There has been media speculation that the May 13 budget would abolish the diesel fuel rebate. The miners mounted strong on the government to drop any such proposal. In a letter to the government the miners said. ‘We have run the numbers on any substantial change to the rebate and the impact would be profound. Most likely far greater than any MRRT and probably a little less than the first mining tax”. So the miners win again. The fuel rebate will be unchanged. Persons with disability, pensioners, the unemployed and the sick will not have such luck.

    See below polling which shows strong public support for mining taxes.

    (See my blogs of October 17, 2013 ‘Short-sighted miners …’ and February 18, 2014 ‘The squandered mining boom’.)

     Public attitudes towards mining taxes from Essential Research

    Re RSPT

    • In May 2010, 52% approved higher taxes on the profits of large mining companies and 34% disapproved.
    • In the same month, 43% said they supported the RSPT and 36% opposed.

    Re MRRT

    • In November 2011, 50% approved the tax and 28% disapproved.
    • In April 2012, 56% approved the tax and 28% disapproved.

     

     

  • Walter Hamilton. Yasukuni Shrine and why it matters.

    Yasukuni–Japan’s Patriotic Lightning Rod

    The Shinto shrine known as Yasukuni sprawls over ten hectares in the centre of Tokyo near the northern edge of the Imperial Palace grounds. Here are enshrined 2.47 million ‘deities’––the spirits of Japanese military personnel and civilians on war service from conflicts going back to 1853, including around 1,000 convicted war criminals. To its critics, Yasukuni is a bastion of historical revisionism, which denies that Japan waged a war of aggression between 1937 and 1945. Visits to the shrine by senior members of the government are an ongoing source of friction with China and South Korea.

    Australia has the War Memorial in Canberra; the United States has Arlington National Cemetery. Indeed every country raises monuments to remember and honour their war dead. What’s different about Yasukuni Shrine? Why the controversy?

    Yasukuni is not a cemetery, nor is it a secular monument. It is a religious institution. Prior to 1945, the shrine was a special organ of the state under the jurisdiction of the Army, Navy and Home Ministries. As ‘ritualist-in-chief’ of the Shinto religion, the god-Emperor had the final say on who could or could not be enshrined at Yasukuni. Shintoism furnished the mythologies that underpinned Emperor-worship in totalitarian Japan, such that soldiers and sailors embarking for the front, and fully expecting to die for the Emperor, would pledge to ‘meet again at Yasukuni’.

    Between 1945 and 1952, the Allied Powers set about dismantling the apparatus of Japanese militarism. The nation’s top civilian and military leaders were put on trial in Tokyo by an international tribunal (the Australian judge Sir William Webb serving as president of the court) for war crimes, crimes against humanity and/or ‘crimes against peace’ (the so-called Class ‘A’ category), which was defined as the ‘planning, preparation, initiation or waging wars of aggression’, or conspiracy to do so. Seven of these high-profile defendants were executed, including wartime leader General Hideki Tojo. Two died during the proceedings; one was declared insane; sixteen were sentenced to life imprisonment; and two others were given shorter prison terms.

    Another forty-two accused Class ‘A’ war criminals, including Nobusuke Kishi, future prime minister and grandfather of Japan’s present leader Shinzo Abe, were arrested but released without trial. After recovering its sovereignty in 1952, Japan began to reverse certain reforms of the Allied Occupation, and by 1958 all war criminals had been released from jail and politically rehabilitated.

    Yasukuni Shrine became a private religious institution in September 1946, in accordance with the principle of the separation of church and state, soon to be enshrined in Japan’s new constitution. Ten years later, however, contrary to this principle, the Ministry of Health and Welfare and Yasukuni Shrine began ‘administrative co-operation on enshrinement’, the process by which individuals were selected as kami or deities. A start was made in 1959 on the enshrinement of Class ‘B’ and ‘C’ war criminals (convicted of mistreatment of prisoners, murder of civilians, wanton destruction and atrocities). By now Prime Minister Kishi was in office. He and other conservative leaders supported the aims of such patriotic groups as the Japan War Bereaved Families Association.

    In 1966 the Ministry of Health and Welfare approved the first group of Class ‘A’ war criminals for enshrinement, but when the list went to the shrine’s head priest Fujimaro Tsukuba no action was taken. In light of subsequent events, it seems likely that the attitude of Emperor Hirohito was crucial. Tsukuba, a former marquis, was himself a member of the Imperial Family, and for as long as he remained in charge at Yasukuni no Class ‘A’ war criminals were enshrined there.

    Tsukuba died in 1978. He was succeeded by Nagayoshi Matsudaira, a former lieutenant commander in the Imperial Navy, whose father-in-law, a vice-admiral, was tried and executed by the Dutch for war crimes (and later enshrined at Yasukuni). Within three months of Matsudaira’s taking over, fourteen deceased, Class ‘A’ war criminals were secretly enshrined at Yasukuni. While its defenders may claim that Yasukuni Shrine serves no other purpose than to console the spirits of the dead and honour their sacrifices, this sequence of events shows how personal and political motives have driven its use as an instrument of national policy. ‘Even before I made up my mind [to become head priest at Yasukuni], I argued that so-called Class-A war criminals should also be venerated, as Japan’s spiritual rehabilitation would be impossible unless we rejected the Tokyo tribunal,’ Matsudaira told a magazine in 1989, as quoted by the Mainichi Shimbun.

    According to Professor Yoshinobu Higurashi of Teikyo University (whose writings on the subject have informed this blog: See http://www.nippon.com/en/authordata/higurashi-yoshinobu/) the enshrinement of the Class ‘A’ war criminals ‘cannot be attributed simply to religious or filial impulses’. It was ‘a blatantly ideological and political act driven by an urge to justify and legitimize a highly controversial chapter in Japan’s history’.

    Even though, as a signatory of the San Francisco Peace Treaty, Japan formally agreed to the outcome of the Tokyo Trials, the nation’s conservative elite––most notably these days, Prime Minister Abe––steadfastly refuse to accept the burden of war guilt. They have a personal and public stake, through ties of blood and marriage, in overturning the verdict of history. On its English-language website, Yasukuni Shrine sets the tone by referring to ‘people who were labeled war criminals and executed after having been tried by the Allies’: in other words, victims not perpetrators. The shrine’s museum continues the narrative of denial of Japan’s atrocious wartime behaviour and, instead, strikes a note of triumphalism in its displays of armaments and trophies of battle.

    The Defense Ministry similarly promotes the idea of ‘victor’s justice’. At its compound in Tokyo where the auditorium used for the Tokyo Trials is preserved, the only reference to the court’s verdict is a display devoted to the dissenting judgement of the Indian jurist Radhabinod Pal, who would have acquitted all the accused on the basis that Japan was forced into war by hostile Western nations.

    The person best placed to know whether this dissenting view has any merit would be Emperor Hirohito. After the enshrinement of the fourteen Class ‘A’ war criminals, Emperor Hirohito made the decision never to visit Yasukuni Shrine again. No emperor has been there since. Not long before he died, according to a memorandum taken by an aide, Hirohito made clear that the two decisions were directly linked. ‘What’s on the mind of Matsudaira’s son, who is the current head priest?’ he is reported to have asked (the man’s father, Yoshitami Matsudaira, was well known to him as Imperial Household Minister during the war). ‘Matsudaira [senior] had a strong wish for peace, but the child didn’t know the parent’s heart. That’s why I have not visited the shrine since. This is my heart.’

    Having controversially escaped prosecution for his role in the war, Hirohito’s stand against the revisionists and deniers––albeit indirectly and by an act of omission––gives the lie to those, like Abe, who insist that Yasukuni can serve both as a symbol of peace and a shrine to warmongers. Could it be that Japan’s swing to the right is, as Hirohito feared, the blindness of the child who does not know the parent’s heart?

    Walter Hamilton reported from Japan for the ABC for eleven years. He is the author of Children of the Occupation: Japan’s Untold Story (NewSouth Press).

     

     

     

     

     

     

     

     

     

  • John Menadue. Taxes – public or private

    The Commission of Audit has recommended that a Medicare levy surcharge be applied to individuals earning more than $88,000 a year and $176,000 for families. This is designed to force high income earners to take out private health insurance. This is one of the most economically stupid and dangerous proposals that I have seen for a long time. The Commission of Audit foolishly thinks that this would reduce public taxes, but it would result in increased private taxes (premiums). Higher premiums are the inevitable result of increased reliance on private health insurance. This is what has brought disaster for healthcare in the US. Private healthcare premiums have gone through the roof and the US now has one of the worst and most expensive healthcare services in the world. 

    Furthermore, the Commission of Audit’s proposal would move us a long way towards a two-tier health system, with a high quality and very expensive healthcare service for the rich and a welfare type health service for the poor. It strikes at the heart of social solidarity and social cohesion which is essential in a good society. It would end Medicare as we know it, a high quality service available to all regardless of income.

    Below I have reposted an article of 1 February about the fallacy of assuming that public taxes are bad but private taxes (premiums) are good.

     

    It has become commonplace for opponents of government and the public sector to suggest that functions like health care and broadcasting should be moved from the public sector to the private sector in order to reduce taxes. They usually add in that the private sector is also much more efficient in performing such functions.

    There are good social and economic reasons why certain functions should remain in the public sector – defence, education and health. But there is also a great fallacy that somehow public taxes are bad and private taxes/premiums are fine.

    Let me give you two examples.

    The private health insurance industry claims that Medicare is unsustainable and that more people should take up private health insurance to reduce the demands on the public health system. The suggestion is that by doing so, governments will not have to keep increasing taxes to fund public health. But there is a fundamental error in this argument. Private health insurance (PHI) has been raising its premiums at an alarming rate and much faster than Medicare through taxation. The PHI premiums are really the same as taxes that finance Medicare, except that one is public and the other is private.

    Since 1999, when rebates for PHI were introduced, the average PHI premium (private tax) has increased 130% whilst overall prices have increased by less than 50%. These private taxes or premiums are rising dramatically for a whole range of reasons that I set out in my blog of December 26 – ‘Health insurance – here we go again’.

    The other important reason for these high private taxes/premiums by PHI is that their administrative costs, including profits, run at about 15% to 16% of total costs. For Medicare, including the cost of tax collection, administrative costs are about 6% of total costs. So with the administrative costs of PHI about three times those of Medicare it is not unreasonable to conclude that the public gets far better value for money in its taxes paid to finance Medicare than paying premiums/private taxes to PHI. Expanding the role of PHI would greatly increase the level of these private taxes. The fact that they are private taxes misses the point. They are taxes on the consumer just the same as public taxes.

    The experience of the US should also warn us about private health insurance premiums/taxes. In the US, healthcare expenditure is over 18% of GDP. It is the highest in the world. In Australia it is about 9% to 10% of GDP, as is the case for most comparable countries that have a single public insurer like Medicare. Of the 18% costs in the US( as a proportion of GDP), about 9% is due to private insurance. Private health insurance in the US has been unable to control price demands by private doctors and private hospitals. If in theory the US had a single public insurer and followed the example of other single public insurer countries like Australia, the US could reduce its health expenditure by 9% of GDP. In such a situation the 9% of GDP paid to private health insurance funds would be unnecessary. If those premiums to private insurance were then redirected into public revenue, the US budget deficit of 7% of GDP would be eliminated. I said this was theoretical and there are clearly enormous political difficulties for President Obama to wind back the mess that private health insurance has wrought. But the figures do illustrate that the US would be better off with a robust public insurer funded by taxes rather than by the grossly unfair and inefficient privatised taxes that private health insurance imposes on the community. The US experience shows quite conclusively that shifting insurance out of the government and into private health insurance would be a disaster for everyone. To finance health care through the private taxes or premiums of PHI would result in much higher imposts on the public, than paying for health care through public taxes.

    The other example of privatised taxes is illustrated in the case that is often made against the ABC and other public broadcasters that are funded by taxes or special licence fees. Yet the critics of public broadcasting like Murdoch impose their own taxes – what is in effect a sales tax on products that are advertised in the commercial media. In my blog of December 19 ‘Murdoch and Abbott and the ABC’, I drew attention to the argument by Ian McAuley about the high cost of these privatised taxes. He said ‘We are paying about $1,500 per year per household for advertising, of which $500 is for commercial TV and radio… By contrast we are paying about $120 per year for the ABC’. Commercial media collects “taxes”, but it is called ‘advertising revenue’. This revenue is a cost to the advertiser and is loaded into the costs of the products when we purchase a car or holiday travel.

    The private sector has its own forms of taxation. Just by shifting functions from the public to the private sector, does not necessarily reduce what we have to pay out of our own pockets. In many cases public taxes are much more efficient and serve a much more desirable social objective than privatized taxes

  • John Menadue. The Commission of Audit and facing the wrong way.

    Tony Abbott and Joe Hockey have been leaking confusing stories in the lead-up to the budget. A consistent theme however is that they must take tough action because of all the problems left by the previous government. They also need to justify the exaggerated rhetoric they used during the election campaign. A lot of it is confected.

    The Commission of Audit will add to the confusion in focussing on expenditure when the main problem is declining revenue. The neglected Henry review of taxation will be a better guide for the future than an ideological and partisan Commission of Audit

    In all this media static, I think there are several key issues that we need to keep in mind.

    • We do have a long-term structural budget deficit of about $60 billion per annum in current prices. That needs fixing. A lot of this structural deficit can be attributed to the policies of the Howard and Costello governments. During their tenure, we frittered away the large government revenue gains from the mining boom. We had one tax reduction after another. We should have been repairing the budget rather than reducing taxes. The IMF is quite clear that the Howard Costello governments must bear the major responsibility for the structural deficit. The Rudd/Gillard governments took some action but clearly not enough to address this structural budget problem. During the global financial crisis, the Rudd government increased spending and was successful in helping steer our way through a threatening world recession. Unfortunately the Rudd/Gillard governments ignored the report of Ken Henry about the need to reform our taxation system.
    • The structural deficit is caused mainly by a shortfall in revenue rather than a surge in spending. Our tax as a percentage of GDP has fallen steadily since 2002 from 30% to 28%. This is well below the OECD average of 34%. We need to give priority to fixing our revenue base which was what the Henry Review was largely about. Reducing tax deductions for superannuation, which benefit mainly the wealthy would be a good way to start.
    • We do not have a growing public sector. Our budget outlays have been trending downwards since the mid-1980s. We do need to further means test our welfare spending but compared with other OECD countries we have a more efficient and equitable welfare system than most. The Commission of Audit will be focussing on spending when the real problem is we need to focus on revenue. The Commission  is likely to face us in the wrong direction
    • Our overseas debt is increasing but it is very low compared with most other countries. Our overseas debt as a proportion of GDP is one of the lowest in the OECD. Our government debt is around 20% of GDP. For Canada it is 89%,France 94%,Germany 78%,japan 227%,Norway 29%,Singapore 104%,ROK 34%,UK 91% and US 102% As the CEO of the National Bank, Cameron Clyne, put it several months ago “Australia does have a debt problem. We don’t have enough of it. We have a lazy balance sheet. We are a AAA economy. We are having a very immature debate about debt.”
    • We must avoid the drastic action taken in Europe to reduce budget deficits where the consequences were disastrous for many governments and a lot of people. The fetish and obsession with deficits tipped many European countries into recession. There was low growth and record unemployment particularly amongst the young. This drastic action in Europe on deficits helped spawn ultra-rightist and anti-immigration political parties. We must learn from the European experience and not over-react in getting our budget deficit back under control.
    • This month the IMF told us that we face a period of sustained and lower growth. The Australian economy is struggling to grow at a sufficient rate to avoid significant increases in unemployment. Youth unemployment is now over 20% and growing rapidly. Joe Hockey should not go too hard in his first budget to reduce spending, despite the exaggerated and windy rhetoric we have had from him for many months. It is damaging consumer and business confidence. Reform has to occur but calamity is not around the corner. The Australian economy is one of the best performing in the world. In the current confused debate which has been triggered by Tony Abbott and Joe Hockey one would think that we faced dire problems. We don’t and we should be careful not to worsen the situation.

    The most worrying prospect is that the government looks like believing its exaggerated political rhetoric about debt and deficits.

    I have outlined in my blog of February 4 ’Do our governments spend too much or do they raise too little in taxation?’ further arguments to support the above case. This blog, which I have reposted below summarises the submission which Jennifer Doggett, Ian McAuley and I made to the Commission of Audit.

     

  • John Menadue. Do our governments spend too much or do they raise too little in taxation?

    This a repost and provides a summary of the submission that Ian McAuley, Jennifer Doggett and I made to the Commission of Audit.  John Menadue

    The Minister for Health, Peter Dutton, has said that we must reduce waste and cut costs in health. (I responded to this in my blog on 3 February “Cutting waste and costs in health”).

    The Minister for Social Services, Kevin Andrews, has said that our welfare system is ‘not sustainable’ and that we are headed down the high cost welfare path of European countries. (The ABC examined this assertion and found that it was incorrect. It found that ‘There is nothing to indicate that as the population ages, Australia is headed towards the big welfare spending of some European countries. Treasury projections to 2050 show welfare spending as a proportion of our GDP will remain steady over the next three decades. www.abc.net.au/news/2014-02-03/kevin-andrews–makes-unfounded-welfare-claims.)

    The Treasurer, Joe Hockey has said that ‘The days of entitlement are over and the age of personal responsibility has begun’. This has been interpreted by some as suggesting that government welfare and other entitlements should be reduced.

    In a submission to the Senate Select Committee into the Abbott Government’s Commission of Audit, Jennifer Doggett, Ian McAuley and I contend that the problem is not that government expenditures or that the public sector is large in Australia compared with other countries. We contend that the problem is a short-fall of revenue and that on international comparison, our tax revenues are low.

    In our summary to the Committee we say …

    The Commission of Audit’s brief is based on assumptions that Australia is burdened with “big government” and that taxes are an impediment to business investment and workforce participation.

    There is no evidence for either assumption. The trend in Commonwealth expenditure has been downwards since the mid 1980s, falling from a peak of around 28 percent of GDP to a range of 24 to 26 percent of GDP in recent years. In comparison with similar prosperous countries Australia has one of the smallest public sectors.

    The problem a body such as the Commission should address is our inadequate tax base, which is the main reason the Commonwealth has had a structural deficit for most of this century. We aren’t collecting enough revenue to fund the public services needed if the economy is to thrive.

    We should not shy away from raising taxes. Evidence from international comparisons and from surveys on competitiveness suggests that reasonable levels of tax do not impede countries’ economic performance. In fact, countries which compete on the basis of low taxes do so to compensate for competitive weaknesses, such as inadequate infrastructure and poor standards of education – in other words impoverished public sectors.

    Such evidence, however, seems hard to convey to those gripped by a zeal to cut spending and taxes. Even in a “small government”/low-tax country like Australia it is possible to find areas where private funding and provision of services can displace public funding and provision.

    But such displacement is usually at high economic cost, simply to achieve an arbitrary fiscal objective. There is no point in reducing taxes if the private costs are greater than the saving in taxes, with no improvement (and in many cases a deterioration) in the services provided. We illustrate this in the case of health care funding. This is an area of significant public outlay and where, because of ongoing growth in demand, there are voices – often the voices of self-interest – calling for a shift from public to private insurance. Such a shift would be costly on all economic criteria – technical efficiency, allocative efficiency and equity.

    The rushed and secretive processes of the Commission are not the path to good public policy. There may be areas where a change in the public/private mix is justified on economic grounds, but these are not one-way towards the private sector as implied in the Commission’s brief. Because we already have a small public sector it is likely that a proper process, with research and consultation, would find a need for a net expansion of Australia’s public sector. By shutting off that possibility those who drafted the Commission’s brief are imposing a constraint which may be contrary to the community’s wishes and sound economics.

    The full submission to the Senate Select Committee can be found by going to my website. Click on ‘John Menadue Web Site’ top left of this blog page.

  • Ian McAuley- Picketty and the gap between rich and poor. Inequality of wealth is the problem rather than the inequality of income.

    The Observer/Guardian carried a recent story/review about Thomas Picketty’s address to the Institute of New Economic Thinking in Toronto. The story was headed “Capitalism simply isn’t working and here are the reasons why” The story draws also  on a recently published book by the French economist Picketty  “Capital in the 21st Century” The newspaper story  asserted “You have to go back to the 1970’s and Milton Friedman for a single economist to have such an impact (as Picketty)”

    The Financial Times labelled Picketty a “rock star economist”. Paul Krugman in the New York Review of Books described Picketty’s book as “awesome” and that it was transforming economic discourse. “We will never talk about wealth and inequality the same way we used to” he said.

    In this blog Ian McAuley outlines Picketty’s thesis that an apparent small gap between the return on capital and the rate of growth can in the long run have powerful and destabilising effects on the structure and dynamics of social inequality.   John Menadue

    Like Marx, Picketty recognizes the consequences of an excessive concentration of wealth – loss of markets, eventual diminution of profit, and social conflict leading to revolution.  His prescriptions, however, for a progressive tax on wealth, are within the field of orthodox capitalist economics.

    He presents convincing evidence that the compression in incomes in the mid-20th century was a unique event. The natural tendency of market capitalism is for concentration of wealth, particularly when there is low economic growth and a high return on capital.  (High growth reduces the relative power of established wealth.)  A tax on wealth has immediate and minor redistributive benefits, but that’s not its purpose, which is to dampen the positive feedback loop of concentration of capital, because a tax on capital reduces its effective return and therefore weakens the positive (self-reinforcing) feedback of an exponential concentration of wealth.

    Picketty puts the unique compression in the mid-20th century down to the events of 1914 to 1950 – an intermittent but destructive war, a depression, and post-war inflation, which combined to wipe out a lot of physical and financial wealth in both the victorious and defeated countries.  The expanding inequalities we are now seeing is simply a return to the natural dynamics of market capitalism.

    His fundamental thesis, I think, does a lot to explain Australia’s history.  We hardly get a mention, but he does point out how the rapid economic growth of the New World (mainly the USA in his examples) made for egalitarianism.  I would like to see his thought on why the same high growth did not make for egalitarianism in Argentina in 100 years ago, or in the Middle East 40 years ago.

    While I find his analysis convincing, I think he attributes too much to war, depression and inflation wiping out wealth as the sole causes of the compression of incomes.  I had the good fortune to be at Harvard when the last of Roosevelt’s liberals were still around – Ray Vernon, Tom Schelling, and JK Galbraith – and they saw the post-war liberalism as a result of deliberate policy, played out domestically in the New Deal and internationally in the Bretton Woods arrangements.  Another strong view, certainly influential to the Hawke and Keating Governments, was that the post-war rise of Germany and Japan, while helped by US anti-Soviet policy, was also helped by the war’s destruction of “distributive coalitions” – groups of rent-seekers blocking economic modernization.

    Picketty is dismissive of human capital theory.  He doesn’t deny its existence (as Marx and Ricardo did), but he thinks its role is overstated.  While he celebrates mass education, he does point out that it has not done much to help distribution – we have simply all moved up a notch or two, and there is something of an arms race at the top.  But he does present strong evidence that high university fees (particularly in the USA) work against intergenerational mobility.

    I find his single prescription somewhat limiting. War, depression and inflation do wipe out wealth, but so too do other disruptions re-allocate wealth.  Galbraith, for example, saw the Australian gold rush as a great social re-distributor (not a leveller, however). New technologies do the same.  In this regard I find the policies of the current Australian Government, in opposing the disruptive technologies of the NBN and renewable energy, as an attempt to freeze an industrial structure to preserve and strengthen the privileges of existing wealth-holders.  Also their policies on superannuation and tax are highly regressive at the top end, and we have a migration program which gives almost free entry to anyone with enough money, regardless of the means by which it was accumulated.  Whether this policy is crony capitalism or a misguided application of Reagan’s “supply-side” economics, the consequences are the same – there is a concentration of wealth and an erosion of meritocracy.

    Picketty’s greatest contribution is in looking beyond income distribution as an indicator of inequality.  (I, for one, have been very critical of the Australian “left” for its narrow focus on income while overlooking wealth.) He looks at the sources of income, and distinguishes between income from labour (which can go up to very high levels of course) and income from wealth.  On the way through he looks at the salaries of “supermanagers”, and points out (as many other researchers do) that their salaries have nothing to do with contribution and that they essentially set their own salaries in a self-referential process.

    But his greatest concern is with the top one percent with incomes greater than $350,000 and whose income comes from wealth.  It is at this level, particularly in the USA, where the bulk of inequality arises – they are taking a huge proportion of the proceeds of economic growth, and damaging any sense of legitimacy in the economic system.  In fact, he points out, the very rich enjoy a certain economy of scale – their return on investment is much higher than is available to lesser mortals with only five or six figure amounts to invest.  Hence their positive feedback cycle is strengthened.  He also points out that the moderately well-off, “petite rentiers”, do very well, while a large proportion of the population has no wealth or negligible wealth.  We, the petite rentiers, should pay more tax – in fact redistribution from the top 20 percentile will be more effective in terms of immediate redistribution than simply taxing the very rich – but it’s hard to convince us when we see the very rich getting off so lightly.

    His main concern is with the very rich, who are on the way to establish an economic and social order, an oligarchy with inherited privilege, similar to that which existed in Europe in the early nineteenth century – an order which Marx correctly saw as unsustainable.  He does not speculate much on our political reaction – perhaps, rather than a revolution, it will be a retreat to protectionism and dirigiste politics.

    Reading his book I have come to ask, in relation to the 2008 crisis, “what would Keating have done?”  Keating, the fellow who talked about the recession “we had to have”.  Perhaps we have been too generous with counter-cyclical levers, thereby accumulating moral hazard in economic systems, while spending a lot of our fiscal ammunition.  To reconstruct a right wing metaphor, a hurricane damages all boats, but the damage to a 4 meter tinnie is easier to rectify than the damage to a 30 meter cabin cruiser.  Can we achieve a destructive re-distribution without the sort of damage that occurred in the 1930s?  My view, taken in part from my time working for the Hawke-Keating Government, and in part from the teaching of Ron Heifetz, is that a task of government is to manage disruption – to steer a policy path between complacency where rent-seekers throttle economic progress as seems likely under Abbott and distress, where the pace of change leads to backlash as occurred under Whitlam..

    It’s a rich work of 700 pages.  If you do buy or borrow it, I suggest you read the first two chapters and the four chapters in part 4.   But be patient. The book is sold out almost everywhere.

     

     

     

  • John Menadue. AMP excess and dud products.

    I have posted several blogs on how powerful insiders bend governments to their will. Just think of the power of the polluter lobby, the mining lobby, the health lobby, the gambling lobby and the hotel lobby.

    But the superannuation lobby is probably the most powerful and the most lucrative gravy-train of all. The superannuation industry receives over $32 billion subsidy each year through ‘tax expenditures’ or what we normally call ‘deductions’. In addition there is the tax-free superannuation income for those over 60, like me. In addition to these enormous subsidies to boost the superannuation industry, federal governments require that 9% of employee incomes must be put into superannuation. Not content with these enormous benefits the four banks and the AMP have been lobbying the government and particularly Senator Sinodinis to bury any attempts to outlaw conflicts on interests by financial advisers. Typically this conflict of interest occurs when the financial adviser also supplies the product, as is the case with the four banks and the AMP. But the superannuation industry, and particularly the retail funds, overplayed their hand and the Future of Financial Advice (FOFA) “reforms” under the guise of reducing red tape have been deferred.

    But not the AMP. In the SMH on 26 April, Michael West tears the veil from the superannuation junkets which the AMP runs to promote its products. The AMP arranged a ‘professional development conference’ in the Bosporus last week. Michael West put it quite colourfully.

    ‘In the footsteps of the Romans and the Ottoman Turks centuries before them, the hordes of AMP descended on the jewel of the Bosporus last week. Some 400 of them; the crème de la crème of AMP’s financial planners, and a host of advisers from Hillross, too, also owned by AMP. In contrast to the Romans who decided to build their empire’s new capital Constantinople there in 330 and the Turks whose troops overran the city in 1453, the throng from 50 Bridge Street(AMP head office in Sydney) descended on the ancient metropolis in planes. In the company of their spouses they overran Istanbul in five star opulence. Unlike the Emperor Constantine and Sultan Mehmed II, AMP and its grand vizier of financial services, Steve Helmich, did not underwrite their Ottoman odyssey from the fruits of empire. It was bankrolled by the ransacking of a mandatory superannuation system. Our latter-day sultans of superannuation have breezily lavished a $20 million junket on their sales force and themselves to boot. Before this year’s Byzantium bash, the AMP held its ‘conference’ in Dublin, South Africa, Amsterdam, Colorado and Buenos Aires. … Surely financial planning should be about the adviser using best endeavours to maximise the wealth of the client.  … . If this was really about education, rather than reward for flogging AMP product, and an enticement to flog more, we solemnly promise to eat our fez. … Let superannuants ponder no more that a third of their life savings can vanish in poorly disclosed fees and commissions. Their advisers are swanning around the grand bazaar like Suleiman the Magnificent, sauntering through the Blue Mosque before a spot of shopping in the ritzy boutiques of Nisantasi.’

    The bottle of Grange Hermitage which Barry O’Farrell received from a financial and Liberal Party lobbyist was nothing compared with this orgy and excess by the AMP in the name of ‘professional development’. Or as Michael put it “the ransacking of the mandatory superannuation system”

    I must confess I have more than a public policy interest in this extravagance by the AMP. I have a personal interest as well.

    About ten years ago my adviser recommended I invest about $55,000 of my super funds in a product called ‘AMP Capital Enhanced Yield Fund’. It turned out to be a dud investment, although small scale dud compared with the cost of dud investments like in Opes Prime and West Point and financial planners like Storm Financial.

    In 2008/9, during the Global Financial Crisis the AMP Capital Enhanced Yield Fund decided to limit redemptions. For over five years since then I have been attempting to redeem this investment. Capital loss has been considerable and the income return has been minimal. Over five years I have received small redemptions in dribs and drabs.

    With this locked or suspended fund, I received regular advice that ‘managed funds [like AMP Capital Enhanced Yield Fund] are suspended …Please be aware that there is no guarantee that the suspended fund will start processing transactions in the future.’

    It is not as if the AMP has been struggling over the long period that my investment has been locked. In the years 2009 to 2013 AMP has made annual profits after tax of $739m, $775m, $759m, $689m and $672m. In 2009, when my investment was locked, Craig Dunn, the CEO of AMP had a 30% pay rise. His total remuneration in 2012 was $3.157 million. Craig Meller, Managing Director of AMP Financial Services had a salary package of $1.917 million per annum. Stephen Dunne, Managing Director of AMP Capital had a salary of $2.133 million p.a.

    I have no doubt that AMP acted legally in respect of my foolish investment in a dud product, but have they any shame in the way they continue to pay their executives, or any sense of moral culpability. The payment of these excessive salaries to senior executives is quite consistent with the behaviour of the AMP in splurging $20 million to indulge the sellers of their new products. It’s all about new products. Forget about the dud products they have sold in the past.

    But some might say that the government has now set up a Financial System Inquiry to sort all this out. But we should not hold our breath. There is no indication from what I have seen that the issue of vertical integration, which allows the four banks and AMP to rip off customers through their conflict of interest, is in the terms of reference of the FSI. Furthermore Craig Dunn, the former CEO of AMP who received that remuneration package of over $3 million per annum, is a member of the FSI panel. All the panel members are from the finance sector .The public or consumer interest is not to be found. The insiders are in charge.

    Can the victims of dud superannuation products look forward to all-expenses paid “professional development conference” next year in Constantinople or some other attractive luxury tourist destination?

     

  • Walter Hamilton. Anti-climax in Tokyo

    Three words for Shinzo Abe––and for history. Three words: ‘…including Senkaku islands’ (was Obama’s omission of the definite article ‘the’, one wonders, part of a subconscious hesitation?). Thus a US president for the first time explicitly committed his country to defend Japan if it should come to blows with China in their territorial dispute.

    Barack Obama affirmed that the islands were covered by Article V of the Japan-US Security Treaty which states: ‘Each Party recognizes that an armed attack against either Party in the territories under the administration of Japan would be dangerous to its own peace and safety and declares that it would act to meet the common danger in accordance with its constitutional provisions and processes.’

    While no different from the position enunciated previously by other members of his administration, in its language and setting––a joint news conference with Abe standing alongside him during a state visit to Japan––Obama’s endorsement of the status quo in the East China Sea was significant. It is exactly what Abe wanted to hear, after months of anguished commentary in the Japanese media suggesting the US might be turning into a fair weather ally. But the comparatively muted official response from China is also interesting: a sign that Beijing heard the president when he said he was not stating a new position. The words might be on the record, but was there is any greater will behind them?

    A visit by a US president to Japan as a state guest (the most elaborate form of diplomatic visitation) is uncommon. The last one was 16 years ago. Reportedly the Americans took some persuading to set aside the minimum three days required. Such occasions can serve to elevate a bilateral relationship to a new level, and they can draw attention to areas of disagreement as well as agreement. On the territorial dispute, for instance, the main focus was on the US commitment to fight alongside Japan. Obama, however, also stressed the importance of ‘dialogue’ to resolve the dispute, and avoiding ‘escalation’, which implicitly binds Japan to keep its power dry.

    As for the other big-ticket item on the agenda, trade liberalisation, Japan had hoped the impetus of a state visit would deliver an agreement. The strategy came up well short. Instead of sweetness and light, the impression gained in Tokyo was that the Americans were intent on extracting the highest price, in economic terms, for those three choice words on security. (Having said that, insiders already knew that Obama lacked the clearance from Congress to strike a deal with Japan, and nothing less than a trade coup would allow him to presume on Congress’s approval.)

    Abe took a gamble early in his second administration when he went against the protectionists in his governing Liberal Democratic Party and led Japan into the Trans-Pacific Partnership. While trade liberalisation is necessary for his program of economic revitalisation, the disruptive risks of increased import competition, particularly in the agricultural sector, are not inconsiderable. Japan’s farming communities are the most exposed to the effects of an aging society, and there are far fewer employment alternatives in regional and rural areas than in the big cities. Farmers are a well-organised lobby group in a country where all politics is local.

    In the TPP negotiations, the Americans are seeking a better deal on beef than was recently obtained by Australia, and they want a broader agreement to include various other farm goods, automobiles and intellectual property.

    Japan’s TPP Minister, Akira Amari, is showing signs of wear and tear, admitting publically that if he were ever asked to do the job again, he would refuse. Amari and his US counterpart Michael Froman have held 25 hours of face-to-face negotiations, continuing even as Abe and Obama were tucking into their Ginza sushi––but without result. At one point it seemed Obama’s visit would end with no joint communiqué, which certainly would have left a bad taste. Officials eventually managed to cobble together a communiqué that reiterated the president’s statement on the Senkaku dispute and supported Abe’s drive to reinterpret the Japanese constitution to embrace the right of collective self-defence (hardly surprising, since this is already assumed in the bilateral security treaty quoted above). But when it came to the TPP talks, the document turned to fairy floss: ‘Today we have identified a path forward on important bilateral TPP issues. This marks a key milestone in the TPP negotiations and will inject fresh momentum into the broader talks.’ It takes some cheek just to write that down. Japanese sources claim the Americans held the communiqué hostage, delaying its release in an effort to wring extra trade concessions from Japan––if so, all that resulted was sweet talk.

    Without a substantial trade deal soon the Obama administration risks a loss of domestic support for his much touted ‘rebalance’ to Asia. Likewise some of the gloss will come off Abe’s can-do image, particularly the credibility of his claim to want to break down structural rigidities in the Japanese economy. For all the pomp and ceremony, and three-star sushi, the two nations only managed to reaffirm the old––military––basis for their relationship rather than define the new.

    For the Japanese, an unwanted byproduct of the state visit has been to draw attention in the US and elsewhere, through media commentaries and analysis, to Abe’s pivot to the right since he returned to office in 2012. Some observers are discovering this issue for the first time, while others have looked for fresh evidence from Obama’s visit with which to refine their sense of where events might be headed.

    For the first group, it is always possible to overstate the situation––it is worth reiterating that Japan is not ‘rearming’, muzzling its news media or abandoning its democratic institutions. Nevertheless there are signs of a nationalistic revival, amid a period of heightened regional tensions. Against this background, the take out from Obama’s visit, I think, is disappointing. Having gone to Tokyo, he could not have said less than he did on the territorial issue––though he might have said more, for instance, on the mechanism by which the disputing parties might enter a dialogue. He came across more like a tourist than a statesman willing and able to engage Abe on fundamentals. If President Obama once seemed to represent a fresh, inclusive and future-oriented style of leader, he brought little or nothing of that to Tokyo. Which is more the pity, since he came at a time, without doubt, when Japanese are questioning whether what has served them well for almost 70 years can see them safe and strong into the future.

    Walter Hamilton reported from Japan for the ABC for 11 years.

     

  • John Menadue. Anzac and hiding behind the valour of our military.

    For those who may have missed this. I have reposted this earlier piece about Anzac and hiding behind our heroes.  John Menadue

    There is an unfortunate and continuing pattern in our history of going to war- that the more disastrous the war the more politicians and the media hide behind the valour of service men and women. We will see this displayed again on April 25.

    The Director of the Australian War Memorial, Brendan Nelson, drew attention to this well-honed way of distorting and excusing our strategic and political mistakes. In the SMH on October 5 last year, he said ‘The more obscene the war, the more inexplicable it seems for us today, the more many [young people] admire those men and women who went in our name’. (See my blog October 11, 2013, ‘The drumbeat grows louder’.)

    It is not only young people who have been drawn into this distortion of history. Governments and the media have encouraged us to ignore the disastrous wars that we have been engaged in and learn from our mistakes. Rather than face the consequences of acknowledging those disasters, governments and the media then change the subject to the valour of our heroes. We refuse to face the fact that these heroes have often died in vain

    By any measure our involvement in the wars in Vietnam, Iraq and Afghanistan have been disastrous. So what do our governments, the Australian War Memorial and the media do? They avoid examining how we got into such disastrous wars. They do this by dwelling on the heroism of our service people. VC winners are an ideal way to change the subject from a disastrous war to an Australian hero.

    There is no doubt that they are heroic, but the wars they fought in were anything but heroic. These three wars were disastrous but we refuse to acknowledge that fact. The consequence will be that in the future we will continue to make foolish decisions about getting into war. That could occur over the dispute between Japan and China over the islands in the East-China Sea.

    In this cover up of failed policies, prime ministers, ministers, opposition leaders and the media have attended almost every ship taking Australian service personnel to or from war zones in the Middle East. I don’t think the Prime Minister and Leader of the Opposition have missed any funeral of a veteran of those wars. There was even a fly-over in Gippsland for an Australian soldier who had accidentally shot himself.

    Our involvement in WWI was disastrous in every way. We acted like a colony at the behest of England But we didn’t spend time dwelling on the catastrophe as a result of our strategic and political mistakes. That hopefully would discourage us from repeating them in the future. Instead we deluged ourselves and continue to do so in the valour of those who served and died in WWI.

    WWII was much more a war we had to fight in our own national interest and for the freedom of our region. But the recall of that war and the sacrifices of our military personnel is quite small at the Australian War Memorial compared with the coverage of WWI. We had a strong case for involvement in WWII but not WWI. Yet the coverage at the Australian War Memorial does exactly the reverse. Strategically Kokoda was more important to Australia than Gallipoli.

    In his excellent new book ‘Rupert Murdoch’ – a re-assessment” Professor  Rod Tiffen draws attention to the way that News Ltd in the UK covered its mistaken  support for  the appalling  wars in Iraq and Afghanistan . It just changed the subject. News Ltd never attempted to seriously  examine the fiction and mistaken policies which it supported and which led the UK into those wars. It changed the subject by attacking PM Gordon Brown for not looking after the veterans. Rod Tiffen put it this way.

    ‘In one of the last issues of The Sun edited by Rebekah Brooks, the front page consisted of the faces of the 207 British soldiers killed in Afghanistan, with a large headline across the middle, reading “Don’t you know there’s a bloody war on”. The strap at the top said “Message to politicians failing our heroes” … The multipage splash was accompanied by a cartoon of a wounded soldier with the caption “abandoned”.’

    Tiffen added ‘Responsible newspapers such as the Washington Post and the New York Times reflected publicly on their journalistic failings during the period [of the Iraq and Afghanistan wars]’.  

    But not News Ltd and Rupert Murdoch.

    What the Murdoch papers did in the UK is common amongst governments and media generally. They refuse to acknowledge their complicity in disastrous wars. To cover their tracks they focus on the heroism of service people.

    It is unpatriotic and cowardly to refuse to examine and publicly acknowledge decisions about going to war. That is surely the most momentous decision that any government can make. But by focusing on the story and the valour of service people, like successive Australian Prime Ministers, Rupert Murdoch and the Australian War Memorial, we are discouraged from looking honestly at our history.

    If we don’t learn from our mistakes we will keep repeating them. We must stop hiding behind our heroes.

     

  • David Stephens. Parochial commemoration of war.

    Australians are not alone in the world in being parochial but we are very good at it, especially in the way we commemorate our men and women who die in war. The Australian War Memorial is missing many opportunities to expand our commemorative horizons and put our war deaths in context.

    Under its legislation, the Memorial is ‘a national memorial of Australians who have died on or as a result of active service or as a result of any war or warlike operations in which Australians have been on active service’. The Memorial is also required to research and publicise ‘Australian military history’, defined as ‘the history of (a) wars and warlike operations in which Australians have been on active service, including the events leading up to, and the aftermath of, such wars and warlike operations, and (b) the Defence Force’.

    The Act is not, however, the last word on how the Memorial does its work. The Memorial has given itself a ‘purpose’ clause which puts a gloss on the Act by using the debatable word ‘sacrifice’ to describe deaths in war. Then, there is a ‘mission’ clause in which the ambit is not ‘Australian military history’ as defined in the Act but the narrower field of ‘the Australian experience of war and its enduring impact on Australian society ’. (The history of wars in which Australians have been involved on one ‘side’ is clearly a broader canvass than the Australian experience of those wars.)

    This narrowed focus allows the Memorial to target ‘Australian experience’ down to the most trivial level while ignoring events that did not involve Australians. The Memorial’s #OnThisDay ‘tweets’ are a microcosm of this phenomenon. On 19 March this year, the Memorial tweeted that on that day in 1916 one British general, Sir Archibald Murray, replaced another British general, Sir John Maxwell, in charge of the King’s armies (including Australians) in Egypt. Yet, on the same day, 19 March, in 1945, 800 US sailors were killed when the USS Franklin was attacked by the Japanese. The latter event was ignored by the Memorial’s ‘tweeters’.

    Not all of the Memorial’s tweets display such clanging incongruity. Nevertheless, the ‘rules of engagement’ at the Memorial mean that any ‘Australian experience’ trumps any ‘non-Australian experience’, even where the latter occurs within a war ‘in which Australians have been on active service’ or where there are many allied deaths, as with the bombing of the Franklin. The Memorial’s exhibitions are a credit to their curators but they have a relentlessly parochial focus. Currently or recently there have been [Australian] ANZAC Voices, Australia Under Attack 1942-1943, Remember Me: The Lost [Australian] Diggers of Vignancourt, [Australian] Rats of Tobruk, 1941, Afghanistan: The Australian Story, and so on.

    The Memorial website’s search function provides a crude measure of the Memorial’s areas of interest. ‘Gallipoli’ throws up 885 references to articles, 1064 to books, and 12 713 to collections, including 7639 photographs. ‘Holocaust’, on the other hand, scores 20 articles, 78 books and 23 items in collections. No-one outside Australia would have any doubt as to which of those two events – both part of the history of wars ‘in which Australians have been on active service’ – says more about the experience of war and of the human condition but the Memorial’s ‘Made in Australia’ lens forces these bizarre results.

    On a smaller scale than the Holocaust, ‘Breslau’ (40 000 ethnic German civilians dead in the first four months of 1945 while the Russian Red Army besieged the city) provides one article (about ‘the Red Baron’, who was born there), nine books and 39 items in collections. Okinawa (100 000 civilians died there in 1945) tallies five, 18 and 123. Neither event was part of ‘the Australian experience’ so both are virtually ignored.

    The wars and conflicts of the twentieth century killed an estimated 231 million people, perhaps 80 per cent of them civilians. By contrast, the wars recognised by the Australian War Memorial took around 100 000 Australian lives during that century, all but a handful of them enlisted servicemen and women. Every single one of those 100 000 deaths was a tragedy but are there in the world any 100 000 deaths so much commemorated as these?

    Moreover, are there any deaths in war anywhere which are commemorated with so little regard for the context in which these men and women died? The ‘history of wars’ should involve looking at both sides in each conflict and the full range of effects. Wars have despoiled the lands and the lives of hundreds of millions of people, few of whom – apart from the dead of the Australian Frontier Wars, which the Australian War Memorial refuses to recognise – lived in Australia.

    The causes of wars are complex, their progress, aftermath and ramifications traumatic for individuals, families and nations. Yet, in pursuit of ‘the Australian experience of war’, the Australian War Memorial steers away from these aspects while it endlessly mines the stories of our 100 000 uniformed victims, a mere 0.04 per cent of that 231 million.

    The Memorial’s Act says, ‘The Memorial shall use every endeavour to make the most advantageous use of the memorial collection in the national interest’. It is surely in the national interest that we understand more of the reasons for wars and the impact of war beyond our own kith and kin. That understanding would do something positive towards advancing the ‘abhorrence of war’ (which all of us ritually claim to feel) and reducing the possibility of future wars.

    The Memorial could play an important role in this task and it could do so within the terms of its own Act; it is foregoing that role at present in favour of sentimental and nostalgic commemoration. Picking at ancient scabs has been preferred to making a positive contribution to Australia’s tomorrows.

     

    David Stephens is secretary of Honest History (honesthistory.net.au). Honest History is a broad coalition of historians and others, committed to frank debate and expressing a diversity of opinions on specific issues. Views in this article are the author’s own.

     

  • We were warned about lobbying.

    In my blog of April 19 2014, ‘This is about more than a bottle of wine’ I referred to the need for major reforms in lobbying. 

    Three and a half years ago the ICAC in NSW brought forward proposals to better manage lobbying and avoid corruption. The Recommendations of the ICAC are still relevant today. If action had been taken at the end of 2010 we could have avoided many of the problems that have arisen in NSW. The ICAC report follows.

    John Menadue

    (more…)

  • Brian Howe – Raising the Retirement Age

    The Labor Government planned to lift age of eligibility for the aged pension from 65 to 67 between 2017 and 2023 and now the conservatives are considering raising it to 70 by 2029. Unless there are very big changes in the demand for older workers these changes must increase numbers on other payments such as Newstart or the Disability Pension. In the case of case of Newstart it would add to the hundreds of thousands of people living at least twenty percent below the poverty line.

    Several years ago a panel (Advisory Panel on the Economic Potential of Senior Australians) chaired by Everald Compton, and established by the Gillard government reported to that government on the potential of older Australians to make a larger contribution to the economy given the fact that people for various reasons (higher living standards, medical breakthroughs) were on average living longer. (2011)

    Successive federal Treasury reports had tended to emphasize coming pressures on budgets generated by an ageing population, but there is a more positive story that might be told.

    ‘Australia’s ageing population brings real opportunity-opportunity for the nation, for industry and for individuals. Not only are Australians living longer. Australians born in 1950 will live on average almost ten years longer than those born in 1910 but changes in society are creating unprecedented opportunity. Advances in health, education and technology provide an enormous scope for the nation and individuals to make better and more informed choices about the contribution of seniors in the workplace and the broader Australian community’

    The Advisory Panel saw extended lives, especially extended middle years, as being especially significant for the active aged. It also recognized that in Australia there were formidable constraints/barriers that would need to be overcome if that potential was to be full realized.

    • the persistence of outdated stereotypes and discriminatory attitudes towards older people
    • the lack of vision and understanding on the part of individuals, organisations, industry and governments about how to capture the potential of older Australians through creating more flexible and responsive workplaces
    • the constraints of the built environment that limit older Australians living the most fulfilling and creative lives, (very limited housing and transport choices)
    • the potential of poor lifestyle and health choices, including those that increase chronic health problems such as obesity and diabetes that threaten to undermine the health advances of previous generations. (G Hugo)

    The consequence of this analysis is that simplistic approaches to ageing by increasing retirement ages whether to 67 or 70 may impacts on future trend in social security expenditure but do not address any of the key issues that the Panel considered

    Discrimination

    For example, the Human Rights and Equal Opportunity Commission (HEROC) has identified a significant problem in the discriminatory attitude of many employers who discriminate in favour of the young and educated, especially where they have some work experience, when putting on new employees. They may also encourage older workers to ‘take the package’ often another way of terminating workers whose skills may be getting rusty rather than offering redeployment or retraining. It is very unusual for older workers in a modern economy to be kept on if they are seen to be unproductive or be offered a transition plan that will enable that person to gradually phase from paid work into retirement. Similarly older women who have caring responsibilities outside of their paid workplace may have great difficulty in nominating the hours in which they work or having the flexibility to leave work when there are special demands at home. This may be especially the case when women are working casually and have very little protections in the form of an award. Discrimination tends to affect most acutely people doing physical work e.g., cleaners, and construction workers.

    A Different Labour Market

    It is very important that there be public recognition of the very different labour market we have today to that which existed a generation ago. Along which the shift from an industrial to knowledge/service economy (80% of jobs today are in the service economy) there has been created a very different and much more dynamic and diverse labour market. This has resulted in a comprehensive movement way from standard employment contracts. There have been increasing variation in working times, working lives of working contracts.  Also there is a shift away from large employers with life time commitment to an employee to the increasing fragmentation of employment and labour markets where people are much more reliant on maintaining their personal skills to survive in today’s labour market. The rapid pace of change implies high rate of ‘technological obsolescence’ along with a redefinition of work with for many their ‘skill set ’ no longer relevant. These changes place special pressures on older people who if they do choose to remain in paid work may have to learn new skills set or create a new business or job. It is for this reason that life long learning is so important but of course that requires time and space well in advance of so called ‘retirement ages’. For most people working longer will often mean creating a new career either in the paid workforce or in the voluntary sector. The delayed retirement age suggests that there is an employer to keep an employee on. Security of employment is no longer a part of the work contract.

    Changing Cities

    Of course the changes in the economy have spatial implications in that the new economy is now focused increasingly in those places where there is the most concentrated investment taking place in the new economy and where there are maximum opportunities for creative communication. Older people are increasingly rejecting ‘sea change’ and ‘tree change’ and seeking to ‘hold’ their places in cities but with the flexibility sought by younger childless households.  The higher costs of energy are turning cities inside out and thus the importance of holding position. But for many older people there will be the demand for new housing choices whereas the market has been slow to realize the opportunity and scale of the aged housing market.  Furthermore governments have tax and social security rules that reflect a period in which older people either did not need or were not encouraged to participate in the more cosmopolitan city. Governments are still giving the highest priority to new freeways whereas for older people wanting to be active the key will increasingly be public transport. For older people the 20-minute city makes sense as they are less mobile but want to be engaged.

    Wellbeing

    Perhaps there has been a too easy assumption that aging baby boomers are all fit and well whereas they may be much less fit than we imagine perhaps for reasons that have to do with a too comfortable life style. On the other hand they will not be served well by ageist assumptions that consign older people to a retreat from life. The good news associated with ageing is certainly that maintaining activity and involvement is consistent with good health. On the other hand there are constraints that need to be addressed. Exercise does need organization and an enabling environment.

    Conclusion

    The most important message is that advancing the age at which people are able to access income support may have a limited impact on social security expenditures. However it will do very little to increase employment for older people often facing discrimination and exclusion from a labour market increasingly favouring the well and more recently educated.  The most likely impact on the aged of deferring the pension will be increasing the numbers on Disability support pensions and on Newstart, thus creating a cohort of aged people living well below the poverty line while minimizing savings to budgets.

     

    Brian Howe AO is a former Deputy Prime Minister. More recently he was a member of the Gillard Government’s Advisory Panel on positive ageing. This panel has been disbanded by the Coalition Government.

     

     

     

     

     

     

  • Kieran Tapsell. The war on drugs.

    Juan Gabriel Vásquez, El Espectador, Colombia, 20 December 2013, http://www.elespectador.com/opinion/esta-babilonia-nuestra-columna-465199

    Summary: The so called “War on Drugs” is an American invention from the time of Nixon. It has been a spectacular and costly failure. But the Puritans in the Americas do not want to even discuss the subject.

    A year and a half ago, President Santos of Colombia said to Obama that the 40 year war on drugs had failed, and that perhaps it was time to look for alternatives.

    Obama, for his part, recognized the necessity for debate, and that simple concession was seen by various Latin American representatives as a victory. It isn’t, but the mirage is tangible proof of an unhealthy dependent relationship: that which exists between the coca producing countries – the main ones are Colombia, Bolivia and Peru, which together have 150,000 hectares of illegal cultivation – and the principal consumer, the United States that takes up 27% of the world’s consumption.

    Things being as they are, it is evident that any real change in drug politics has to have the United States as a party to it. It is also evident that Latin America cannot avoid taking the initiative. Now Uruguay is proposing to sell marihuana at a dollar a gram, and, “to defeat the drug trafficking business”, the Guatemalan President is looking at the possibility of selling opium poppies. Meanwhile, Michael Botticelli, the head of the Office of Control of Drug Policies of the United States, came to Bogota to say what we already know: Washington will not change.

    The War on Drugs is a United States invention: the first person to use those words was Nixon, at a time when drugs were starting to be consumed massively, but in the producer countries, there were no cartels, no mafia, violence or corruption.

    Forty years later, that same prohibition has converted the drug business into the most lucrative in the world. It has put into the hands of the mafias, an economic power strong enough to destabilize whole democracies, and above all, it has left dead people behind its trail. In Mexico alone in the last decade there were 70,000 murdered. Colombia’s deaths, from the years of Pablo Escobar to the war being waged today (whose principle fuel is the drug business) are equally astounding.

    Drugs have a twofold problem: on the one hand, there is the public health problem that has always been there; on the other, there is the problem of public order, aligned to violence and the economic power of the mafias. Legalizing drugs is the only viable way of eliminating the second problem, and then only the first remains. The money wasted on this artificial war can be invested in education, prevention and treatment.

    The Puritans, of course, in all parts of the Americas are opposed to this. In Colombia, during Uribe’s disastrous years, the slogan of a government campaign was the product of infantile stupidity: marijuana is “the stuff that kills”. But it isn’t: what kills is not the stuff, but the violence with which the mafias defend an illegal business.

    Santos has created that Advisory Commission for Drugs Policy to think seriously about legalization, but it has received a hostile reception from the Puritans in Colombia, made up of Uribe’s heirs and the acolytes of the Procurator, a Lefebrvist Catholic, who has published pamphlets – from the Procurator’s office itself – against legalization whose title page has one of Durer’s paintings: “Scene from the Apocalypse, the Whore of Babylon”.

    This, on the other hand, cannot be taken seriously. We are right behind the eight ball in allowing any debate on the subject.

    Guest blogger, Kieran Tapsell, drew to my attention some good writing from Colombia on issues of international importance. Kieran is a Spanish translator. I hope you enjoy something a little different.  John Menadue

  • John Menadue. The media, our region and the PM’s visit.

    The Prime Minister’s visit to Japan, the Republic of Korea and China, highlighted for me the problems of media reporting and understanding our region.

    I have posted blogs on our media. See April 17, 2013, ‘Media failure: the tale of two bombings in two cities’; May 17, 2013, ‘Truth, trust and the media’ and January 31, 2014, ‘Murdoch and Abbott versus the ABC’. I posted a blog on April 10 this year, specifically on Tony Abbott’s visit to Japan and the political shortcomings of Free Trade Agreements which usually have more hype than substance. That continues to be the case.

    Our international media coverage is dominated by news out of London, Washington and New York. As I posted before, ‘An outsider and independent observer would conclude that Australia is an island parked off New York or London’. Our media coverage continues to be dominated by North Atlantic sources.

    Although it is inadequate, the ABC is far ahead of other media in Australia in coverage of our region. It has fully-fledged correspondents based in Jakarta, New Delhi, Port Moresby, Tokyo, Bangkok, Auckland and Beijing.

    None of our commercial TV or radio networks have full time correspondents based in Asia.

    The SMH/Age have correspondents in China, Indonesia, New Delhi and Bangkok.

    The Australian and other News Corporation publications obviously tap into the company’s foreign reporting assets such as the London Sun. The Australian has a correspondent in Tokyo. But News Ltd can hardly claim to be a serious and professional news organisation. It is the largest and least trusted media organisation in the Western world.

    As mainstream media is squeezed the trend will be to reduce regional coverage. Closures are ongoing.

    Tony Abbott’s Asian visit was principally covered by journalists from the Canberra press gallery. The gallery is increasingly fixated on politics, with very little interest in policy, let along policies in the foreign affairs, trade or defence areas. Embedded in the Abbott touring party, it is not surprising that they gave us an unprofessional coverage of the Abbott Asian visits, and particularly any understanding of Free Trade Agreements.

    The embedded gallery journalists obviously had not read the November 2010 Productivity Report on Bilateral and Regional Trade Agreements. (This is a different name for Free Trade Agreements.)

    The Productivity Commission Report concluded ’Businesses have provided little evidence that Australia’s Bilateral and Regional Trade Agreements (have to date) generated significant commercial benefits … net benefits are likely to be small … the direct economic impacts from services and investment provisions in Australia’s BRTAs … have been modest …’.

    Following the Productivity Commission Report, the Minister for Trade, Dr Emerson, told the Lowy Institute in December 2010 that he was not interested ‘in collecting trophies for the mantelpiece, empty vessels engraved with the words “FTA” if they are nothing of the sort and of only token value to our country.’

    In my blog of April 10, I drew attention to the exaggerated benefits that our embedded journalists attached to the FTAs with Japan and the ROK. The former Trade Minister said the same thing two and a half years ago.

    The conclusion of the FTAs with Japan and the ROK with their exaggerated benefits did not occur with the stroke of Tony Abbott’s pen. Ian McAuley in New Matilda pointed out those negotiations had been ongoing for many years under previous governments. If anything, Tony Abbott’s public eagerness in advance to sign the agreements weakened our bargaining position. The Australian journalists with Tony Abbott didn’t make this point.

    Further, the journalists paid little attention to the Trans Pacific Partnership (TPP) that the US is discussing with Japan and ten other countries, including Australia. The US Trade Representative, Michael Froman, in commenting on the FTA between Australia and Japan said ‘Clearly, we are looking for a level of ambition in the TPP which is significantly higher than [what Australia achieved] in access to Japan’s farm sector, notably for beef’. If President Obama achieves this concession under TPP, the short-term benefits we have achieved in beef access will be quickly overtaken by our major competitor in beef, the US. But did the journalists with Tony Abbott understand this about the TPP?

    I was in Japan immediately following Tony Abbott’s visit. The issue which struck me was not that the Japanese were so concerned about relations with China and the ROK. Their concern was the effect of the ultra-nationalist policies of Japan’s PM, Shizuo Abe, on relations with the US. I have not yet seen anything about this by the journalists who travelled with Tony Abbott to Japan. Did they speak to anyone but the public relations people working for the Australian and Japanese governments?

    In the last day or two we have seen odd comments from a media commentator, Harold Mitchell, about the agreement between Australia and China for the Australian Network of the ABC to be made available to the entire Chinese population. This is something which only the BBC and CNN have been able to achieve. Not surprisingly, after twenty years of trying, News Ltd failed to get such access. Harold Mitchell said that ‘This agreement [with China] is one of the greatest ways we can continue on the PM’s very successful visit to China last week.’

    The Abbott Government is threatening to cut ABC funding. Tony Abbott has accused the ABC of being unpatriotic. Julie Bishop has said that the government is assessing whether the $223 million contract with Australian Network in promoting Australia’s interest in the region is of value. The government has made it clear that it is seriously considering changing the contract with Australian Network and the ABC and giving a leg-up to News Ltd as an alternative to the Australian Network.

    In short, the arrangement between the ABC and China would have been achieved in spite of and not because of the Abbott Government or the PM’s visit to China. But the members of the press gallery who travelled with Tony Abbott to the region have said nothing about this quite significant breakthrough by the ABC.

    Apart from the ABC, we are not well served by the media in its coverage of our own region. That has shown up in the coverage of Tony Abbott’s visits to Japan, the ROK and China.

  • This is about more than a bottle of wine

    To mix my metaphors, the bottle of red wine that Barry O’Farrell received is only the tip of an iceberg – a sleezy world of lobbying, influence-peddling and corruption.

    (more…)

  • Kieran Tapsell. Things are improving.

    Héctor Abad Faciolince, El Espectador, Colombia, 29 December 2013, http://www.elespectador.com/opinion/el-espantoso-mundo-vivimos-columna-466312

    Summary: The world we live in is frightening, but it is less frightening than it used to be.

    One of the best definitions of the word, “intellectual” that I have read is: “a person who has studied beyond his own capacities”.

    There are those incapable of comparing the world of today with that of yesterday, of weighing up the gains and losses; their obsession consists in outraged criticism, arrogant moralising, scorn for any progress, enjoyment or happiness, in the conviction that there is no creature more repugnant that the human being, nor a place more inhospitable than the Earth.

    The intellectuals I am talking about are the ones wallowing in the culture of complaint, for whom contemporaneous society (especially the West) is a kind of invention of the devil: the most vulgar, unwieldy and hellish thing that has ever existed in the history of the world.

    The modern world, for them, is the most violent, aggressive, exploitative and unjust place: a society that we will have to destroy to start another on its ruins. The worst thing about this nauseating whine, this permanent moral indignation, is that this supposed “elite of the intelligentsia” has managed to convince millions of young people – as Karl Popper deplored years ago – that we are living in the worst world that has ever existed.

    Increasingly I come across young people who are convinced that having children is an awful thing to do, because they will be bringing into the world new human beings whose only fate is to suffer.  And most of these willingly sterile are young people who have studied the most, that is to say, those who have been most exposed to this evil influence of that “intelligentsia” for whom the achievements of humanity are one big lie.

    These “intelligentsia” are immune to all criticism and logic, and it makes no difference to point out the undeniable: comparing the world of today with the world without anaesthetics, without antibiotics, and without pain killers (they believe that in the “natural” world, where there were no illnesses and where humans would have lived 600 years, like the biblical patriarchs).

    It’s pointless telling them that there has been moral progress since the times of slavery (they say that the slave of yesterday was a pampered child compared to the worker of today; as if they were being branded with red hot irons).  Demonstrating with figures that life expectancy has increased exponentially in the last century only creates scorn because the only thing that we have achieved now is more people.

    Nor does it seem to them important that a poor person today – in Colombia – receives much better medical attention than a Renaissance king, nor that we have better transport, better clothing and shoes. That infant mortality – even amongst the poor – was much higher than amongst the poor in the countryside today.

    You can’t say to these intellectuals, without causing outrage, that things have been improving for decades in almost the whole world. That sexual or racial discrimination was much worse 50 years ago; that never before could homosexuals better defend their right to be free. That never in history have there been so many women studying and working in important ositions – thanks to, amongst other things – the existence of contraceptive methods, and that they themselves have managed to make sure that they are respected.

    Poverty also – even in Colombia – has been dropping in absolute and relative terms in recent decades. Violence itself, as Pinker has demonstrated, to the disgust of the pessimist intellectuals, is today one of the lowest in the whole history of humanity.

    When you are an optimist, the intellectuals of indignation and complaint look on you like an idiot. Of course, we are confronting very serious problems (global warming is the worst of them), but perhaps never before in the history of humanity have we been better prepared to confront them. Because of those convictions, we can wish and even hope that the year 2014 will be a little less bad than the 2013 that is just finishing. The world in which we live is frightening, but it is less frightening than it used to be.

    A guest blogger, Kieran Tapsell drew to my attention some good writing from Colombia on issues of international importance. Kieran is a Spanish  translator. I hope you enjoy something a little different.   John Menadue

  • Cavan Hogue. Russia and the West.

    The USA and NATO seem to see their relationship with Russia as one of goodies and baddies. This is naïve and their hairy chested approach is not helpful. This paper looks at the realities of Russian attitudes to the outside world.

    Many foreigners write off Vladimir Putin as a “fascist”, a communist throwback, a brutal dictator and so on. There can be no doubt that he is strongly authoritarian and doesn’t suffer opponents gladly but he is not Stalin. He was elected and there are opposition parties. Many Russians dislike him and oppose what he stands for but his appeal to Russian nationalism does not fall on deaf ears. Russians are a proud people who are glad to be rid of many aspects of Communism but feel some nostalgia for the glory days of the USSR which was strong and respected as a great power.  They believe that Russia will always be a “Great Power” and are suspicious of Western attempts to play down Russia’s importance in the world. These attitudes go back way before theSoviet Union and reflect the longstanding Slavophile/Westerniser debate.

    While there were obvious differences in ideology and rhetoric there were also many similarities between theUSSR and the Russian Empire, especially in their policy towards the neighbours. The Soviets kept the conquests of the Tsars and added some. This does affect the attitudes of many today. Putin is above all a nationalist who wants to restore Russian greatness and is willing to stomp on anyone who gets in the way. However, he is neither mad nor stupid and understands the difference between a kind of Russian Monroe Doctrine and conquest.

    Any action by NATO needs to take account of how Russia views things even if it is only following the time tested principle of know your enemy. Russians see the West as hypocritical and are suspicious of what they see as a US desire to dominate the world – and more importantly Russia. The US has a long track record of interference and aggression against other countries – Mexico 1847, the Philippine Republic 1898, Nicaragua, Guatemala, Chile, Grenada, Vietnam, Iraq and so on. The Russians also have no illusions about the peaceful record of European nations. Therefore, Western rhetoric about freedom and non-interference is not seen as the righteous wrath of the just but as the hypocrisy of aggressors. Russians would ask that if it was wrong for theUSSR to have missiles in Cuba is it not equally wrong for NATO to have missiles and troops on Russian borders? We may debate the rights and wrongs of these arguments but it is how Putin and most Russians see things. Even the pro-democracy anti=Putin people are not immune from this view.

    Putin knows that the US is not going to use military force against Russia and the Europeans are even less inclined to do so. Sanctions will only have the effect of reinforcing anti-Western views and perhaps persuading people who don’t really like Putin to back him against the foreigners. If they were to bite economically that would resentment would be even greater. They may also encourage counter-sanctions.

    So what next?  Crimea is a special case. It is historically Russian, has a Russian majority and should never have become part of Ukraine. It will be absorbed into theRussian Federation but it does not follow that Russia is bent on a conquest of Ukraine or even less on the rest of the former Soviet Union. Admittedly, the Eastern Russian speaking part of Ukraine is a problem as are some other Russian enclaves from the former Soviet Union. Putin has said he will protect the interests of Russian minorities but also that he has no claims on other territory. His actions in the case of Georgia and theCaucasus are not encouraging but fear of the West did not stop him.

    If the West is seriously interested in a solution, more carrot and less stick would seem to be the answer. Most Ukrainians do not want to be part of Russia – and other neighbours even less so – but Ukraine is a corrupt and inefficient basket case which must give the Europeans pause for thought about how far they go in absorbing Ukraine as opposed to simply talking about its right to freedom of choice. NATO needs to be more sensitive to Russian feelings of encirclement by an organisation which was set up to contain theSoviet Union. They ask that if the Cold War is over, what is the role of NATO? This does not mean accepting Russian bluster or aggression but attempts to force Russia to kow tow publicly to the West are doomed. Quiet diplomacy has a much better chance of getting results.

    Threats by Australia to ban Russia from the G20 meeting in Brisbane miss the point. This is not Australia’s decision to take but the G20 organisation’s. Australia is not a player in this game and if the Russians notice us at all they will see us as simply following the big kids of the anglosphere as we always do. Nobody is lying awake in the Kremlin worrying about what Australia will do. We would be well advised to keep a low profile.

    Cavan Hogue was Australia’s last Ambassador to the USSR and the first to the Russian Federation and to Ukraine.

     

     

  • Michael Sainsbury. Australia and Cambodia’s shady asylum seeker deal.

    Australia’s history of dealing with asylum seekers continues to spin into a dizzying spiral of contempt. Already under fire for shutting its doors to some of the world’s most vulnerable people, the Canberra government is now in talks with Cambodia, the latest in a rollcall of poor, dysfunctional neighbors to whom it will “outsource” its so-called asylum seeker problem.

    Immigration Minister Scott Morrison, who counts as a ‘success’ every asylum seeker he can banish, last week became the second member of Prime Minister Tony Abbott’s Cabinet to visit Cambodia this year, following Foreign Minister Julie Bishop’s whistle-stop trip to Phnom Penh in February. Seemingly peripheral to the talks was any discussion of Cambodia’s own woeful rights record, and how that may impact on the refugees Australia is unwilling to shelter.

    Abbott’s aggressive but election-winning asylum seeker policy is a marked departure from Australia’s once proud record of handling those forced to flee their homelands. In the 1970s, the Liberal/National Party government under Malcolm Fraser threw the doors open to over 70,000 Vietnamese escaping the communist invasion from the North. That era is now confined to history – unlike most other western democracies, Australia wants to shirk its moral and ethical obligations to help the ever increasing numbers displaced by war, political oppression and persecution.

    The request for help from Cambodia, which relies on foreign aid for nearly half its annual budget, also coincides with Australia slashing billions of dollars in aid to the Southeast Asia region. Cambodia will receive money from Canberra if it does agree to take asylum seekers, but Prime Minister Hun Sen’s own record of embezzling large chunks of the state budget does little to boost confidence that the money will be spent on the welfare of those whom Australia deports to Cambodia.

    But back to Australia. The citizenry’s own fears of an asylum seeker “crisis” are grossly inflated, but have been used as a cynical ploy by politicians, notably Abbott, who campaigned on an anti-asylum seeker platform, to win votes. Australia has a per capita GDP that now ranks only behind oil-rich Norway and Singapore, and has to date been relatively sheltered from the global burden of accommodating refugees.

    According to figures from the UN Human Rights Commission, Australia had 10,900 asylum seekers in 2012. That year, Belgium had more than 14,000, as did Ecuador, still a developing country. France, where politicians and citizens alike fear imminent collapse due to the heavy refugee traffic, muddled along with almost 50,000 in 2012. Europe’s economic powerhouse, Germany, had 85,000.

    Pledges from the Abbott administration that the policy will alleviate pressure on the taxpayer to fund the wellbeing of asylum seekers runs into problems, given estimates that the outsourcing program will cost some US$2.85 billion. Papua New Guinea was reported to have received an initial US$25 million in “aid” in exchange for allowing Canberra to send human cargo to a now-notorious holding facility on Manu Island.

    So turning to Cambodia will do nothing to boost Australia’s global standing. Hun Sen, who has been in power for 36 years, has a less than stellar record with asylum seekers, having returned to possible incarceration people trying to escape to Cambodia from China and Vietnam upon request of the two governments who have helped to prop him up.

    His treatment of political opponents, lawyers, rights campaigners, thousands of whom have been either murdered, tortured or locked up in dark holes, should give further pause to Australia. Even the Australian Trade Department says: “A key disincentive to Foreign Direct Investment (FDI) has been the lack of an effective judicial and legal system and a poor corporate governance environment.”

    Apparently this hasn’t registered, and rights groups have accused Abbott of neglecting his obligations to international rights protocols.

    “It’s quite clear that Cambodia does not have any sort of appreciable service for refugees,” Phil Robertson, deputy Asia director of Human Rights Watch, told the Australian Broadcasting Corporation. “They have a shoddy record of protecting refugees despite having ratified the refugee convention and there’s very little political commitment from the Cambodian government to ensure the ongoing support or safety of refugees.

    “One wonders how Australia thinks the Cambodian government would be in a better position to provide support and protection than Australia would be.”

    Tony Abbott and his lieutenants rail against the grubby human traffickers who take the money of people desperate to escape oppression by any means, shifting them across borders and across oceans on rickety boats. Yet they consciously move the very same human traffic, handing out cash for others to take the problem off their hands. All told, Australia’s prime minister wants to send people desperate to escape from oppressive regimes right back into the arms of another.

    Michael Sainsbury is a Bangkok based journalist who writes for www.ucanews.com

     

  • Simon Rice. Racial vilification, social values and humility

    I have spent a professional lifetime trying to get people to know about (let alone respect) anti-discrimination law, and suddenly everyone knows about ‘section 18C’.  For all the wrong reasons.

    A right reason for knowing about 18C would be because it is offers guidance on what can fairly be said and done on the basis of race.  A wrong reason would be because it is characterised as an unwarranted limit on ‘free speech’.

    For close to 20 years, the limits imposed by 18C have been unremarkable. The Australian Human Rights Commission receives and resolves complaints about conduct that exceeds the limits, and the federal courts decide cases when the complaints cannot be resolved.

    As with any legal regulation, awareness of 18C, and understanding about how it works, has grown over time. But most importantly, 18C, as with any legal regulation, stands as a statement of public values, a declaration by the government, on our behalf, of what is and is not acceptable in society.

    For close to 20 years we have told ourselves and the world that an Australia value is to not tolerate race-based words that cause harm.  Brandis has declared that not only we will tolerate such words, but we will encourage them.  So the 18C debate is about much more than the unremarkable exercise of setting limits on free speech.  It is, as well, about the role of our representatives in articulating public values and, relatedly, about the place of legislation in expressing those values.

    Public values change, and law needs to change with them, though it often lags behind. When there is sufficient public momentum a government acts to reflect popular will by making, amending or repealing a law.  In the current racial vilification debate, ‘free speech’ has been promoted as an Australian public value that is overly-limited by 18C, and that should now be given greater prominence.

    Has the time come to resile from the values that are expressed in 18C? It is hard to see anything that suggests that Australian values have reverted to a time when racial abuse was permissible.  Despite the Attorney-General’s notorious defence of our right to be bigots, there is no evidence that a large number of us actually want to express bigotry any more than 18C allows.

    The ‘free speech’ rhetoric is, in fact, a claim to ‘free racist speech’, and the Racial Discrimination Act allows a great deal of free racist speech; persistent reference to 18C overlooks the wide exceptions available in 18D.  We are very free to engage in race-based speech in Australia; as Richard Ackland asked ‘what is it that these people really want to say about race, colour, etc, that they are currently chilled from saying by the anti-free-speech RDA?’.

    The one celebrated case when someone wanted to say something about race, but failed to do so within the exceptions in section 18D, was Andrew Bolt’s.  If it was not for that case, and News Limited’s determined attack on 18C as a result, we would not be having this debate, and our racial vilification law would have continued doing its work.

    Senator Brandis invites us all to engage in racist speech.  When your child comes home from school dismissing ‘boongs’ as lazy and ‘towel-heads’ as terrorists, she can say that Senator Brandis told her that she has the right to be a bigot.  This type of ‘leadership’ is unworthy of an elected official, let alone Australia’s first law officer.

    Specifically, Brandis’s amendments to 18C invite anyone to say anything about anyone, under the guise of ‘public discussion’.  Perhaps it is the contemporaneous announcement of the reintroduction of knights and dames that makes me wonder whether Brandis’s idea of public discussion is still in the 19th century: a town hall meeting or a Hyde Park soap box.  These days, very little is not ‘public discussion’.  Media such as websites, blogs, Facebook, YouTube and tweets enable the public promotion of ideas and opinions as never before.

    The contemporary unregulated, unbounded world of public discussion gives the lie to those who disdain government regulation and would rely instead on the ‘marketplace of ideas’ as a way of regulating speech.  The brave new world of public discussion is undiscerning in the relative prominence it gives to speech: in the absence of any guiding principles, vicious and hateful opinion is as ‘valid’ as that which is respectful and affirming.

    There is, therefore, no ‘exchange’ as there might be in a market, no mechanism for evaluating opinion; online, everything has a claim to credibility.  There is no ordered exchange of opinion.  Opportunities for debate are limited, most of what ‘said’ remains untested and unchallenged, and it is implausible to claim that opinions will thrive or fail on merit. 

    This unregulated space suits those with the capacity to exploit it, to make the loudest noise, and to dominate.  Politicians and news media corporations have that capacity, and 18C stands in their way.  They attack it because they can, and they (wilfully?) fail to see and respect the power they have. Without the quality of self-restraint, they are able to say that something should be done simply because it can be done. Without the quality of empathy, they are able to say that causing offence doesn’t matter. And without the quality of humility, they are able to decide what level of racial abuse people should live with.

    While politicians and news media corporations have the power to dominate public discussion, racial minorities do not.  Although the backlash against Brandis’s proposed amendment of 18C has been substantial, it comes largely from those who receive 18C’s protection – that is, from those who are on the receiving end of race-based conduct, particularly migrants and indigenous peoples.

    Our social minorities, who look to the government for protection in a majoritarian ethos, now find that their government promotes a right to oppress them.  In this perverse situation, it is vital that members of the majority stand against their colleagues, and stand by the state’s obligation to protect the vulnerable who are under its care.

    Simon Rice teaches law at the ANU. He is the Professor of Law, Director, Law Reform and Social Justice, ANU College of Law. He is also Chair of the ACT Law Reform Advisory Council.