Category: Politics

  • Peter Gibilisco. Friendship and Service Provision Ethos for People with Disabilities

    In this article I want to discuss an aspect of the standardised procedures set by service providers in facilities that serve people with disabilities. More to the point, I am keen to explore how this affects the ethos of service delivery for people with severe or profound physical disabilities within such shared supportive accommodation.

    Let me be utterly frank. The ethos of service delivery, in this house where I live, has lacked key attributes that are necessary for caring for people with disabilities. Admittedly, I have sought to draw attention to this deficit by a constant effort to raise awareness. And an organisation’s ethos takes time to change. Nevertheless, the jury is still out with respect to whether we are experiencing a positive change. I am concerned that the friendships that I have made with support staff be respected by a form of management that recognises the benefits that arise from the personal synergies that arise from the work done.

    There is a simple need of enjoying life as an individual, in a way that is like the individual aspects of dignity that are part and parcel of the much proclaimed “freedom of choice.” I want to ask: has the “right to choose” become a ploy of many service providers? The principle is conveniently displayed in marketing and other public relations material. But is it all a matter of staying on the politically right side of the Government and public opinion?  After all, it can be argued by many living in such supportive accommodation that the self-interest of top management has been placed well beyond the reach of the people with disabilities that these facilities are established to serve. But Personal Care Attendants (PCA) are not just an abstract function;  they are people just like the people they are employed to serve.

    This state of affairs is why I am taking the opportunity of writing this article. Our friendships with PCAs need to be defended. I am a little fired up although I guess some who know me will think that is rather strange. It is true: I cannot wave my arms around and bang my fist on the table. But I am just a little concerned that the message I have been putting for many years gets through. This is serious.

    I am a severely physically disabled person with Friedreich’s Ataxia, who presently lives in shared supported accommodation. This place can fail to administer appropriate assessment of my specialist medical and social needs, one of which is human companionship. This place needs to function in ways that allow the clients with disabilities to solve individual problems pertaining to their own problems even if the house is managed under the protocols of a service provider. And the workers should be respected as our friends.

    I am quite sure that those managing this place were not expecting me, and I too never expected to be here. But even though we have to make the most of this unfortunate state of affairs, it is not going to prevent me from saying what needs to be said.

    The service provider has a real problem. Rather than looking to a set of policies that emphasise procedures that are formed individually with the needs of the person front and centre, they seem to be stuck with operating in a standardised way that at the same time keeps the self-interest of top management of service providers out of sight, and makes continuity with workers difficult.

    The standardised procedures simply do not provide adequate support. Even if the standardised approach qualifies as “best practice” under some managerial criteria we, and our day-to-day relationships that sustain us, are simply too complex for an abstract modus operandi.

    As a matter of fact, I am not a person with a cognitive, behavioural or developmental disability. I do not take kindly to being treated like one, as I am also sure many people with intellectual disabilities do not take kindly to being treated like a semi-paralyzed person who has to live in a wheelchair. Mistreatment that ignores a person’s humanity, violates the person’s right to be given due respect.

    My complaint also has to do with the ethos of the place I live in. Let me tell you what I experience all too often. My friendships with my support workers are unfairly reduced in a variety of ways by the presumptions of management that fail to respect what is going on. Support workers are the first faces we see in the morning and last faces we see at night. It is as if our friendships are simply not part of the implementation of policy. I suspect that this kind of managerial presumption of the disposability of friendship is alive and well elsewhere in social welfare delivery. But I am keen to preserve the friendships that keep me going, even as I find my body slowing down.

    I am also not wanting to identify any individual manager – there are some I have come across who come to mind that possibly should be exposed for their blindness and self-interest, but I will restrain myself.

    My aim here is to suggest some sustained soul searching among those managing service provision for ‘people with disabilities’.

    I’m writing this against the background of a service delivery context that is simply not good enough.

    Dr Peter Gibilisco was assisted by Dr Bruce Wearne in the preparation of this article.

    Special thanks to Cunxia Li, Patrick Wleh and Christina Irugalbandara.

  • John Menadue. The ‘third man’ in the sacking of Gough Whitlam

    In a series of books and articles, Professor Jenny Hocking has provided conclusive evidence that Sir Anthony Mason was even more important than Sir Garfield Barwick in assisting John Kerr in the sacking of Gough Whitlam. It is scandalous and almost beyond belief that two senior members of our High Court were secretly collaborating with the Governor General to sack a Prime Minister who had a clear majority in the House of Representative

    With a  ‘born to rule’ superiority, some people lecture us about the importance of conventions and traditions, the separation of powers, the independence of the judiciary, the integrity of judges and honesty in public and private life. But two senior High Court judges, Sir Garfield Barwick and Sir Anthony Mason trashed all that.

    In addition to her outstanding books on Gough Whitlam and the dismissal, Jenny Hocking gave a lecture at the National Archives on 16 February 2014. The subject was ‘Hidden History of the Whitlam Government’s dismissal: Unmasking the Third Man’. The full text of that lecture can be found at http://www.naa.gov.au/collection/publications/papers-and-podcasts/prominent-people/JHocking-transcript.aspx.

    In that lecture, Jenny Hocking speaks particularly of the role of Sir Anthony Mason.

    ‘This detailed record from Kerr’s private papers has been described as a “discovery of historical importance” and it is without doubt the most important material to emerge about the dismissal in 37 years. Firstly, it confirmed from Kerr and then Mason himself what had been widely speculated for decades, that Sir Anthony Mason was the “third man” – along with Sir John Kerr and the Chief Justice of the High Court, Sir Garfield Barwick – in the back room manoeuvering that led to the dismissal of the Whitlam government; second, this new material revealed the full extent of Mason’s role – which had previously been seen as minor – in Sir John Kerr’s thinking and planning in the dismissal itself; and finally, the publication of this new material precipitated the release of a public statement from Sir Anthony Mason acknowledging his role for the first time, which in turn brought further revelations of its own.’ 

    In this lecture Jenny Hocking comments on how emotionally damaged Sir John Kerr had become.

    ‘It is also abundantly clear to me that Sir John Kerr was a deeply damaged and devastated man. It is hardly new to remark upon Kerr’s personal frailties, his weaknesses and his need for validation. But what is surely tragic, is the extent to which John Kerr’s own actions, his best known actions in dismissing the Whitlam government, also destroyed it. It makes salutary reading to see that years after the events of 1975, in his private journal in his own sloping hand, Kerr was still obsessively revisiting every day of that critical month, reinterpreting every conversation, recalling every exchange, desperately seeking some resolution – ultimately for himself.

    ‘Gough Whitlam put it more prosaically; “Kerr rooted himself as well as us”. 

    But Sir Anthony Mason was not only intimately involved in Gough Whitlam’s dismissal, he also gave advice to Sir John Kerr that he should not meet the Speaker of the House of Representatives who wished to convey a message that the House of Representatives had no confidence in the new Prime Minister, Malcolm Fraser, and that Gough Whitlam should be called to become Prime Minister again. In our long constitutional history an English king lost his head for ignoring the parliament, but Sir Anthony Mason disregarded all that history and tradition about the role of the Speaker and that the Governor General should see him. Jenny Hocking records what happened.

    ‘The Speaker was headed for Yarralumla to convey the motion of no confidence in Fraser to the Governor General. None of them had anticipated what then took place. Kerr simply refused to see the Speaker, or to receive the motion of no confidence in Malcolm Fraser. Instead Kerr kept the Speaker waiting for more than an hour until after he had dissolved both houses of parliament and closed down the parliament, with Malcolm Fraser still in office. … Mason recalls that after the dramatic post dismissal afternoon parliamentary session, Kerr made one final and crucial telephone call to him [Sir Anthony Mason] – and it is interesting to note that Kerr makes no mention of this final conversation with Mason in his own accounts of these events. … Sir Anthony Mason’s response to Kerr’s quandary posed by the House of Representatives motion of no confidence in Fraser was simple – he told the Governor General that “the resolution (of the House of Representatives) was irrelevant as he had commissioned Mr Fraser to form a caretaker government”. Mason’s advice was a breathtaking repudiation of the very essence of the Westminster system and its core convention of responsible government – that governments are made and unmade in the House of Representatives. … The assault on responsible government through the continuation of Fraser in office, despite the want of confidence motion against him, was absolute. So a Justice of the High Court, Sir Anthony Mason, told the Governor General that the single most important resolution the House of Representatives can ever make – the resolution by which governments are made and unmade, a vote of confidence or lack of it – was irrelevant.’ 

    But there is more. Sir Anthony Mason kept all these secrets to himself and was appointed Chief Justice of the High Court of Australia by the Hawke Government in 1987 – twelve years after his collaboration to bring down a Labor Prime Minister. Jenny Hocking comments –

    ‘Mason’s continued silence has been seen as self-serving, as ensuring the continued public ignorance of his role in the dismissal of the Whitlam government. And there is no doubt that this silence had worked to his own benefit, for it is simply inconceivable that the Hawke Labor government would have appointed Mason Chief Justice of the High Court in 1987 had it known the full story of his involvement with Kerr in dismissing the Whitlam government.’ 

    The fortieth anniversary of the dismissal of the Whitlam Government and the disclosure of more and more information by Jenny Hocking points very clearly to the shameful behaviour of a Governor General and two High Court judges. Gough Whitlam is more and more vindicated as his political assassins and detractors sink further into the mire.

    Professor Jenny Hocking’s latest book ‘The Dismissal Dossier – everything you were never meant to know about November 1975’ has just been published by Melbourne University Press.

  • Allan Patience. Now is the Time for All Good Men and Women to Come to the Aid of the Party

    Richard Di Natale has called on the Greens to get ready for government. Well and good. The direction in which he is prodding his party is a rare glimmer of hope in an otherwise bleak Australian political landscape.

    Whether in a coalition (likely with Labor), or in its own right (unlikely), what sort of public policy agenda would a Greens government pursue? It is time for it to come up with a broad and innovative policy agenda; otherwise a completely new political party will have to be created.

    The other major parties, Labor and Liberal, have become ossified under the thumb of ideologically blinkered, self-perpetuating elites, the consequence of what Robert Michels once called the “iron law of oligarchy.” The Nationals are mostly irrelevant to mainstream policy debates, but they too suffer from the same organisational malaise as the ALP and the Liberals.

    For over three decades now Labor and the Coalition parties have been in obsessive thrall to a neoliberal mindset, utterly insensitive to the havoc that neoliberalism has been wreaking on our economy. However, what they are clearly incapable of comprehending today is that the whole neoliberal (or “economic rationalist”) project is about to come crashing down.

    Some of the catastrophes that neoliberalism has unleashed on us in Australia include: stagnating economic growth rates; sharply increasing socio-economic inequalities that are undermining capitalism itself (though, as with most subtleties, this irony escapes most neoliberals); the running-down of vital public services and the devaluing of public goods (for example, hospitals, schools, public transport); the appalling expansion of what were once termed “repressive state apparatuses” (increased powers for police and border protection authorities, state-sanctioned human rights abuses on Manus Island and Nauru, draconian meta-data gathering laws, the use of legally prescribed secrecy by governments to hide what they are really up to); and a society in which a range of social pathologies (family violence, depression, narcissism, drugs, begging, violent crime) are becoming the sine qua non of everyday life.

    The licence that big private sector corporations have been granted by successive neoliberal regimes has not resulted in better services, cheaper credit, or widely shared prosperity across the community. As Milton once observed, licence is not the same thing as liberty. Markets are now being crowded out by start-up ingénues and fraudsters while being bullied by big local and overseas corporations intent on feathering their own profitability nests and with little interest in the needs or rights of their employees and consumers.

    For example, the billion dollar profits that the big four banks are presently announcing (even as they increase their lending rates) point to the abject failure of the principles of deregulation and privatisation – that neoliberals have boasted endlessly will free up a shackled market, to benefit everybody. In the case of the banks, the only beneficiaries have been their obscenely overpaid executives and a narrow grouping of major shareholders. And, remember, many of those shareholders are offshore corporations.

    Consider, too, the myriad private providers of electricity that have exploded on to the scene since the privatisation of energy generation. Neoliberals promised that privatising the delivery of electricity would bring vigorous competition into a previously lazy and cosseted industry, driving down the price of electricity in household budgets. But, as every household knows only too well, this simply isn’t happening. In fact there are now far too may competitors in the market devising all sorts of byzantine schemes to woo customers, while investing in costly advertising and hustling campaigns to cajole bemused and confused customers into signing up with one or other of them. The result has been a shocking escalation in the costs of a fundamental public good – affordable electricity. The privatisation of electricity has been one of the most spectacular of neoliberalism’s disasters.

    These are only two examples of many failures by neoliberalism to progress our economy and enhance people’s lives.

    So what sort of agenda should the Greens espouse?

    Their first priority must be to counter-attack in neoliberalism’s war on public goods and services. Reimposing regulatory constraints on a private sector that is out of control is an impossible task. That horse has well and truly bolted. However, neoliberals love to extol the virtue of competition in the economy. So why not give them some real competition?

    This is where Greens should enter the policy debates. They should can mount a political campaign explaining that there is no competing mechanism in the neoliberal quiver to challenge the social destructiveness and economic vandalising that neoliberalism’s privatising and deregulating have unleashed. They need to explain that the only achievement of neoliberal policies has been to oversee capital roaring up the system, not trickling down.

    This should be the prelude for advocating a policy of strategically targeted public competition into the so-called “free market.”

    The first item on the post-neoliberal policy agenda should be the setting up of a publicly owned bank, to provide genuine competition in the banking industry. Of course the neoliberal beneficiaries of the current banking order will scream like stuck pigs about the unfairness of a publicly owned competitor in their midst, insisting that only they be allowed to compete on that most sacred of neoliberal cows – the fabled level playing field.

    Anyway, why must a publicly owned bank be seen as unfairly tilting the economic arena? Its establishment would simply provide more competition to bring the banking field back to an even keel, while returning profits to the community either though cheaper, more consumer-respectful services, and/or profits being invested in public goods (for example, better schools, railways, medical services).

    Another strategic area in the contemporary economy is legal services. Thousands of Australians are locked out of the justice system because of prohibitive fees charged by the big law companies that as greedy as the banks. A publicly owned law firm providing cheap and friendly (dare one say compassionate) legal advice would help address the unjust over-representation of social minorities and the poor who are routinely and unjustly the majority victims of the pointy end of the country’s legal system. When did you last hear of a senior partner in a law firm, or a distinguished surgeon, or a bank CEO going to jail?

    Other strategic areas in the Australian economy in urgent need of tough public competition include the real estate industry (agents’ costs and fees are a significant factor in pushing up already escalating house prices), medical (including psychiatric) and dental clinics, a publicly owned pharmaceutical corporation (once a dream of the Whitlam government), childcare centres, a government airline, and a comprehensive news and entertainment media agency (an expanded and properly resourced ABC and SBS).

    A cautiously progressive introduction of public competition into strategic sectors of the economy would certainly contribute to improving the barrenness of our contemporary public policy environment. As each new public competition agency is settled in, further competition could be contemplated – for example a publicly owned supermarket chain.

    And once people realise that this kind of state intervention doesn’t cause the sky to fall in, then even the nationalisation of certain crucial industries could be considered – an obvious example is urban rail networks and road tollways.

    Indeed with the institutionalisation of a healthy culture of public competition in the post-neoliberal economy, further private competition could even be encouraged. But any new private enterprises will have to operate on a truly level playing field. Regulators will require them to demonstrate that their services are consumer-respectful and that the efficiencies they promise are genuine, not bogus as so many are right now.

    If the Greens are unable to mount a public policy program for the coming post-neoliberal era, then a new political party will be necessary. That will be the time for all good men and women to come to the aid of the party.

    Allan Patience is a political scientist at the Asia Institute in the University of Melbourne.

  • Race Mathews. A cancerous corruption is eating the ALP

    Bill Shorten is to be congratulated on telling the Victorian ALP to investigate and eliminate its membership rorts, as exemplified by the latest branch-stacking scandal that has again humiliated the party and exposed it to public ignominy and disrepute.

    There may never be a better opportunity to clean up once and for all the morass that has been exposed. The party must not let this opportunity be lost.

    Shorten must now insist that the investigation into this disgraceful episode be truly independent.

    Nothing short of an arm’s-length and fully transparent inquiry by an external nominee of unimpeachable integrity and stature, such as a retired Supreme Court judge or senior barrister, will ensure that justice is both done and is seen to be done.

    To settle for less – to allow the inquiry to remain in factional hands – would be tantamount to entrusting foxes with the security of a hen house.

    What is at issue here is fraudulent conduct that in any other sphere would be investigated and prosecuted as a criminal offence. The perpetrators and their protectors must be identified and expelled.

    Authority for the appointee to require evidence under oath will be essential in order to expose and uproot the cancerous corruption within the Victorian ALP that for too long has been allowed to flourish unchecked.

    Key questions needing to be addressed will include whether party office-holders and officials were aware of what was happening and, if so, when. Was there an involvement by either or both of the party factions and, if so, by whom was it authorised and to what effect?

    Terms of reference for the inquiry must also include the rorting for factional advantage of the secret ballots provisions of the party rules that has resulted in the elevation to party office of some by whom a blind eye has been turned to the present abuses.

    Factional operatives routinely require conference and pre-selection committee delegates to disclose their completed ballot papers, in order to ensure that they have voted in accordance with factional directives. Alternatively, delegates are required to hand over their blank ballot papers to be completed by the operatives on their behalf.

    A familiar sight at the early stages of party conferences is queuing by delegates who attend for the sole purpose of receiving ballot papers, which they then turn over for completion by the operatives, before leaving and taking no further part in the proceedings.

    The surrender or disclosure of ballot papers in circumstances where plainly it is not voluntary defeats the whole purpose of the mandated secret ballot, which is to ensure that the person voting can do so without fear of consequences if they vote in a way that is not a agreeable to another person.

    Such interference would not be tolerated in the conduct of any parliamentary election. Any federal or state returning officer who failed to prevent it would be sacked.

    For the ALP to continue condoning the factional subversion of its commitment to the secret ballot is for it to acquiesce in the lawlessness that the latest branch-stacking scandal exemplifies and thereby to live a lie and betray the trust of its members and supporters.

    Race Mathews is an ALP life member, and a former chief of staff to Gough Whitlam, federal MP and Victorian state MP and minister. This article was first published in The Age on November 1, 2015.

  • John Menadue. The new squatters are taking over more public land.

    On a wide front developers and other commercial interests are moving into our public parks, gardens and beaches. They are our new squatters and the community is feeling powerless in the face of this invasion.

    In earlier blogs I outlined the historic encroachment of private interests on our ‘public commons’ – the land and facilities we share as citizens.

    In Sydney, there are many glaring examples of how the new squatters are moving onto public land.

    Darling Harbour has been ‘developed’ to within an inch of its life. Instead of a spacious recreation area we now have a congested and ugly commercial ghetto.

    Without due process and with political influence writ large, the public commons at Barangaroo has been dramatically reduced in favour of commercial interests. The original plan was to keep about half of the site, including the whole 1.4 km waterfront, as inalienable public land. That has been junked in favour of James Packer’s six-star casino to bring in ‘high rollers’.

    The original architect of Barangaroo, Philip Thalis, said ‘the vibrant public space envisaged seven years ago has shrunk to become basically an enclave of privilege and exclusion’.

    But worse is in prospect. The Sydney Morning Herald has reported ‘the city’s newest park, Barangaroo Reserve has attracted 200,000 visitors since August. But kite flyers, soccer players, fishers and musicians will find it off limits from this weekend. Anyone wanting to hire exclusive use of Barangaroo foreshore, lawns, coves and walkways for public functions however are welcome-if they are prepared to pay.’ Slowly the takeover continues.

    Another Sydney example of squatter encroachment on public land is the Sydney Botanic Gardens. For many years part of the gardens have been alienated for four months each year for opera and cinema. Wealthy patrons and wealthy sponsors have been the main beneficiaries. But this isn’t enough for the new squatters. The Botanic Gardens and the Domain Trust have released a master plan for the parks to be developed with cafes, an $80 million hotel and year-round concerts. This is desecration of the hallowed grounds bequeathed by Governors Phillip and Macquarie.

    In congested Watsons Bay where I live, a developer from Darling Harbour has applied to develop wedding facilities and restaurants within the South Head National Park and spill his patrons onto a beautiful public beach.

    Step by step our public commons is being eroded. When governments refuse to adequately fund our parks and gardens it is likely that commercial interests will seize the opportunity for a land grab. The economy is put ahead of society.

    In the 18th and 19th Century, wealthy and privileged landowners in England passed Enclosure Acts forcing people off common land which they had used for centuries. About 20% of land in England was enclosed.

    We followed suit in Australia in the 19th Century with ‘squatters’, mainly from the upper echelons of colonial society, occupying large tracks of crown land to graze livestock. Over time, this occupation of the pastoral ‘commons’ and the dispossession of indigenous people was enshrined in law and enforced by the police.

    History tells us that we need to be very careful about those who want to take possession and erode our public ‘commons’. It happens slowly, almost imperceptibly, often without our knowledge or understanding of what is at stake.  And it is not just about getting shooters out of national parks or protecting waterfront land without public tender. Councils often carelessly allow commercial interests to encroach on public parks, botanic gardens and beaches.

    Some council do oppose many crass and vulgar developments, but too often they don’t have the resources to combat a phalanx of celebrity architects, lawyers and public relations lobbyists. Some councils are obviously concerned that if they reject such developments, it will lead to expensive legal appeals to the Land and Environment Court.

    We owe a great debt to foresighted citizens and governments in the past who established our public ‘commons’, national parks ,botanic gardens and beaches, for the enjoyment of all.

    If governments and their agencies are unwilling or unable to protect our natural and built environment, I would hope that our unions would take up again what the BLF pioneered 40 years ago in Kelly’s Bush in Hunters Hill, Sydney. We need an association of professional and community groups, including unions to develop a charter to safeguard our public commons.

    With the rapid increase in our urban populations, protecting and expanding our public commons is more important than ever. The new squatters must be turned back.

     

  • Quigley, former CEO of NBN, attributes $15 b. cost blow out to Turnbull’s Multi Technology Mix.

    For comment by Renai LeMay, see link to his blog delimiter.com.au below:

    https://delimiter.com.au/2015/11/05/quigley-releases-detailed-evidence-showing-mtm-nbn-cost-blowout/

    John Menadue.

  • Quentin Dempster. Countering Rupert Murdoch’s plan to destroy public broadcasting in Australia.

    I regret to report there are forces at work in this country out to destroy public broadcasting… the ABC and SBS.

    But the fight to protect and enhance a more dynamic public broadcasting sector has just begun.

    Tomorrow in The Age and The Sydney Morning Herald, you will see a half page ad paid for by public broadcasting supporters calling on all Australians to join the Friends of the ABC or Save Our SBS – grass roots audience-focused organisations – to stake a claim on this country’s future as an informed, engaged and cohesive polity. A more professional national campaign organisation has been revitalised with branches in all states. I ask all in this room – and particularly the teachers and parents of Australia beyond this room – to help build our fighting fund and to join the membership drive. We need people power to counter the forces out to undermine and destroy the tangible and intangible benefits to be derived from quality journalism and program making – from news and current affairs, specialisations in science, health, education, climate change, the environment, economics and international affairs, law, media and justice; documentary, satire, drama, curriculum-specific educational programming, music – contemporary, symphonic, jazz, opera, the performing arts, rural and regional engagement, multi-lingual radio and television broadcasting in our now polyglot Australia, entertainment and sport.

    The media industry is now in the disruptive grip of what we call the digital revolution.

    I don’t know about you and .. don’t get me wrong … I love Stephen Fry , QI and Antique Roadshow across the village greens of Merry England .. but this is bloody Australia. We’re standing in it! How many more of these relentless repeats of other broadcasters’ catalogue and comparatively cheap off-the-shelf shows do we have to endure on the ABC?

    Under funding attack, the ABC has retreated to its Ultimo bunker. The ABC IS Sydneycentric with more than half the staff working there. TV production in Tasmania, South Australia, Western Australia and Queensland has been eliminated. The ABC does not have an in house documentary or natural history unit. The ABC co-produces its declining drama slate with commercial producers on ideas often prioritised as ‘bankable’ for on sale to Foxtel and other cable services. This business model necessarily limits innovative drama.

    Next year a tranche of ABC regional radio programs through the morning across Australia will go. Hard pressed so called breakfast presenters will be hoarse after more than three hours at the microphone as ‘breakfast’ extends well into the day.

    As well there’s the existential threat from the digital revolution. There are now many online players, over-the-top video streamers from off shore, now with direct access through wi fi to eventually all Australian households. They do not make any content locally and many use tax havens to avoid paying fair tax on revenues derived from Australian consumers. The entire Australian creative content industry is now fighting for its viability under this threat from the global aggregators. So the disruption does not just affect the public broadcasters.

    Without a strong political support base, the public broadcasters are in grave danger. These institutions – the ABC with an 83 year legacy; SBS with 36 years, have legislated Charters requiring all program makers to regard their audiences as citizens in a robust democracy .. and not consumers to be delivered up to advertisers. Programs should be commissioned on the basis of their creative merit, sometimes with risk. On-air conversations should facilitate the clash of ideas, not be devised by agents provocateur , radio shock jocks or Murdoch Press ranters for political propaganda. Interviews should interrogate both the information available and the advocate or mouthpiece. This requires experience, skill, and lots of preparatory research.

    While the laws establishing the ABC, SBS and NITV may remain, the lever of ‘control’ applied by government, is, as always, in the adequacy of resources directed through triennial funding appropriations. And there’s the discretionary power of executive government. It is this lever which urgers like the Murdoch Press work on, here in Australia, in the United Kingdom with the BBC and in the United States through that country’s now marginalised PBS broadcaster. It is the reason the ABC in Australia has been vilified as ‘left wing’, out of control, wasteful and unaccountable in a barrage of beat-ups and contrived scandals. It is the reason the BBC in the United Kingdom has been shrunk with funding stasis implemented by a hostile Cameron Government. It is the reason PBS in the United States has to try to supplement its funding through ‘pledge plea’ telethons – something the Murdoch Press now wants replicated for ABC funding in Australia.

    In his recent play, ‘Rupert’, the great Australian playwright David Williamson had the actor playing the older Rupert Murdoch confront the audience in the last scene. After a clever exposition of Murdoch’s lifetime of acquisition audacity, his aggressive intimidation of the politicians in Australia, the United Kingdom and the United States, his unethical practices like phone hacking and his Fox News propagandising for the Republican Party in the U.S. and his newspapers’ shameless front page barracking for Tony Abbott more recently in Australia… David Williamson had the actor playing Murdoch eye-ball the audience with words to the effect: “I’m still here .. what are you going to do about it?”

    Although – now – the demise of Tony Abbott as prime minister has mitigated the fear many of us felt over two years of hostility … we are yet to see Prime Minister Malcolm Turnbull’s professed regard for the public broadcasters turned into supportive action. (I made a mistake in my political judgement last year when I said I believed Malcolm would never become the PM. I thought if Tony faltered, Rupert would swing his support behind Julie Bishop or Scott Morrison. But more than six months after his near-death experience this year, Abbott remained vulnerable and Malcolm seized the moment and the numbers in a very nervous party room to eclipse Tony. So it appears that Malcolm Turnbull has attained the prime ministership without the support of the kingmaker … Rupert Murdoch. We will have to wait for the published memoirs to learn how Malcolm persuaded Scott Morrison and Julie Bishop not to split the vote by throwing their hats in the ring in the latest leadership ballot).

    We know all about the concept of Cabinet solidarity. Malcolm was not a member of the Abbott Government’s Expenditure Review Committee (ERC) which dishonoured Abbott’s now infamous pre-election commitment that there would be no cuts to the ABC or SBS .. no cuts to health and no cuts to education. (I’ll get back to education shortly). But the record shows Malcolm Turnbull tap danced around, defended and compounded Tony Abbott’s lie. He sooled a commercial TV network executive, Peter Lewis, on to both ABC and SBS in what was called an ‘efficiency review’ with the implication that the broadcasters must be wasting taxpayers’ money. ( Lewis has now been appointed to the board of the ABC). Turnbull tried to indicate that the reduction in base funding ordered by the ERC over three years was manageable and should not impact on either broadcasters’ programming. He was mute when his Cabinet colleague, Foreign Minister Julie Bishop, unilaterally terminated the ABC DFAT contract, bringing to an end the Australia Network and its active engagement with the region through its many in situ correspondents … and the reduction of Radio Australia to no more than rip and read. The loss of these resources has vandalised Australia’s national interest in the Asia Pacific region. The vacuum of influence created by Australia’s withdrawal is now being filled by China… and New Zealand.

    We all live in hope and I can accept that many Australians want to cut Prime Minister Malcolm Turnbull some slack while he soothes the hard right of his party room, compromises with the Nationals, and tries to reshape the government in his own image .. not Tony Abbott’s image. I’m sure every Australian of goodwill is hoping that now the ambitious Mr Turnbull has attained the top job he will be a unifying and intelligent facilitator and leader of the the nation as we confront our problems: environmental sustainability, the budget deficit, more effective counter-terrorism measures and the infrastructure backlog in a country still on track to rapidly increase its population to 40 million by 2055. The Prime Minister promises us a smart, intelligent, inclusive culture full of start-up innovation and entrepreneurship, presumably with an education system embedding his friend David Gonski’s recurrent funding formula to over-come educational disadvantage which has been proven to exist.

    The Gonski model will only be entrenched in recurrent funding beyond 2017, it now appears, through an increase in the goods and services tax to 15 percent. This is now on the political agenda. I, for one, think it must happen with appropriate offsets but as part of fair tax and structural reform. Where do you stand on this? This country needs to broaden its revenue base. And for sure a G20 crack down on corporate tax avoidance through offshore tax havens must be a part of the fix. With a rapidly growing population this country’s revenue base has to be increased and diversified, not just to drive us back to budget balance. Dr Ken Henry has clearly indicated that current revenue and expenditure settings are unsustainable given the two party determination to drive population growth to pile on consumer market demand.

    As well Malcolm Turnbull and his new Communications Minister Mitch Fifield look like moving to reform media policy in Australia by eliminating what’s known as the ‘reach’ rule and/or the ‘two out of three rule’, allowing print, radio and television ownership to be consolidated across all capital city and regional markets. These rules are now considered redundant because of video and audio streaming now accessible to worldwide players.

    The need to join the Friends of the ABC and/or Save Our SBS is now more urgent if there is an early double dissolution federal election. My Canberra spies tell me that if the current primary vote honeymoon now being enjoyed by the Coalition in response to Turnbull’s ascension to the prime ministership continues into next year, the PM and Tony Nutt, the new federal director of the Liberal Party, will be unable to resist exploiting this political advantage to deliver a Mal-slide – an electoral land slide, not only to defend the current 22 seat parliamentary majority but to increase it in the face of a faltering Bill Shorten Labor Party. March could be the preferred timing. The PM will have to be deft in his footwork, making sure there are no political gaffes which leave him exposed. Otherwise the election will occur later .. back to schedule after September … rather than sooner.

    Let’s watch and see how Rupert Murdoch plays this out. His organs and ranters appear somewhat confused at the moment.

    The Australian Labor Party has not always been a friend of public broadcasting in the past – particularly during the Hawke and Keating eras when funding was progressively cut and the ABC was taken up the dry gulch of pay television and sponsored international services. I give appropriate credit now to then federal treasurer Wayne Swan in the Rudd and Gillard governments. Under his ERC there was a modest enhancement for the ABC and the rescue of SBS from insolvency. Both broadcasters were able to restructure their services to lead the way in the transformation to digital services. The ABC had been reborn through cost effectively using the multi-platform, multi-channel technology. But when the next wave of political hostility came last year with the Abbott Government’s dishonouring of that election commitment, the broadcaster was faced with what managing director Mark Scott said was a choice between servicing older audiences accessing traditional radio and television media, and new younger audiences accessing the ABC through iPad and iphones and online. With an ageing population we should be doing both, but the MD and the ABC Board believed that if the ABC was to survive to its 100th birthday in 2032 it needed to get with youth and technology.

    For SBS a hostile SBS Board has allowed the commercial compromise of its Charter through allowing the disruption of programs by ads .. not between programs, but within them. And this year the SBS Board, backed by Malcolm Turnbull as communications ministers, tried to amend the SBS Act to effectively double the ads in prime time from five to 10 minutes. SBS will now start a shopping channel .. an advertorial channel .. with a commercial programmer and its own catalogue of cooking shows to enhance its advertising revenues. Over time this will destroy SBS and its raison d’être. SBS was established by the Malcolm Fraser Government in 1979 to serve the needs of the non-English speaking population in languages of their countries of origin The ABC was rightly seen as deficient in this area. In an age of geo-political tension, drone and jihadi terror, if ever a taxpayer investment in counter-terrorism was justified – the $270million we spend on SBS is more than justified. Incoming migrants from non-English speaking backgrounds including this country’s 600,000 Muslims, need to feel included and listened to, not alienated by Murdoch Press rantings or dog whistling prejudice, racism and xenophobia.

    In his recent book Rules of Engagement former News Corp chief executive Kim Williams offered a critique of the ABC with which I found myself agreeing. As a Friend of the ABC you are entitled to your two bob’s worth. We all own it, as Williams rightly points out.

    He writes: ‘The ABC is capable of as much vainglorious behaviour as our commercial media and is often consumed in a fountain of self-congratulatory rhetoric about itself and its centrality to independent views and reportage on Australia.’ P 223.

    We all need to be constructively critical of the ABC. Williams says the ABC refused to acknowledge just how slight the ABC’s comparative output against other TV media has become in quantity, particularly drama. I don’t remember seeing Kim at the political barricades as we fought for adequate program funding for the ABC over the last 20 or so years. But his observation rings true. “Its television work in documentary and the arts is uneven and frankly quite slight, and both are areas which are almost exclusively the responsibility of ABC TV and it needs to nurture and care about that territory more than others.”

    I agree with him. To wear the mantle of the national broadcaster the ABC needs to dramatically lift its game in documentary and the arts across all platforms. Williams says ABC documentary has become cheap and basic populist fare, a discount copy of many commercial reality shows. ABC TV does not reflect a diversity of views about our society.

    He suggests: “ I am reluctant to advocate separating ABC radio and television to create smaller more focussed organisations, but something is needed to revitalise the institutional framework that reinforces the ABC’s strength in aspects of radio and enables television to address its areas of weakness with continued attention to allied digital development”.

    Now that Kim Williams is free from the persecutions of those ingrates, his former fellow News Corp. executives, perhaps we can expect him now to join the Friends of the ABC and Save Our SBS to add to the constructive criticism and political advocacy to improve ABC and SBS performance … and funding.

    Ladies and gentlemen, unless this country is to be surrendered to the dogmatic simplicities, intimidations and manipulations of the Murdoch Press we need all concerned Australians to support and constructively criticise the ABC .. and SBS.

    There are big political battles to be fought over the education of our children … and the future of our democracy and our media, the public broadcasters in particular, through the digital revolution.

    The ABC and SBS need Friends and Saviours.

    Please help! Thank you.

    This speech was delivered by Quentin Dempster to the Ryde-Macquarie Teachers’ Association Annual Dinner, 30 October 2015. Note this address was given a day before the advertisements referred to.

  • Douglas Newton. Australia’s Leap into the Great War.

    One of the great clichés of Australia’s entry into the Great War is that Australia stepped up to ‘answer the call’ of the Mother Country. Much of the press coverage of the centenary of Anzac repeats this claim and adds a nationalist frosting: our entry into the Great War was a moment of national awakening. The facts fly in the face of this. Australia did not ‘answer the call’ in August 1914 – Australia jumped the gun. It was not a stand-tall moment of national awakening but of willing imperial subservience.

    At the heart of the story of Australia’s response to the international crisis of July-August 1914 was the decision of the Cabinet of Australian Liberal Prime Minister Joseph Cook to cable London in the early evening of Monday 3 August, offering an expeditionary force to Britain and the transfer of the Royal Australian Navy to the British Admiralty – almost forty hours in real time before Britain’s declaration of war (deep in the evening of Tuesday 4 August). Of course, Australia had no power to choose neutrality in 1914. That Australia would fight on Britain’s side in a great war was certain. But Australia’s plunge into war through her government’s offer of an expeditionary force on Monday 3 August was excessive, reckless, and scarcely a democratic decision. A handful of decision-makers in Melbourne pushed ahead of events and chose to immerse Australia utterly in the looming war.

    Events in Britain are crucial to the story. In London, during the last days of peace, the British Cabinet of Liberal Prime Minister H. H. Asquith was evenly divided on the question of British intervention in any European war. On one side stood the faction of Liberal Imperialists, keen to act loyally with Britain’s Entente partners, Russia and France, in order to safeguard the British Empire from those two Powers as much as Germany. On the other side stood a faction of Radicals, anxious to preserve Britain’s neutrality, and pleading that she should focus upon mediating the dispute and restraining Russia in particular. The decision hung in the balance. Then, over the last weekend of peace, New Zealand, Canada and then Australia cabled the offers of expeditionary forces, to anywhere, for any objective. The Dominions appeared to be eager for war – champing at the bit. This boosted the campaign on the right of British politics for instant intervention in any war. It was one factor helping to push Britain over the edge.

    Australia’s decision was made in the din of politics. The nation was in the throes of a bitter federal election campaign. At rallies on Friday 31 July, both the Liberal leader Cook and the Labor opposition leader Andrew Fisher promised Britain unlimited assistance (Fisher’s ‘last man and last shilling’). Over the weekend that followed, Liberal politicians, seeking political advantage, alleged that Labor was lukewarm on the Empire and a Fisher government would neglect Australia’s defence. Spooked, the Labor leaders pledged to support all Cook’s measures to secure Australia in this crisis. Seeking political safety in the middle of the election, they sidelined the ALP as a voice for caution at this critical hour. On Sunday, Cook’s ministers ordered the ‘precautionary stage’ of mobilisation, prompted by Britain’s ‘warning telegram’ seeking mere preliminary steps. Then, on Monday 3 August, Cook’s government sought 20,000 points on the political scoreboard, to eclipse Fisher’s vague ‘last man and last shilling’: a public offer of an expeditionary force of 20,0000 men, in any composition, to any destination, under British command, with Australia picking up the entire bill. This far exceeded the measures agreed between Australia and Britain as necessary upon the receipt of a ‘warning telegram’.

    Australia’s offer is praised in nationalist histories as democratic audacity in action. In fact, it was imitative, reckless and driven by the politicians’ pursuit of political advantage. The bitter truth – that Australia’s rushed offer of an expeditionary force added to the momentum of reactionaries pressing for war in London – is scarcely recognised. Moreover, the offer was a dangerous precedent for Australia. Her politicians forfeited the chance to weigh carefully war aims against costs, in life and treasure. Australia was taken for granted, and scarcely gained any role in the high diplomacy of Britain’s war.

    Was this a moment of national awakening for Australia? Just ten days into the war The Times of London drew the obvious lesson from Australia’s impetuosity. In an editorial it explained that the Dominion force that had been offered ‘is instantly under the orders of those who direct the movements of our Armies. They will go, without question and with eager alacrity, wherever they are sent. They will do what they are told to do. Theirs is not to reason why.’[1] A stand-tall moment? For Australia? We were hell-bent – and we got there.

    Assoc. Prof. Douglas Newton is a retired academic. He has taught history at Macquarie University, Victoria University of Wellington, NZ, and the University of Western Sydney. He is the author of a number of studies of war and peace, including most recently, ‘The Darkest Days: The Truth Behind Britain’s Rush to War, 1914 (London, Verso: 2014) and Hell-bent: Australia’s Leap into the Great War (Melbourne: Scribe, 2014). This article is based on a longer article which appeared in The La Trobe Journal. See link below.

    http://www.slv.vic.gov.au/about-us/our-publications/la-trobe-journal/la-trobe-journal-no-96-september-2015

    [1] ‘Brothers in Arms’, editorial, The Times, 13 Aug. 1914.

  • Steve Hatfield-Dodds. Australians can be sustainable without sacrificing lifestyle or economy.

    A sustainable Australia is possible – but we have to choose it. That’s the finding of a paperpublished today in Nature.

    The paper is the result of a larger project to deliver the first Australian National Outlook report, more than two years in the making, which CSIRO is also releasing today.

    As part of this analysis we looked at whether achieving sustainability will require a shift in our values, such as rejecting consumerism. We also looked at the contributions of choices made by individuals (such as consuming less water or energy) and of choices made collectively by society (such as policies to reduce greenhouse gas emissions).

    We found that collective policy choices are crucial, and that Australia could make great progress to sustainability without any changes in social values.

    Competing views

    Few topics generate more heat, and less light, than debates over economic growth and sustainability.

    At one end of the spectrum, “technological optimists” suggest that the marvellous invisible hand will take care of everything, with market-driven improvements in technology automatically protecting essential natural resources while also improving living standards.

    Unfortunately, there is no real evidence to back this, particularly in protecting unpriced natural resources such as ocean fisheries, or the services provided by a stable climate. Instead the evidence suggests we are already crossing important planetary boundaries.

    At the other end of the spectrum, people argue that achieving sustainability will require a rejection of economic growth, or a shift in values away from consumerism and towards a more ecologically attuned lifestyles. We refer to this group as advocating “communitarian limits”.

    A third “institutional reform” approach argues that policy reform can reconcile economic and ecological goals – and is attacked from one side as anti-business alarmism, and from the other as indulging in pro-growth greenwash.

    Income up, environmental pressures down

    My colleagues and I have spent much of the past two years developing a new framework to explore how Australia can decouple economic growth from multiple environmental pressures – including greenhouse emissions, water stress, and the loss of native habitat.

    We use nine linked models to assess interactions between energy, water and food (and links to ecosystem services) in the context of climate change.

    The National Outlook focuses on the intersection of water, energy and food. National Outlook Report, CSIRO

    The project provides projections for more than 20 scenarios, exploring different potential trends for consumption and working hours; energy and resource efficiency; agricultural productivity; new land-sector markets for energy feedstocks and ecosystem services; national and global abatement efforts, climate, and global economic growth.

    While our major focus is on Australia, at the national scale, we also model what might happen globally, and at more detailed state and local scales within Australia.

    We find economic growth and environmental impacts can be decoupled − in the right circumstances. National income per person increases by 12-15% per decade from now to 2050, while the value of economic activity almost triples.

    In stark contrast to income, which rises across all scenarios, environmental performance varies widely. Key environmental indicators such as greenhouse gas emissions, water stress, and native habitat and biodiversity are projected to more than double, stabilise, or fall across different scenarios to 2050.

    As shown in the chart below, we find that energy rises in all scenarios, but that greenhouse emissions can fall at the same time – with the right choices and technologies. Water use can also rise without increasing extractions from already stressed catchments. Food output (here indicated by protein) can increase, while native habitat is restored.

    Hatfield-Dodds et al (2015)

    Many of the 20 scenarios explored would represent substantial progress towards sustainable prosperity.

    Indeed, we find that Australia could begin to repair past damage: restoring significant areas of native habitat and achieving negative emissions (net sequestration) of greenhouse gasses.

    Growth of what?

    We use the normal definition of economic growth as measured by increase in Gross Domestic Product (GDP) – the value of goods and services produced in an economy – consistent with the national accounts framework.

    Some authors use a different definition, most notably Herman Daly a leading advocate for a steady state economy. Daly defines growth as an increase in physical economic scale, such as resource extraction, and goes on to argue that indefinite (material) economic growth is not possible.

    While this may be true, for his definition, it can be confusing for people that do not realise he is not referring to GDP growth. Indeed, Daly recently acknowledged that economic (GDP) growth is possible with finite resources and steady material throughput.

    These definitions matter: we project growth (GDP – measured in real dollars, adjusted for inflation) increases by more than 160% in scenarios where domestic material extractions and throughput (measured in tonnes) decreases by around 40%.

    Choosing a sustainable future

    But here is the real crunch: we find these substantial steps toward sustainability could build on policy approaches that are already in place in Australia or other countries. This implies Australia could make enormous progress towards a more sustainable future without a major change in what we value.

    We can be confident that a values shift is not required to achieve these outcomes – at least before 2050 – because none of the scenarios we modelled assume change in values or a new social or environmental ethic.

    Instead, we show that people will make choices to change their behaviour to make the best of particular policy settings. These choices shape production and consumption.

    For instance, we consider increasing Australia’s climate effort in line with other countries would be consistent with Australian public opinion and assessments of Australia’s national interest in limiting the rise in average global temperature to 2°C. So we do not interpret this as implying a change in values.

    But we find collective choices are crucial. For example, individual choices about whether to drive or catch a train to work are strongly shaped by prior collective choices about transport infrastructure. Collective choices are often, but not always implemented through changes in government policy, legislation, and programs.

    We find collective choices explain around 50-90% of differences in environmental performance and resource use across the scenarios we model. Consistent with the institutional reform approach, we find top-down collective choices are particularly important in shaping “public good” outcomes – accounting for at least 83% of the difference between scenarios for greenhouse gas emissions.

    Bottom-up individual choices play a greater role when private and public benefits are aligned. For instance individual choices account for up to half of the difference between scenarios for energy use (33–47%) and non-agricultural water consumption (16–53%).

    While individual choices are important, we find decisions we make as a society are likely to shape Australia’s future sustainability more than the decisions we make as businesses and households.

    Sustainable prosperity is possible, but not predestined. Australia is free to choose.

    Steve Hatfield-Dodds is Chief Scientist, Integration science and public policy, CSIRO. This article was first published in The Conversation on 5 November 2015.

  • John Menadue. The Dismissal. How John Kerr saved Malcolm Fraser forty years ago,

    In my post on 27 October 2015- ‘The Dismissal – Forty years on. A smoking gun’ I pointed out that Jenny Hocking in her recent book confirmed what I had always assumed that John Kerr had given Malcolm Fraser a clear indication of support.

    In her book ‘The Dismissal Dossiers; Everything You Were Never Meant to Know About November 1975’ MUP. Jenny Hocking points out quite clearly from material she has discovered that John Kerr was in regular and secret telephone contact with Malcolm Fraser in the week before the dismissal. That really is a smoking gun.

    In my post, I said that John Kerr’s intervention had saved Malcolm Fraser. I am convinced that that was the case. We didn’t fully understand at the time but in retrospect it is clear that John Kerr intervened prematurely in a political dispute which saved Malcolm Fraser.

    Let me set out what I think are important factors leading me to the conclusion that John Kerr acted prematurely and saved Malcolm Fraser. Most of these facts are included in my book ‘Things you learn along the way’ which was published in 1999.

    First, Gough Whitlam was dominating the parliamentary forum on the Opposition’s refusal  to pass the finance bills. In his speeches, Gough Whitlam was able to draw on the historic struggle between the Crown and the parliament in Britain. The outcome of that struggle was the supremacy of the House of Commons in financial matters. That was what was at stake in the Australian parliament in October and November 1975. Malcolm Fraser was no match for Gough Whitlam in the debate over these important constitutional and political issues.

    Second, public opinion had swung very clearly in support of the Whitlam Government that the finance bills should be passed. Opinion polls showed that well over 60% favoured passing the budget. I would not conclude from that that the Whitlam government would have survived a general election, but on the issue of passing the budget bills, the attitude of the Australian public became very clear. The momentum was with Gough Whitlam on this issue.

    Thirdly, as the parliamentary struggle continued, there were increasing doubts whether all coalition senators would continue to oppose the budget bills. It is now beyond doubt that some coalition senators would have broken and either abstained or passed the budget bills. In my book I quoted what Senator Reg Withers, the Leader of the Opposition in the Senate in 1975 told the The Australian newspaper on 6 November 1985. He said

    ‘For all I know, my blokes might have collapsed on the 12th. I don’t know. You just hope day after day you would get through until the adjournment. … There were two senators who told me that they were prepared to go. … I reckon we had another week. If I had got through that week, then you would look at the following week. I would have lost them some time about 20 November onwards. I know I would have lost them in the run-up to 30 November, but it wouldn’t have been two then, it would have been ten.’ 

    Fourthly, it was very clear that the coalition generally was very concerned about the course that it had embarked on. In my book I said

    ‘I recall speaking to Margo Anthony, Doug Anthony’s wife, in February 1976. She said that the Country Party had become so discouraged and disillusioned in the days before 11 November, that she had arranged a social get-together for the night of 11 November to try and boost morale and keep spirits up. As it turned out, it was a celebration rather than a wake.’ 

    These four factors convinced me that Malcolm Fraser would have lost the political contest and the budget bills would have been passed, but that he was saved by the premature intervention of John Kerr.

    (As a postscript to the above there is a recent comment by Tony Eggleton.the former Liberal Party Director in 1975. He said in The Australian on November 5,2015 ‘the view of senior Liberals that morning (of November 11  1975) was that unless Fraser prevailed that day then’it is all over…there had been quite a few people hanging in there who wouldn’t continue to support him’)

    In my book I drew attention to the view of Buckingham Palace that John Kerr had acted prematurely. This view was clearly conveyed in a conversation between Tim McDonald, the Official Secretary at Australia House London and its most senior Foreign Affairs officer and Sir Martin Charteris who was personal secretary and political adviser to the Queen at the time of the dismissal. Tim McDonald sent me a note of his discussions with Charteris. The note said

    ‘The Palace shared the view that Kerr acted prematurely. If faced with a constitutional crisis which appeared likely to involve the Head of State, my advice would have been that [the Queen] should only intervene when a clear sense of inevitability had developed in the public that she must act. This had been Kerr’s mistake.’ 

    Malcolm Fraser’s political life was saved by the premature intervention of John Kerr. In the process he destroyed Gough Whitlam. The reputation of Gough Whitlam is continually enhanced as more and more revelations keep piling up but a great injustice has been done to him.

     

  • John Menadue. The unfairness and waste in health. Private Health Insurance is the real culprit.

    Medibank Pte has been in dispute with the Calvary Hospital Group and now with UnitingCare over performance in their hospitals.

    At last our largest private health insurance company, MBP has come to understand that the private providers, hospitals and doctors, are really in control. These private providers determine the quality of care and its cost. The PHI companies like MBP are really powerless to control both the quality and cost of healthcare. They need to lift their game .But they are in a bind.

    The problem that the MBP faces is precisely the same problem as the US healthcare system faces. In the US hundreds of competing private health insurers do not have the power to control quality and price setting by providers. If a private insurance company is too tough the provider will take the business to a competitor. The worldwide lesson is that only a single insurer can have a real effect on costs and promote quality.

    The CEO of MBP has got into trouble by confronting the powerful providers, in this case Calvary and UnitingCare. He has resigned!  In his exit comments, the CEO of MBP, George Savvides said he was seeking to ‘reposition MBP from being a payer of bills, to a player in the health system’. He could not be more precise and correct. The private health insurance companies meekly accept the prices set by providers, both hospitals and doctors. I read Savvides’ comments to mean that the providers rebuffed him in his attempts to improve the quality and contain the cost of care. And his board did not support him. The providers have won again.

    Apparently Savvides was insisting on two things. The first was that MBP would refuse to pay when any of a list of 165 ‘highly preventable adverse events’ occurred, including preventable falls in hospital and presumably hospital-caused infections. Secondly he proposed that MBP would refuse to pay hospitals for unplanned patient readmissions that occur within 28 days of a procedure, compared with seven days previously.

    Good luck to PHI companies like MBP who refuse to be passive payers of bills and want to have a say in the cost and quality of care by private providers particularly in private hospitals.

    ‘Adverse events’ are a major cost in all health systems – mistakes, injury, infections and even death. Many are avoidable and many are not. Avoidable adverse events probably cost well over $ 5b p.a. in the Australian health sector. Good clinicians are caught up in a bad system. See link to my previous post ‘The personal, public and social costs of mistakes in health’.

    Other PHI companies like BUPA must similarly be concerned about the difficulty in controlling provider costs. That is the reason why PHI premiums rise significantly each year. Since John Howard introduced the rebate on PHI in 1999 the cost of PHI premiums has increased 150%.Overall prices have increased by less than 50%.Not surprisingly a reader panel in the Sydney Morning Herald has found that 64% of people don’t believe that PHI provides value for money. The Minister for Health describes many PHI policies as ‘junk’

    But PHI companies like MBP and Bupa contribute to high costs. Through GAP insurance that they provide they have underwritten an enormous increase in specialist fees in private hospitals. These specialists receive remuneration three to four times what is paid in public hospitals. And not to be out done on specialist fees the major private hospital; Ramsay Healthcare for example paid its CEO $31 m in 2014. No wonder MBP wants to get hospital costs down!

    In addition to the inability of PHI companies to put pressure on health costs, there is the problem of waste in the delivery of health care – excessive pathology and radiology tests, over-treatment and over-prescribing. In the recent Four Corners program we were told about a tsunami of over-diagnosis and treatment. We heard about

    • Care that is ineffective and sometimes unsafe;
    • That perhaps a half of MRIs, are unnecessary;
    • At least half arthroscopies are unnecessary;
    • At least 20% of knee replacements may be inappropriate;
    • The majority of MRI’s and CT’s for back pain are a complete waste;
    • The scientific evidence for spinal fusion is just not there;
    • As much as a third of money for stenting is potentially being wasted;
    • And up to 43% of invasive coronary angiograms are unnecessary.

    This waste is common across the health sector, both public and private, but I suggest that the problems are greater in the private sector and private hospitals in particular.

    The Four Corners program highlighted the particular problems in private hospitals.

    • ‘Stents are more likely to be given in the private sector than in the public’
    • ‘Most spinal fusion is done in private hospitals’
    • Angiograms are performed ‘more frequently in the private system’
    • ‘In the last ten years we have forked out nearly $486 m. for knee MRIs in the private sector alone.’
    • ‘It does seem that over-treatment is in the private sector’.

    Four Corners did not examine Work Cover and the cost of injuries in the workplace, particularly back injury when it is treated in private hospitals.

    Many clinicians and others in the Four Corners program pointed out that there is a great deal of data in all these areas but unfortunately it is invariably in silos and not readily accessible to the public so that we can effectively address the problems of ineffective, wasteful and sometimes harmful medical procedures. There are large variations in medical procedures between public and private hospitals and regions. We have a long way to go in rigorous evidence based care. Accreditation in itself does not tell us much about the quality of care.

    There are particular reasons why we should be concerned about what is happening in some private hospitals.

    • Fee for service in private hospitals and in the private sector generally provides a perverse incentive. Clinicians are rewarded for volume of work rather than the quality of care and patient outcomes. In the public sector, clinicians are more likely to be remunerated on a salaried or sessional basis without the financial incentives for over treatment.
    • In the public hospitals peer review is much more widely practiced with mistakes, adverse events and poor performance more readily corrected.
    • Dealing with less complicated cases, many private hospitals do not have the breadth and depth of experience and the skills that are found in public hospitals and particularly teaching hospitals. Some of the larger private hospitals are well run with peer review and strict accreditation. Some have training registrars and medical students. However the quality of care is patchy, particularly in smaller private hospitals.
    • I am also advised that private hospitals are much more likely to import minimally qualified nurses on temporary visas. This inevitably leads to more adverse events.
    • Private hospitals work much more on a cottage industry basis with visiting medical practitioners coming and going between the hospital and their private rooms. With hundreds of visiting specialists it is very difficult to develop professional collaboration and peer review and professional esprit des corps when they are coming and going on a part time basis.

    Australia is spending $10 b. to subsidise private health insurance. In 2014/15 this was made up as follows

    • $6.3 b for direct outlays as in Budget Paper 1
    • $1.5b tax free income rebate.
    • $1.0b benefit for exemption from Medicare levy surcharge.

    The total is $8.8 b for 2014/15. This year it would be higher and before we look at the inflation effects of PHI

    Most of the direct outlay of over $6b benefits higher income people accessing high cost private hospitals in the name of choice .In the process they jump the hospital queue.

    MBP’s attempt to address some of these problems in negotiations with Calvary Hospitals and UnitingCare is the first public sign that I have seen of PHI companies recognizing their serious problems. The ‘canary in the mine’ is warning us about the quality and cost of private hospital care that is   generously subsidised by the Australian taxpayer.

    PHI’s are financial intermediaries. They do not deliver healthcare. They are proving unable to effectively manage quality and contain costs in private hospitals. George Savvides has found out the hard way. But the government doesn’t care and diverts attention with nonsense about the unsustainability of our health system. Abolishing the $10b subsidy for PHI would greatly improve the quality of health care, reduce costs and make our health care system much more sustainable.

    But the lobbying power of PHI companies and private hospitals like Ramsay Healthcare frightens almost all politicians and particularly Commonwealth health ministers from both sides of politics.

    Taxpayer subsidised PHI will destroy our world class health system in the same way that PHI has caused disaster in the US.

  • John Menadue. Malcolm Turnbull and the NBN mess

    As Minister for Communications Malcolm Turnbull had two major responsibilities. They were the public broadcasters, ABC and SBS, and the NBN.

    As I pointed out in an earlier post, the ABC needs rebuilding after the harsh budget cuts and termination of the Australian Network contract while Malcolm Turnbull was the minister.

    The plight of the NBN is much more serious. Consider comments by people who have followed this issue very closely.

    In this blog on 10 September 2015, headed ‘The NBN; why it’s slow, expensive and obsolete’, Rod Tucker, Laureate Emeritus Professor at the University of Melbourne said

    ‘The Coalition sold the public a product that was supposed to be fast, one third the cost and arrive sooner than what Labor was offering us. Instead the Coalition’s NBN will be so slow it will be obsolete by the time it’s in place, it will cost about the same as Labor’s fibre to the premises NBN and it won’t arrive on our doorstep much sooner. By my reckoning we didn’t get a good deal’

    In The Conversation on 15 September 2015, Rod Tucker commented further:

    ‘Under Turnbull, the NBN budget has blown out as much as $A18 billion and on current projections is four years behind the original schedule. Worse still, additional funding to help cover the cost blow-out will need to be obtained from outside sources. This could be difficult given that the fibre-to-the-node (FTTN) technology to be rolled out will soon be obsolete and will not be attractive to an investor looking for a reasonable long-term return on investment. This problem is just one of many that the incoming Communications Minister is going to have to solve. … Broadband customers Atlanta, for example, now have the choice of between 1 Gbps connections with Google or 2 Gbps symmetrical (upstream and downstream) services with Comcast. The NBN’s FTTN service will be 20 to 40 times slowed than Comcast. … These are just some of the things that need to be done to help get the NBN back on track. Let’s hope that Turnbull picks a successor who is up to the task. It’s not too late to fix the NBN but time is running out.’ 

    Renai LeMay in delimiter.com.au on 14 November 2015 pulled no punches

    ‘I was present at Turnbull’s very first press conference after Abbott appointed him as the new Shadow Communications Minister five years ago in 2010. And today, I was in parliament house in Canberra as Turnbull announced his challenge. I have borne witness to every step Turnbull has made along the way in the portfolio over the last five years. So let me be the first to say it. And I’ll say it loud and clear. Malcolm Turnbull has been an absolutely terrible Communications Minister. … The strength of the [ALP] policy was always that it would have laid the foundation for the next century of world-class telecommunications infrastructure in this country, fuelling the development of a massive digital economy and better health, education, business and social outcomes. Along the way it would also have completely broken Telstra’s stranglehold on market competition. Turnbull’s appalling multi-technology mix approach to the NBN, will in sharp contrast, set Australia significantly back. The policy will result in massive cash windfalls to the likes of Telstra and Optus, allowing Australia’s two major telcos to offload their outdated copper and HFC cable infrastructure at a premium cost to the taxpayer. Meanwhile, that same taxpayer will face a legacy of decades of technical failures stemming from Turnbull’s insistence that copper cables and 25 Mbps speeds are good enough for Australia’s broadband needs.’ 

    On 29 September 2015, Paul Budde in BuddeBlog said

    ‘As we predicted when the government changed its plans for the NBN, this would take, not the six months indicated by the minister, but at least two-three years. So in all we have lost at least another two years. During that time the OPEX costs of the company continued, as well as significant extra costs in political reviews, consultancy reports, new designs, pilots and so on – all of these costs eating into a limited budget that, in the case of government funds, will start to run out in 18 months time. On top of that NBN Co also faces a skill shortage, so it has plenty of headaches ahead. … When the NBN was launched in 2009 one of the goals was to get the country into the top ten of the international ladder. Now in 2015 we have dropped to the 42nd position. … With the rest of the world now clearly moving towards FTTH Australia is set to linger on the bottom of the international ladder for many years to come, … if we want to be competitive in our Asian and globalised market we will need to lift our digital profile among our trading partners, and the NBN is key in that. We shouldn’t stop at the already out of date multi-mix technologies. These should be extended as soon as possible to a fully blown FTTH network in line with what other developed nations are building.’ 

    In this blog on 2 November 2015 Mark Gregory, a senior lecturer in the School of Electrical and Computer Engineering at RMIT University said

    ‘The malaise that the telecommunications industry finds itself in has been exacerbated by the efforts of the Prime Minister Malcolm Turnbull who, as the Minister for Communications, spent two years doing very little whilst telling everyone that he was on the cusp of finding solutions for a variety of problems besetting the industry. … The decision by the Coalition government that was implemented by Turnbull in 2013, to adopt the obsolete FTTN technology for a significant percentage of the NBN will, in future years be seen as economic madness. … In what is likely to be the greatest con in Australian history, the government promised that the NBN would be completed at the end of 2016 and it would be built for $29.5 b. The latest projections from NBN Co indicate the NBN should be completed in 2020 or possibly later and the cost for Turnbull’s MTM approach will now be at least $56 b. … [The NBN] is likely to be the most expensive lemon in Australian history that was to be built with an impossible deadline as was widely pointed out by industry and academia at the time.’ 

    Can the new Minister for Communications, Mitch Fifield, get us back on track? It is going to be very hard. A major problem will be to unscramble the fibre-to-the-node contracts that have been let.

    Malcolm Turnbull has left us with an awful mess. It would almost seem that the NBN was set up to fail.

     

  • John Menadue. Abbott lectures London on how to ‘stop the boats’.

    Tony Abbott has been at it again, this time in London, claiming that he stopped the boats and that Europeans should follow suit. It is an oft repeated untruth that he stopped the boats. His one-liners are not supported by the facts. But the lie is deeply imbedded.

    Last month, Peter Hughes and I posted two articles on ‘Slogans vs Facts on boat arrivals’. Part 1 was entitled ‘How Tony Abbott helped to keep the door open for people-smugglers. Part 2 was entitled ‘Tony Abbott did not stop the boats’

    Let me briefly summarise a few facts from these two posts.

    First, the Coalition decision to oppose legislation in September 2011 to implement the Malaysian Arrangement gave the green light for people-smugglers to expand their business. People arriving by boat increased from 319 in September 2011 to 4,230 in July 2013. By opposing the implementation of the Malaysian Arrangement the Coalition showed that it did not want to stop the boats, but for political reasons wanted to stop Labor stopping the boats.

    Secondly, the rapid decline in people arriving by boat began in July 2013 when Kevin Rudd announced that in future no people arriving by boat would ever be settled in Australia. As a result people arriving on 47 boats fell from 4,230 in July 2013 to 355 on 7 boats in December 2013 when Tony Abbott’s Operation Sovereign Borders and boat turn-backs commenced. By the time OSB came into effect, boat arrivals had turned into a trickle. The game was almost over. Tony Abbott made a quite marginal contribution to stopping the boats. With boat arrivals down to 7 in December 2013, turn-backs were possible. They would not have been possible if they had been running at 47 a month as they were in July 2013.

    I often ponder why the untruths about boat arrivals have become so embedded and accepted in public discourse. I suggest there are three main reasons.

    First, Tony Abbott was able to effectively exploit xenophobia. He was very successful with his one liners in many areas. He did not bother to look at the facts, but successfully prosecuted a successful public relations and political campaign. Perceptions counted more than facts.

    Second, the ALP has been reluctant to argue that its hard-line policies had in effect stopped the boats. It was fearful of offending many of its traditional supporters who favoured a more generous approach to asylum seekers.

    Thirdly, under-resourced journalists didn’t bother to check the facts and they locked themselves in to uncritical acceptance of government propaganda. They now find it hard to accept that they were conned.

    The facts are clear. In September 2011 Tony Abbott’s policies gave a green light to people smugglers. The dramatic fall in boat arrivals commenced many months before Abbott’s Operation Sovereign Borders came into effect.

  • Mark Gregory. The new PM and the NBN. ‘An expensive lemon’

    The National Broadband Network (NBN) is now delayed by between five and ten years and will cost significantly more over a 20 year lifetime due to the government’s decision to shift from a Fibre to the Premises (FTTP) fixed access network to the Multi-Technology Mix (MTM) approach that includes Fibre to the Node (FTTN) and Hybrid Fibre Coax (HFC).

    The malaise that the telecommunications industry finds itself in has been exacerbated by the efforts of the Prime Minister Malcolm Turnbull who, as the Minister for Communications, spent two years doing very little whilst telling everyone that he was on the cusp of finding solutions for a variety of problems besetting the industry.

    In his time as Communications Minister Turnbull was responsible or involved with a remarkably small number of bills before Parliament, no doubt because the Senate would not support a large majority of the Coalition’s unsubstantiated justifications and rationale for legislative and regulatory change to the NBN and the broader telecommunications market.

    In a nation that appears to have an endless supply of state and federal funding for roads and hand-outs to multi-nationals that pay little or no tax, the decision by the Coalition government, that was implemented by Turnbull in 2013, to adopt the obsolete FTTN technology for a significant percentage of the NBN will, in future years, be seen to be economic madness.

    Any belief that Turnbull would, on becoming Prime Minister, take action to remedy the mistakes made with the NBN rollout over the past five years has now been shown to be nothing more than a pipe dream.

    Turnbull has clearly demonstrated that he is quite prepared to adopt the age old ploy of commissioning an endless number of reviews and audits that have been carefully stage managed to provide the answers that support his position on a range of topics. And he is quite prepared to direct government departments to take actions that appear to defy international standards and definitions if this is necessary to support his position.

    So it is unsurprising that Turnbull squelched a range of protests by prominent Australian engineering experts and Academics by resorting to name calling and failing to respond to the valid points raised.

    In what is likely to be the “greatest con in Australian history” the government promised that the NBN would be completed by the end of 2016 and it would be built for $29.5 billion. The latest projections from NBN Co indicate the NBN should be completed sometime in 2020 or possibly later and the cost for Turnbull’s MTM approach will now be at least $56 billion.

    In the lead-up to the last election the former Prime Minister Tony Abbott stated “we will deliver a new business plan for the NBN so that we can deliver faster broadband sooner and at less cost. I want our NBN rolled out within three years and Malcolm Turnbull is the right person to make this happen.”

    Turnbull was well aware that the NBN would not be completed by the end of 2016, yet he was prepared to be an active participant in what is likely to be the most expensive lemon in Australian history that was to be built with an impossible deadline as was widely pointed out by industry and academia at the time.

    There can be no doubt that Australia needs the NBN if there is to be active participation in the global digital economy, but to be more specific, Australia needs national telecommunications infrastructure that is based on an all-fiber access network in areas where a fixed access network is appropriate to ensure that the nation can compete and become a global digital economy leader.

    It is unremarkable that the success of New Zealand’s version of the NBN has not been addressed by Turnbull, the adoption of NG-PON2 FTTP in many markets around the world and it is likely that he will continue to harp on about the aging and underperforming FTTN networks operated by BT and Deutsche Telekom.

    Recently the total number of fibre broadband subscribers passed the total number of copper broadband subscribers and what this means is that as Australia rolls out the copper based FTTN or G.Fast we will fall further behind our competitors in related measures of broadband access capability.

    The recent launch of NBN Co’s Sky Muster satellite that will provide a much needed broadband access improvement to regional and remote Australia is likely to have been cancelled by Turnbull in late 2013 if it was not for the iron clad contracts put in place by the former government. Turnbull’s failure to comprehend the need for the two Ka band satellites led to his ridiculous remark in 2012 that the satellites were a “Rolls-Royce” solution that were not needed.

    Unfortunately, as Prime Minister Turnbull is in a position to turn his attention to removing monopoly infrastructure regulation from the Australian Competition and Consumer Commission (ACCC) in what can only be considered to be an effort to placate Telstra and if this decision goes ahead the telecommunications industry is set to enter a period not unlike the dark-ages.

    Turnbull’s recent support of Telstra by writing to the ACCC and arguing that the ACCC should not reduce fixed-line charges by 9.4 per cent clearly demonstrates what the priorities of the Turnbull government are and these certainly do not appear to include working for improved customer focused outcomes and lower costs, so it is likely that Turnbull will renew efforts to marginalize the ACCC.

    Telstra has had major financial boons from the two agreements with NBN Co and the associated multi-billion dollar sweeteners thrown Telstra’s way by the current and former government, but there is no doubt that if Turnbull has an opportunity to sell off the NBN then it is likely that the lions share will fall into Telstra’s hands due to the nearly $100 billion that it will be paid or save over time under the current agreement with NBN Co.

    A review of the Universal Service Obligation (USO) was announced by the former Parliamentary Secretary to the Communications Minister Paul Fletcher and it was apparent that he was taking a positive leadership role within the Coalition government for this important keystone of the nation’s social equality oriented telecommunications policy. Why Turnbull’s attention was not focused on the USO in his time as the Communications Minister is a mystery, but could provide some guidance as to his priorities.

    Turnbull appears to be in denial of his failure as a Communications Minister, and simply brushed aside demands for reasoned and justified telecommunications market reforms. Having made a mess of the NBN and brushed off the wide-spread criticism, we should not hold out hope that Turnbull will change direction.

    And now that the Coalition government believes that Turnbull’s popularity will make the next election nothing but a formality the telecommunications portfolio is likely to remain in the background as the Coalition government seeks to broaden and increase the goods and services tax to 15 per cent. Another Turnbull gem?.

    Mark Gregory is a Senior Lecturer in the School of Electrical and Computer Engineering at RMIT University.  His blog is here.

  • Michael Keating. The Turnbull Government’s Response to the Financial System Inquiry

    The Government has adopted 43 of the 44 recommendations of the Financial System Inquiry (FSI). These recommendations had received wide support, and as I said in an earlier blog (21 January), ‘they should be relatively easy for the Government to adopt’. Indeed, the surprise would have been if the Government had not been supportive (whoever was Prime Minister and Treasurer).

    Overall the net result should:

    • Strengthen the resilience of the financial system
    • Lift the value of the superannuation system and retirement incomes
    • Modestly promote some more competition
    • Lead to some improvement in customer treatment
    • Enhance regulator independence and accountability

    In this posting I will concentrate on the first two points, which have received most public comment and which are the most significant.

    Resilience of the Financial System

    Our financial system weathered the GFC exceptionally well, but nonetheless the Government has accepted the FSI view that “Australia’s financial sector regulatory framework needs to be stronger than those of other comparable countries”. In particular, Australia’s banks provide close to 90 per cent of the domestic credit to businesses and households. Furthermore, compared to other countries, Australia’s banks are especially dependent on off-shore financing, while their lending portfolios are heavily concentrated on home lending, with mortgages accounting for 60 to 70 per cent of their domestic lending.

    The main change to improve the resilience of the financial system has been the requirement for the banks to hold increased capital. In addition, risk weights, leverage, loss absorbency and regulators’ crisis powers will be addressed by the regulators and the Government. These changes should reduce the possible future need to call on the government guarantee and consequently for taxpayer funded bailouts. They should also reduce the advantages that the four major banks have over their competitors, thus increasing competition with better outcomes for consumers. Certainly, the present level of competition is insufficient to hold down charges (see more below), and one wonders if these changes will make enough difference.

    In fact, the banks anticipated the Government’s support for these changes to their capital ratios and moved to improve them before the government announcement. What is of concern, however, is that the increased cost of the extra capital has been passed on, or even more than passed on in the case of Westpac, through higher interest rates to borrowers. Furthermore, the return on shareholders’ funds for the four major banks in Australia is already just about the highest among all comparable countries. Thus the major banks could easily have absorbed the higher costs of their greater security instead of passing them on to their customers. Indeed, that would seem to be only fair as their shareholders are now facing less risk, and normally the return on capital should reflect the amount of risk.

    Clearly the oligopolistic competition among the four major banks is not working in the customer’s favour. Calls by the Government, media and of course the banks themselves, that these interest rates are competitively set and should be left to the market fail to recognise that the evidence clearly proves that the present oligopolistic form of competition is falling far short of the text book ideal of pure competition.

    Now some financial pundits are suggesting that the Reserve Bank will need to lower its interest rate just to offset the unjustified increase in mortgage rates. But this really would be a case of the tail wagging the dog, if monetary policy is going to be set in response to unwarranted decisions by the commercial banks. Indeed, in these circumstances one wonders if stronger regulatory powers might not produce a better result, if this is how our banks are going to behave if left to themselves.

    Superannuation and Retirement Incomes

    The objective of the superannuation system

    Since the introduction of compulsory superannuation back in 1992, superannuation has become one of the success stories of Australian policy. Superannuation funds now account for as much as $2 trillion of savings, and even though the compulsory system is still only half way to maturity, the retirement incomes of middle income households have already improved significantly. Overseas assessments rate the Australian retirement incomes system as being the second or third best in the world. Nevertheless, improvements in our retirement income system have been recommended by the FSI, and these can and should be made.

    Most importantly, the Government has accepted the FSI recommendation that the starting point for reform is to establish clearly the objective of the compulsory superannuation system and enshrine it in the superannuation law. This will act as a guide regarding superannuation’s purpose against which policy proposals can be assessed. This should in turn improve the policy debate and avoid some of the past policy mistakes.

    At this stage, however, the Government has still left open what that objective for superannuation might be. The FSI recommended that the objective of superannuation should be to provide “income in retirement to supplement or substitute the age pension”, and there is an emerging consensus that superannuation should be directed to providing a retirement income and not other benefits, including bequests. Nevertheless, there will be a lot of further debate about:

    • what constitutes an adequate retirement income
    • the implications for the amount of compulsory saving and how superannuation balances might be used in retirement; and
    • the extent to which superannuation should be matched by reductions in access to the age pension.

    Perhaps the most worrying issue yet to be settled in regard to the purpose of superannuation is the extent to which superannuation should act to reduce the call on the Age Pension. Unfortunately both sides of politics in their response to the FSI recommendations have expressed their desire that as many retirees as possible should live off their superannuation and not rely on the Age Pension or even a part Age Pension. In principle limiting access to the Age Pension in this way may seem like a good idea, but practically its advocates merely demonstrate their ignorance of how the pension and superannuation systems actually interact. Furthermore, it was never the expectation of the then government, as can be seen from the second reading speech when compulsory superannuation was introduced, that it would lead to a significant reduction in the number of people drawing an age pension. Instead, it was expected – correctly – that compulsory superannuation would lead to more part-pensions and less full pensions, but not much reduction in the total number of pensioners.

    The reality is that the present age pension for a couple cuts out at around average weekly earnings, and more than 80 per cent of the workforce earn less than this amount. So if this majority of retirees receive a superannuation weekly payment that is a bit less than their previous income, they must inevitably have access to a part pension in their retirement. The only alternative way to prevent most retirees having access to a part age pension would be to:

    • reduce the age pension,
    • increase the rate at which the age (and other) pensions are reduced as private income increases above the already high rate of 50 per cent, or
    • substantially increase the rate of compulsory contributions to superannuation.

    It is doubtful whether any of these ways of reducing access to the Age Pension are actually desirable or politically practical. So in setting the objective of the superannuation system we should focus on achieving an adequate retirement income, and forget about the consequences for expenditure on the Age Pension.

    Reforms affecting post-retirement incomes

    The other really important recommendation by the FSI, which the Government has also endorsed, is the proposal to introduce new income stream products that can better protect retirees from longevity and the other risks. At present retirees draw down on their superannuation balances after retirement, either as a lump sum, or as regular payments from their individual superannuation account. This means that the retiree has to calculate how long they will live and adjust their draw-down rate accordingly if they want to maintain their standard of living. In addition, they must handle the inflation and investment risks that will affect the value of their superannuation balance.

    The evidence strongly suggests that retirees are mostly risk averse and try to ensure that their money doesn’t run out while they are still alive. As a result, they typically leave a sometimes substantial balance in their fund when they die, but this comes at a cost of an unnecessarily low living standard through their retirement, and also a lack of security.

    In future the default option for a retiree will be a comprehensive retirement income product (CIPR), selected by their fund’s trustees. Individual retirees will still be able to opt out if their circumstances and preferences are different. But for those who agree to participate, the longevity and other risks will effectively be pooled, and this should encourage the financial system to develop new products that will provide much more secure retirement income streams to retirees. In addition, the Government has agreed to “continue to work to remove impediments to retirement income product development”.

    While these are important and welcome reforms to the post-retirement arrangements for superannuation, there remains some doubt whether the pooling of the post-retirement risks will work sufficiently on a voluntary basis. Time will tell, but it may be if voluntary pooling doesn’t work sufficiently well, then some form of mandatory pooling will be proposed. The difficulty with compulsion, however, is that the circumstances of different retirees can vary significantly as can their circumstances through their retirement. Thus it will be difficult to design a limited number of common post retirement products that suit everyone, but that is what mandatory pooling would impose.

    Other superannuation reforms

    The other major reforms of superannuation that the FSI proposed and the Government has (enthusiastically) endorsed relate to the governance and regulation of the system. The key changes are:

    • all funds must in future have a majority of independent directors
    • competitive allocation of new default fund members to MySuper products, that have emerged as key savings instruments during the accumulation stage, and the same would presumably apply for the allocation of retirees to funds offering the proposed CIPRs
    • amendment of the choice of fund arrangements by removing the deemed choice in certain industrial agreements and determinations.

    Clearly these changes are intended to reduce union influence over superannuation, notwithstanding that the present arrangements seem to be working well. On the other hand, it is hard to disagree, in principle at least, with more choice and competition. My personal view is that if the industry funds, where unions presently supply up to half the Board members, are truly as competitive as claimed, then I doubt that the changes will make all that much difference.

    The big prize for the retail, non-union, funds is a bigger share of the default market. If they are to win this bigger share, however, they should have to drive their costs and charges down. In that case the broader competition should benefit members, and that would be good. Indeed, a reduction of 30 basis points in charges, could on average accumulate over 40 years into an extra $40,000 that will significantly increase each retiree’s income.

    The key FSI recommendation that was not accepted by the Government was the FSI proposal to stop superannuation funds from borrowing directly. This is despite the risks that such borrowing presents to the resilience of the financial system, with much of that borrowing being invested in possibly over-inflated property. According to the Government the presently available data are not sufficient to justify significant policy intervention, but it will monitor the situation further.

    This decision effectively means that the Government has chosen to ignore the expert advice from the FSI, which clearly did consider that the data were sufficient when they made their recommendation. However, any prohibition on self-managed superannuation funds borrowing to increase their investments would have been unpopular with the relatively well-off owners of these funds. One cannot help wondering therefore whether that may be the real reason why the Government has failed to act on what is a potentially significant risk to financial stability.

    Finally, action to reduce the inequities and costs involved in the superannuation tax concessions was not part of the FSI mandate, but it did advise the Government that action should be taken. It is to the credit of the Turnbull Government that it has now decided that this issue should be considered as part of its Tax Review. On the other hand, a review of the superannuation tax concessions should never have been prevented by the Abbott Government; indeed even the former Treasurer, Joe Hockey, in his valedictory speech to the Parliament called for these tax concessions to be reviewed. 

    Conclusion

    All in all the new Turnbull Government has got off to a good start with its first major set of reforms covering the financial system. The net result should be better performance by what is now one of Australia’s biggest industries that greatly influences our overall economic performance. This reform package, however, was not a real test of the Government’s economic credentials. Frankly almost all the decisions involved were not controversial, and the few exceptions affecting superannuation governance and competition were strongly supported by the Government’s own constituency.

    The real test for this Government will come later when it reveals its intentions regarding Budget repair, tax reform, and the future of federalism. Innovation policy will also be important but less controversial, while workplace reform will most probably involve more legislation to curb the power of unions, but no-one has yet shown that such attempts in the past have ever made much if any difference to productivity.

    Michael Keating is the Chairman of the newly formed Committee for Sustainable Retirement Incomes which is an independent, non-partisan committee that has been established to act as a catalyst for public debate about retirement incomes through the development of evidence and policy advocacy.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    [1] Michael Keating is the Chairman of the newly formed Committee for Sustainable Retirement Incomes which is an independent, non-partisan committee that has been established to act as a catalyst for public debate about retirement incomes through the development of evidence and policy advocacy.

  • John Menadue. Malcolm Turnbull and rebuilding the ABC

    Our new prime minister, Malcolm Turnbull has a chance to repair the damage that was done to the ABC when he was the minister in charge. Malcolm Turnbull was unable to stop Tony Abbott’s cultural war on the ABC which was aided and abetted by Rupert Murdoch.

    Today, Friends of the ABC published an advertisement in The Age and the Sydney Morning Herald calling on the public to ‘support the rebuilding of the ABC (and protect SBS)’. This advertisement highlights the recent damage that has been done to the ABC

    • Severe cuts to the budget.
    • Terminating the ten year contract between the ABC’s Australian Network and the Department of Foreign Affairs and Trade, to run the Asia Pacific Television Service. As a result Australia’s voice in the region has been muted and our engagement set back.
    • Over 500 staff have been retrenched. There will be less in-depth programs and more reliance on overseas news services, reduced rural coverage and centralisation of programs in Sydney.

    Rebuilding is necessary because the ABC plays a vital role in this country. What a barren media landscape we would have without the ABC and SBS. Our public broadcasters are unique and important, even if Murdoch would like to get rid of them and give his organisation even more media dominance.

    Australians trust the ABC.

    Essential Research in January this year asked Australians what trust they had in some key institutions. The research showed that the ABC and the High Court topped the list of the most trusted institutions with 53%, followed by the Reserve Bank at 48%. Newspapers well down the list at 30% and the ‘news media’ at 25%.

    Looking specifically at the media. Essential Research found ’a lot or some trust in the media’ as follows:

    ABC TV news and current affairs                               70%
    ABC radio news and current affairs                           63%
    ABC talk-back programs                                              46%
    Commercial news and current affairs                       38%
    News and opinion in daily newspapers                    48%
    Commercial TV news and current affairs                 41%
    Commercial radio talk-back                                        31%

    For ‘a lot or some trust’ in particular newspapers rankings were as follows:

    Melbourne Age (Victoria only)                                    68%
    The Sydney Morning Herald (NSW only)                 64%
    The Australian                                                                64%
    Courier Mail (Queensland only)                                  59%
    Herald Sun (Victoria only)                                            48%
    The Daily Telegraph (NSW only)                                 41%

    One unfortunate feature of Australian media with it’s under resourced journalists is its heavy reliance on information and propaganda put out by vested interests. The Australian Centre for Independent Journalism at UTS Sydney found in a survey of major metropolitan newspapers published in Australia in 2010 that 55% of content was driven by public relations handouts from lobbyists and their associated public relations arms and 24% of the content of those metropolitan newspapers had no significant journalistic input whatsoever … relying heavily on public relations handouts.

    Rebuilding the ABC and repairing recent damage is urgent. No media does it better than the ABC but it is under increasing pressure and attack.

     

  • Erica Feller. Good democracy is challenged by mass migration.

    Mass migration in a globalised world might well turn out to become, not least from the perspective of democracy, one of the overarching and defining challenges of our time. Syria and the exodus of millions of Syrians to neighbouring states and beyond is currently bringing this home in the starkest of ways.

    The autonomous sovereign nation state is still the central feature of current political architecture, regardless of ethnicity, creed, religion or political philosophy. Borders classically mark it out. Political systems built around autonomy and sovereignty are increasingly becoming out of kilter with the changes wrought by globalisation.

    Where a state fails, is deeply fragile or is run by a government unable or unwilling to ensure to its citizens the basic necessities for a safe and secure future, what flows from this can no longer be contained within the borders of that state.

    Tens of millions of displaced-people in desperate situations.

    Statistics can be difficult to grasp, but the recent image of the drowned Syrian toddler, Aylan Kurdi, was an emotional reminder that behind every number is an individual.

    When it comes to safety, security, dignity, self-worth, realized potential and decent lives, divergences between people, within states and between countries are huge.   There are some 60 million persons in displacement situations at the moment, over 17 million of them refugees. Eighty-five per cent live in developing countries, most of which suffer human rights and governance issues of their own.

    Less than one in 40 refugee situations are resolved within three years and many continue for 10 or more, with donor funds progressively drying up and millions of people left in sub-standard living conditions with no foreseeable future prospects. There are currently some 630,000 refugees in Jordan, 84% of whom live outside refugee camps. Two thirds subsist below the national poverty line, with one in six refugees living on less than $40 per person per month. Coping strategies include children dropping out of school to work or to beg, and women selling sex for survival.

    Facilitated solutions are not on the horizon for most, with local integration not available, (with some exceptions) and with resettlement to third countries a possibility for no more than one per cent of the global refugee population. Flight has to be understood as people taking control of their own futures in the face of  grave danger or the impossibility of staying where they are.

    Not all the displaced are refugees. Many leave for reasons linked to desperation and not to persecution or grave security risks. The forces fuelling departure are various. Insecurity and desperation are driving an increasing number of refugees to flee. Opportunity is enticing others to join the mass flows, with quality services, education and work possibilities in developed countries a strong incentive.

    The prognosis on the horizon for future mass movements is not good. There is a high probability that patterns of displacement will be increasingly impacted by environmental factors such as population growth, declining resources and inequality of access to them, ecological damage and climate change. Conflict looks to be a constant, increasingly acting in combination with extreme deprivation and resource issues. Many refugees come from or find themselves in countries falling into the highest risk category for civil conflict, which also happen to be ranked amongst the world’s poorest nations and where endemic and cyclical ethnic and civil strife is compounded by low cropland and fresh water availability.

    Ten Crisis Hotspots

    In January this year the International Crisis Group released an analysis of the conflicts and crises likely to beset the world in 2015, identifying in particular ten to watch. Top of the list is the situation in Syria and Iraq.

    The rise of the Islamic State was described as a “symptom of deeper problems that are not amenable to military solutions, including sectarian governments in Syria and Iraq {and} military strategies dependent on militias that radicalize local populations…” Then there is the Ukraine, which he said “may not be the world’s deadliest crisis, but it has transformed relations between Russia and the West for the worse”.   The “top 10” list also includes South Sudan, Nigeria, Somalia, the DRC, Afghanistan, Yemen, Libya and even Venezuela which, while no war zone, is presented as a country in crisis due to falling oil prices, an unpopular Government and weakened institutions.

    What this means, among many other things, is that refugee and migrant exoduses are not solely a concern for the humanitarians. They can prove a huge burden on the economy, infrastructure, security and society of affected countries and a destabilising force for regions, and globally.

    They can also be a positive force for social change and economic advancement. It is also increasingly clear that, in our globalised, tech-savvy and interconnected world, the ability of States to forestall or halt them is seriously diminished.   Germany is confronting the probability – to its credit as a management challenge, not a disaster – of over one million people seeking sanctuary or a better life over the next twelve months.

    Democracy, human rights and the rule of law.

    One significant litmus test of the strength and resilience of the democratic system as we know it – meaning open and responsible government founded on tolerance, respect for human rights and the rule of law – is how global people movement will be managed.

    Recent developments in Australia have brought home just how much the values and processes traditionally underpinning democracy in this country are being impacted by the growing capacity of people to take their fate into their own hands and move, sometimes long distances, in large numbers and mostly irregularly, across state borders.

    Compassion and justice, international obligations and national due process requirements should frame the response in democratic societies to those who make a claim to their protection. The policies of recent Australian Governments designed to deter asylum seekers, refugees and migrants from coming by boat to lodge their protection claims are not built on such a foundation. The country whose accession brought the 1951 UN Refugee Convention into force has migration control provisions bearing directly on the treatment of refugees from which all reference to Convention arrangements has been removed.

    Australia has long and rightly prided itself on promoting and respecting internationally agreed human rights instruments. But it has put in place an arbitrary detention regime for boat people, doing some of them immeasurable physical and psychological damage. The country which has taken a strong stand internationally on fundamental civic rights like freedom of expression has put a cloak of secrecy over its contested boat policies and has even threatened legal retribution for release of information by health workers concerned about conditions in immigration detention centres.

    New thought about how democracy and government needs to be recast in Australia and beyond, to deal with the displacement in the context of globalisation is urgently called for. Philosopher Martha Nussbaum puts it well when she says: “We live in a world in which the destinies of nations are closely intertwined with respect to goods and survival itself…..any intelligent deliberation about ecology –as also about food supply and population – requires global planning, global knowledge and the recognition of a shared future”.

    Erika Feller, former Assistant High Commissioner, UNHCR; Melbourne School of Government

    This article was co-published with DemocracyRenewal

    Mass migration, conflict and democracy will be under discussion at the ‘Democracy in Transition’ conference, Melbourne, December 6-8

  • Chris Bonnor. Educational opportunity in Australia.

     

     Educational opportunity in Australia – who succeeds and who misses out? This critical question about our schools is the title of a new report commissioned by the Mitchell Institute. It is a thorough, timely and outstanding contribution to our understanding of disadvantage in schooling. The report, produced by Victoria University’s Centre for International Research on Education Systems, compiles data from a variety of sources to answer the ‘who succeeds and who misses out’ question. And they do this by investigating four stages of education: beginning school, Year 7, senior school and at age 24.

    The report draws together existing information – something which adds to its value and significance. Cutting a long story very short, it concludes that only six out of every ten students succeed across the four identified stages. School works well for these students. As for the others, the report helps us know who they are and why they are falling behind. No surprise here: they are overwhelmingly the socio-educationally disadvantaged. The good news is that, with the right interventions, these young people can recover and succeed at the next milestone – as long as the school is properly funded to make the required difference. Yet another timely plug for the full Gonski.

    Notwithstanding the quality of this report I have an enduring hope that this is surely as far as we need to go in analysing the problem. It follows over a decade of research with the same message: if we want to lift student achievement we need to lift the disadvantaged. Stephen Lamb, the team leader for this report, told us that years ago. His submission with Richard Teese to the Gonski review, along with the NOUS report for Gonski, reinforced the message. More recent reports, including by Lyndsay Connors and Jim McMorrow, show that our framework of schools is dysfunctional. Bernie Shepherd and I have found that Gonski’s findings have been strongly supported by data since Gonski reported.

    A few matters arising out of the Mitchell Institute report are worth a mention. If six out of ten students are well served by our schools, then what strategies are needed for the other four? In a partial answer the report devotes attention to the problem of student disengagement, something which lies at the heart of underachievement.

    But there seem to be at least two underlying assumptions. The first is that the extent of student disengagement is something that the available data, including on attendance, retention and completion captures. Margaret Vickers is one who has challenged this in the past – and teachers are well aware of students who stay the course, but also stay below the radar and jump through the hoops without really achieving their best. For all the talk about lifelong learning, the school experience of many young people ensures that their learning life ends when they finally walk out the door. This contributes to the scale of the problem identified by the Mitchell report for young people at age 24 years.

    The second assumption seems to be that students are disengaged from schools. Many successful interventions proceed on information that suggests that it is the other way around: that the way we do school itself is disengaging and needs a rethink. The experience of Big Picture schools, to cite one example, is that students from a range of backgrounds (and for a range of reasons) have switched off mainstream schooling. Injecting a shopping list of ‘reforms’, including doing conventional school harder and longer – even with better teachers – isn’t the answer. Investigations into disengagement suggest that we should be having serious conversations with the young people and rethinking how we can tailor their learning.

    And we need to do this thoroughly and soon, with organisations such as the Mitchell Institute taking a leading role. We need to investigate authentic interventions which are making a difference, switching kids back onto learning and achievement for the long term, right now – and support the people who are doing it while planning how to scale up such success. If we don’t – and if we only just restate the problem – then we vacate the solutions field for all those intent on recycling solutions that just don’t work. The Mitchell Institute report has appeared in the same week that the media reported on Simon Birmingham’s apparent flirtation with school vouchers. Are we going to have to endure the useless reform fetishes of yet another federal education minister?

    To conclude: full marks to the Mitchell Institute and the authors of Educational opportunity in Australia. What a terrific start. Just don’t stop now!

    Chris Bonnor is a Fellow of the centre for Policy Development and a Director of Big Picture Education Australia

     

  • Marie Coleman. The FTB cuts have been softened, but they’re still a con

    The Turnbull Government might be trying to scale back the size of its planned Family Tax Benefit cuts, but the fact is they still hit the poor hardest and ask them to foot the budget repair bill, writes Marie Coleman.

    After a year of the Senate blocking its radical changes to parental benefits, the Government has tried another tack this week.

    On Tuesday the Turnbull Government introduced revised welfare legislation to Parliament that scales back some of the tougher Family Tax Benefit cuts first flagged in the 2014 budget.

    Under the new plan, the Family Tax Benefit (FTB) Part B payments to families would end when their youngest child turned 13 (rather than the original plan of six), and there will be a boost for those receiving FTB Part A payments.

    But the proposal still includes a number of cuts to payments that are expected to save the Government $4.8 billion over the forward estimates and leave thousands of families worse off.

    The welfare changes have always been tied (hypothecated) to overall budget savings and to funding new approaches to expand child care, and despite this new approach it is still something we need to reject.

    It still relies on punishing low income and sole parent families. It asks the poor to fund the need to bring outlays under control. And it doesn’t approach the expenditures outside the Social Security portfolio where the major inequitable expenditures exist.

    More than 130,000 single parents stand to lose family benefits under the Turnbull Government’s new family payments plan.

    Department of Social Services officials this week told a Senate committee that 136,000 single parents would see a reduction in FTB part B once their youngest child turned 13. Furthermore, single parents of teenagers would have their payments reduced from more than $3,000 a year to $1,000 and grandparent carers would also have their payments cut when their grandchild reached 13.

    According to the Australian Bureau of Statistics, in June 2012, there were 961,000 one-parent families, making up 15 per cent of all families. About two-thirds of these one-parent families (67 per cent) had dependants living with them.

    There were 780,000 single-mother families in June 2012, making up the vast majority of one-parent families (81 per cent).

    Single-parent families come into being for many reasons – death of a partner, divorce, separation, and births to unwed mothers. Many women leaving domestic violence become the heads of single-parent families.

    Not all these families live in poverty. But those reliant on our tightly targeted Australian social security system are indeed close to the poverty line. Australia has fewer children living in poverty than many comparable economies because of our system of providing benefits to all families to assist with the costs of child rearing, although there are some worrying trends.

    Many, but not all, single-parent families are reliant on financial support from the taxpayer to some degree. Some, not all, receive Sole Parent Payments. Many receive further support through the system of Family Tax Benefits (FTB).

    FTB has two key elements.

    First, the FTBB is available to all families, both two-parent and single-parent. Second, the FTBA is means tested, and available to the very poorest of families – some two-parent, some single-parent.

    The Senate estimates session heard 3,900 grandparents who are carers would be affected by the measure and that a further 76,000 couple families would lose their FTBB completely when their youngest child turned 13.

    The Government argues that the new approach will mean that parents will be encouraged to enter the workforce, and that the proposed new child care arrangements will mean that those who do will in fact be better off.

    This assumes that there is work for these adults – notwithstanding continuing strong trends in unemployment in many regions. It also assumes that the as yet announced child care details will indeed lead to beneficial outcomes. But child care policy experts Professor Deborah Brennan and Dr Elizabeth Adamson found that the draft proposal will “reduce access and increase complexity“. Many organisations commenting on the Regulation Impact Statement supported the Brennan-Adamson findings.

    Then there are the regional and national employment data from the Australian Bureau of Statistics.

    Unemployment and underemployment remain an issue. There are strong regional issues. Where are the retraining programs? Social Services Minister Christian Porter has no real answers. He suggests grandparents need to get a job. Really?

    Get real. Where are the jobs for these grandparent and sole parents and low income families?

    Senators need to look at the facts in their own areas – can sole parents or grandparents find work? This is a disgraceful con.

    Marie Coleman is the chair of the National Foundation for Australian Women Social Policy Committee. This article was first published in The Drum on 23 October 2015.

  • Next week’s launch of the Blog’s book ‘Fairness, Opportunity and Security’

    You are invited to the launch of Fairness, Opportunity and Security: Filling the Policy Vacuum, edited by John Menadue and Michael Keating, and published by ATF Press. The book is a collection of the special policy series of blogs that was published earlier this year.

    cover

    Topics include Democratic Renewal, the Role of Government, Foreign Policy, the Economy, Retirement Incomes, Population/migration/refugees, Communications and the Arts, Security – internal and Human Rights, Security, Health, Development of Human Capital, Environment, Indigenous affairs, Welfare and Inequality.

    Among the authors are Ken Henry, Ian Marsh, Stephen FitzGerald, Cavan Hogue, Richard Butler, Stuart Harris, John McCarthy, Andrew Podger, Julianne Schultz, Kim Williams, Susan Ryan, Michael Wesley, Jennifer Doggett, Glen Withers, Chris Bonnor and Ian McAuley.

    The launcher is Fairfax columnist Ross Gittins, economics editor of the Sydney Morning Herald. His books include Gittins’ Gospel, Gittinomics and The Happy Economist.

    The event takes place from 3:30 pm – for a 4:00 pm start – on Thursday 5 November, at Corrs Chambers Westgarth, Level 17, 8-12 Chifley Square, Sydney. No bookings necessary.

    CLICK HERE to download the flyer and order form. For a limited time, the book is available for $45 (paperback) and $65 (hardback).

  • Robert Brown Two concerns about the government’s response to the financial system inquiry.

    It’s been a big week for the Australian financial services industry. Firstly, there was the unusual decision by the big banks to raise mortgage interest rates in an economic environment which would normally result in no change or even a drop in rates, claiming with some justification that new capital adequacy requirements ‘forced’ them to do it. Secondly, there was the government’s generally positive response to the recommendations of Financial System Inquiry chaired by former CEO of the Commonwealth Bank, David Murray.

    While I am supportive of most of the government’s responses, there are at least two that concern me.

    The first is the decision to not support the recommendation of the FSI to ban gearing (borrowing) in Self-Managed Superannuation Funds (SMSFs). Typically, this is in the form of limited recourse borrowing to purchase real estate. This is not a marginal issue. The sector accounts for over 99% of all superannuation fund entities (of which, at June 2015, there were over 560,000). SMSFs are also the biggest single sector of the market, controlling over 30% of the $2 trillion in Australian superannuation savings.

    Gearing introduces significant risk into the system and in some cases, high risk. While the level of gearing in SMSFs is not large at this stage, the trend is clear. Eventually, there will be individual financial tragedies, if not large scale public scandals. It’s only a matter of time which is why public policy action should be taken before the inevitable financial and political pain demands intervention to clean up the mess.

    I respectfully suggest that decision makers have lost sight of why the SMSF sector was allowed to exist as a unique and relatively unregulated category in the first place. SMSFs (then called section 23F or ‘exempt funds’) were originally allowed by government in the 1980s as a simple ungeared safe harbour for Mum and Dad investors to place their retirement funds, in return for which they were promised limited regulatory intervention (in contrast to the heavily regulated APRA funds).

    So if we are going to continue to allow gearing in SMSFs (which readers may recall was an unintended consequence of poorly drafted legislation designed to allow the Howard government to sell Telstra to SMSFs via warrants), we must consider whether:

    1. a) The people of Australia should be subsiding this form of gearing (often negative gearing) through the superannuation system; and
    1. b) Whether the amount of intervention and regulation by government should be increased to ensure the system isn’t compromised or rorted.

    Having lived through 30 years of SMSF reforms, particularly in the early days when they were quite simply tax rorts with the ability to borrow and lend through all manner of direct and obscure techniques, I regret to say that increased regulation of SMSFs is inevitable. Of course, the response from supporters of gearing is simply that the regulator should get rid of the ‘rorters’, the ‘spruikers’ and the ‘bad apples’. That’s an easy thing to say, but as we’ve seen in the financial planning industry in recent years, doing so is never easy and always involves much cost which taxpayers will have to cover.

    I suppose we can be at least thankful that the government has announced that it will monitor and formally review SMSF gearing within three years. Of course, we can be sure that changing anything at that time will be much harder, unless by then the industry has come in for a very hard landing (which legislative action in 2015 would avoid). Regrettably, we rarely seem to learn the lessons of the past.

    On a more positive note, I was pleased to see the government’s agreement to the FSI’s recommendation to mandate higher education, an industry exam, a professional year and an approved code of ethics for financial planners/advisers. All of these initiatives are worthy courses of action which should be supported. However, we must not lose sight of the fact that ethics is the key to success for the new reforms. A university degree is a good idea because it makes a person more competent (I hope); but it certainly doesn’t make a person ethical and trustworthy. Adoption of (and adherence to) a set of ethical and professional standards does that.

    This brings me to my second concern. What will the approved code/s of ethics contain? If they accept the continuity of %-based asset fees (aka commissions paid by clients), life insurance commissions and other product sales incentives allowed in the Future of Financial Advice legislation (2013/14), remuneration conflicts will continue and only a limited amount will be achieved for consumers of financial advice which, after all, is supposed to be the ultimate purpose of these reforms.

    I’m reminded of the ‘agri-business’/’tree’ saga of recent sad memory. Many of the offending unethical advisers were members of my profession. That is, they were experienced chartered accountants or CPAs with relevant university degrees. All of them had done an exam (many exams actually), had undertaken a professional year (two years in some cases) and had signed up to a ‘stringent’ (but inadequate and mostly unenforced) code of ethics. So why did it all go so wrong? As always, the answer is the corrupting influence of conflicted remuneration. So this week’s announcement, whilst most welcome, is yet another case of “the devil will be in the detail”.

    Good progress has been made. However, I remain concerned that gearing of SMSFs is an accident waiting to happen and that failure to comprehensively remove conflicted remuneration will cause the proposed reforms to fall far short of consumers’ expectations. 

    Robert M C Brown AM BEc (Syd), FCA

    Robert Brown is a Sydney-based chartered accountant with over 30 years of experience in public practice. He is a member of the Australian government’s Financial Literacy Board and a director of Financial Literacy Australia Ltd, a not-for-profit company which provides grants for the development of community-based financial literacy programs. He was awarded membership of the Order of Australia for his work in the superannuation industry.  

     

  • Ranald Macdonald. The ABC and SBS are under attack.

    Now is the time to support the ABC and SBS and the reasons are clear for all to see.

    Our new Prime Minister has the chance of reversing decisions made during the Abbott leadership – but with him as the Communications Minister.

    Public broadcasting is under attack in many countries. The BBC has been particularly targeted by the Murdoch media in the UK to devastating effect by a grateful Conservative Government. In the USA support has been cut by Republican State leaderships and here in Australia – surprise, surprise – the ‘Murdoch factor’ has resulted in the ABC and SBS pondering a lean and restricted future.

    The Friends of the ABC has launched a National Campaign to ensure it has the funds to both defend the ABC and to lobby for an ABC which serves all Australians as required under its Charter.

    Already, by capricious decision of Foreign Minister Bishop who broke the Australia Network contract, the ABC has lost its ability to both report Asia and the Pacific and also to project an Australian voice to our Northern neighbours.

    The result – less of our outstanding foreign correspondents, a dismembered Radio Australia and 500 jobs lost, plus hundreds of millions of dollars in funding.

    Australians deserve better – and we are calling on both the new PM and the Labor Opposition to right the wrongs – though Malcolm Turnbull introduced the cuts and arm-twisting of the ABC  took place.

    NO CUTS, Abbott trumpeted before the election – and our new PM now has the opportunity to rectify the situation.

    The BBC is a fascinating case study for us here in Australia . PM David Cameron rewarded the Murdoch Empire (which just happens to dominate BSkyB and wants total control of it)  with a first raft of cuts immediately he reached Number 10. With his Murdoch-supported re-election, further cuts introduced of some 20% (with more in the wings) will ensure a lesser competitive corporation. (I have just returned from the UK and the pressure on the BBC is palpable).

    The parallels with Australia are obvious. In both countries, the international reporting and penetration has been heavily affected, with the suggestion from Government Ministers that the new media should be left to ‘Private Enterprise’. In other words, slow down public broadcasting with a view to its demise, while News Limited flourishes.

    Yet Russia, China and Al Jazeera are upping their television budgets – and our neighbors in New Zealand are rushing to fill the broadcasting gap left in South East Asia and the Pacific by the forced retreat of the ABC.

    That is why the National Campaign by the ABC Friends – explained in half page ads in the SMH and The Melbourne Age on next Saturday, October 31 – is crucial for democracy and for all Australians who want independent, properly resourced national broadcasting producing quality programs for everyone– children, rural and provincial, those interested in the arts, drama, sport, documentaries and who seek in-depth and authoritative news coverage and analysis.

    Once we weaken or lose our independent public broadcasters and the economic rationalists take control, we will mourn the passing of a vital part of democratic Australia. Both the ABC and SBS serve Australia’s interests.

    The battle is ideological, political and also very much driven by those who would benefit from less competition.

    Ranald Macdonald is a Friend of the ABC. He was formerly Managing Director of David Syme, the publisher of The Age.   .

     

    For those who miss the Friends ad. On Saturday – Join the Friends State organisations, Donate to the National Fighting Fund and become Supporters of the ABC NOW – through the website www.abcfriends.org.au, or by calling any hour on 0498 111 258, 0498 111 259 or 0498 111 261 and talk to friendly volunteers.

     

  • Richard Letts. Mitch Fifield should dump it while he can.

    In a Senate Estimates hearing this week, the new Arts Minister Mitch Fifield was gently questioned for ten minutes by Senator Scott Ludlam about his intentions with regard to the future of arts support: in particular, did he intend to implement the plan of his displaced predecessor, Senator George Brandis, to use funds taken from the budget of the Australia Council to set up a new fund under direct Ministerial control. This scheme created open warfare between Brandis and his arts constituency and doubtless was the reason for his removal from the post in PM Turnbull’s ministry reshuffle.

    Fifield dodged and weaved. To be fair, he is still warming his seat as Minister for Communications and the Arts. But he has been left a mess, and no government action in living memory has put the arts in such a precarious position. If Fifield perseveres with Brandis’s plan, there will be enormous damage. He should at the least postpone that decision until he knows what he is doing.

    The funding to the Australia Council was divided by Brandis into two categories: support to major performing arts organisations – the large theatre, dance and circus organisations, the orchestras and opera companies – and everything else. Support to the major performing arts organisations has been quarantined over the last two budgets. Support to everything else has been halved, firstly by a cut to the arts budget in 2014 and then, in 2015, by Brandis’s raid on that part of the Australia Council budget that does not go to the major companies.

    Brandis never gave a coherent explanation of his policy intentions. He pointed out that the overall funding to the arts had not been cut. However, in a one-sentence improvisation in a Senate Estimates hearing, he said that his main intention was to give more funding to the major performing arts companies. So the major companies retain all of their ongoing funding, and will receive more from the funds removed from the Australia Council.

    Of the $26m a year taken from the Australia Council, Brandis announced that $19m will be distributed via his National Program for Excellence in the Arts (NPEA). That will be divided into support for international touring (intended recipients: the major companies), matching grants for funds secured from the private sector (de facto recipients, the major companies, which have staff members devoted to fund raising), and the rest to “strategic projects” for which small organisations can apply. That leaves $7m. Could it be that the intention for this money was to fund the recommendations of Brandis’s National Opera Review?

    Excluded from applying for NPEA support are individual artists (Brandis was dismissive of them as interested only in creating art – bye bye Beethoven; a recent statement from Malcolm Turnbull was even more scathing – indeed was the sort of abuse that many people direct at politicians.) Also excluded were applications for “operational” funding – the core funding that enables an arts organisation to have a continuing existence.

    The NPEA would fund projects – one-off exercises that certainly are important but only in a scatter-gun sort of way support the existence of the art world. Private donors like the in-and-out thrill of project funding. It is governments that give ongoing core funding, the funding that allows an organisation to build skills, audiences, supporters, mount projects, raise money.

    So the Australia Council is left with sole responsibility for funding operational budgets and it mainly does this through support to 145 “key organisations”. These are the small to medium sized organisations that make up a sort of informal infrastructure for the arts in Australia. The Australia Council has suggested that in the new circumstances, it may have to delete support to about half of them.

    Here from the list are the “A’s”. (This being Australia, there is a bias towards national support organisations cf production/presentation organisations.) If the Australia Council has to close half of these organisations, which will they be?

    • Arena Theatre Company Ltd – 50 year-old theatre for young people, Melbourne
    • Art Gallery of SA (Adelaide Biennial)
    • Art Monthly Australia – major periodical for visual arts
    • Art on the Move WA. Organises state, interstate and international tours of visual arts exhibitions
    • Artback NT – visual and performing arts touring agency
    • Artlink Australia. Quarterly magazine covering contemporary art and ideas from the Asia-Pacific
    • Arts Access Australia – arts participation for the disabled. The national body.
    • Arts Access Society Inc. The Victorian body.
    • Arts Law Centre of Australia – legal advice to artists and arts organisations, policy formulations in advice to governments
    • Artspace Visual Arts Centre Ltd – gallery in Sydney
    • Asialink University of Melbourne – support to artist residencies, collaborations with Asian countries
    • Asian Australian Artists Association Inc
    • Assoc of Northern Kimberley & Arnhem Aboriginal Artists
    • Ausdance National – national organisation that speaks for the dance world, provides services to dancers and dance companies
    • Australian Art Orchestra Ltd – Australia’s only improvising orchestra
    • Australian Book Review Inc – monthly literary review, also gives annual awards
    • Australian Centre for Contemporary Art – major public contemporary arts space, in Melbourne
    • Australian Children’s Performing Arts Co t/a Windmill – children’s theatre company in Adelaide
    • Australian Copyright Council Ltd – the main copyright organisation in Australia
    • Australian Dance Theatre – one of the main contemporary dance companies. Based in Adelaide.
    • Australian Experimental Art Foundation Incorporated – important Adelaide organisation combining a gallery, bookshop and residency studio
    • Australian Network for Art and Technology (ANAT) – innovations at the interface between arts and technology
    • Australian Poetry Limited publishes Australian Poetry Journal inter alia
    • Australian Script Centre collects, catalogues, promotes and distributes unpublished Australian plays and now holds hundreds of scripts.
    • Australian Society of Authors – the professional association for literary authors
    • Australian String Quartet Inc – one of Australia’s main string quartets; there are only 11 with a continuing existence
    • Australian Theatre for Young People – major Sydney company for young actors
    • Australian Writers Guild Ltd – the professional association for Australian performance writers including film, television, theatre, radio and digital media.

    One year ago, then-Minister Brandis announced that he would take half of the funds provided by the Australia Council to literature and with them create a national book council, which would distribute the funds on new criteria decided, presumably, by the Minister and the commercial industry. There is still no book council and arrangements are in limbo.

    The Minister announced the redirection of the Australia Council funds at budget time in May. There are still no guidelines for application to the National Program for Excellence in the Arts.

    Beyond the ineptitude in instigating and following through on his scheme, the problem with this whole initiative is that it seems simply to be an indulgence of the Minister’s personal artistic taste. There is no sense of an understanding of the ecology of the whole of the cultural sector, the interdependence of its parts. The arm’s-length status of funding under the Australia Council is bypassed in favour of direct ministerial control, leaving the arts open to political favouritism or censorship – only a good idea when your own side is in power. Pork-barrelling was seen, in the May Estimates hearing, as an exercise in democratic government. There is no sense of the importance of artistic creation. Malcolm Turnbull has said that we will be an innovative nation but the government’s arts policies withdraw support from the artists and organisations most responsible for artistic innovation. Mitch Fifield should dump the Brandis scheme while he has the chance. There is nothing in it for him.

    Michael Naphthali was Minister Brandis’s chief arts advisor and Naphthali and Brandis made very similar statements about these initiatives in the middle of the year. Naphthali was on the Board of the Australian World Orchestra – which to date is by far the principal beneficiary of the new arrangements. (The lack of guidelines and applications did not deter Minister Brandis from deciding upon a number of handsome grants.) There is some speculation that Michael Naphthali was an originator of the Brandis scheme. At the least, they appear to have sung from the same hymn book.

    Malcolm Turnbull has just appointed Michael Naphthali as his arts advisor.

    Dr Richard Letts is Director of the Music Trust. In the 1980s he was Director of the Music Board of the Australia Council. He was founder and CEO of the Music Council of Australia (now Music Australia) and is a past President of the International Music Council. 

     

  • Derk Swieringa. Ka-ching – The interest of the Labor Party in poker machines in the ACT.

     

    This article is prompted by the recent ABC program ‘Ka-Ching’ which details the subtle mechanisms that are programmed into poker machines to make them addictive. It reminded me of the clever engineers at VW who were able to program software into their cars to cheat pollution testing.

    Let me also declare my personal experience of the havoc caused to families by poker machine addiction. My late mother in law blew her last $60,000 of retirement savings on mainly poker machine gambling. A close friend’s sister in law committed suicide after she gambled away her own daughters’ savings. Sadly, there are few families that have not been adversely affected by the curse of gambling addiction.

    Roughly 80% of all gambling in Australia is via poker machines. Any analysis of the problem of gambling addiction concludes that poker machines are the main problem. Many, many poker machines are located in community clubs such as the Canberra Labor Club where they are often patronised by the poor, the elderly and the lonely. The Ka-Ching program showed how these machines are cleverly programmed to turn these people into poker machine addicts. It is estimated that over 50% of all revenue from poker machines comes from people with an addiction problem.

    The Gillard government tried to address this problem but were beaten by a relentless campaign conducted by Clubs Australia. As a measure of this campaign I recall going into the Tomakin Social Club and seeing a life size poster of Mike Kelly, the local Labor member and minister at the time, with the caption underneath “this man wants to destroy our club”. An outrageous claim.

    Yet the Canberra Labor Club claims on its website to be ‘proud members’ of Clubs ACT, an affiliate of Clubs Australia.

    In the 1970’s members and friends of the Labor Party formed a community club. This Labor Club has now grown into a four venue corporation with assets over $60 million and a turnover more than $30 million per year. The bulk of this turnover coming from members’ losses on poker machines. Under the constitution of the Canberra Labor Club its profits go to the ACT Branch of the Labor Party. As a result the Party has received millions every year.

    A previous Labor Chief Minister, Jon Stanhope, who disliked the link between the Party and poker machines, tried to sell the Labor Club but he was blocked at the Party’s federal level. No doubt because it is the Party’s most lucrative source of revenue.

    Poker machines, brothels and tobacconists are all legal industries in the ACT but their operation requires sensitive policy settings and administration. It is therefore inappropriate for a political party in government to derive funds from any of these sources if it wants to avoid a perceived conflict of interest. Nor is it now necessary for the Labor Party to derive its money from gambling. Recent amendments in the ACT to donation rules, plus government grants to political parties, now provide ample funds for political parties to run elections fair and square.

    The Labor Club has 9 directors,6 of whom are are nominated by ACT Labor. In effect, therefore, the 50,000 plus members of the Labor Club have no say in the running of the Club. Furthermore, unlike other community clubs that publicise their constitution, annual report, financials etc on their web site, the Labor Club on its web site provides no such information and therefore keeps its members in the dark. When I recently asked for a copy of the 2014/15 annual report I was told that, under the constitution, I would have to apply in writing to the Company Secretary who would decide if I would be given a copy. This is treating members as if they belonged to the mushroom club.

    The Canberra Times, which is not known for being anti-Labor, has written numerous articles critical of this link between the party and gambling money but invariably the Club responds with a ‘no comment’. I am sure that the Liberal Party will not leave this matter alone at the territorial elections next year.

    In many respects the ACT Branch of the Labor Party is very well run. For example, pre-selections for the House of Representatives, Senate and Local Assembly are determined by members ballots and not by Party bosses as in other states. However, as a Party member, I wish we could rid ourselves of a reliance on gambling money. It is also regretted that powerful lobbying forces were able to beat a Labor Government which was proposing to implement the Productivity Commission’s recommendations. These recommendations were aimed at harm minimisation by limiting the size and speed of bets on poker machines.

    Derk Swieringa has been a member of the ACT Labor Club for some years and joined the ACT Branch of the Labor Party in 2014. He is also a strong supporter of Open Labor. Derk believes that the Labor Party must be fit for government not only in the polices it presents to the electorate but also in the integrity of its internal administration.

     

     

     

  • Sam Bateman. US muddle in South China Sea.

    Strong calls continue to be made in Washington for the US Navy to increase its freedom of navigation (FON) activities in the South China Sea. This is despite apparent differences of view between the Pentagon and the White House about the wisdom of such action. The US has done little in 2015 to ease concerns about whether it knows what it’s doing in the South China Sea. If anything, the rhetoric coming out of the Pentagon, and the US Navy in particular, has become stronger.While extensive land reclamations in the South China Sea have not helped China’s image, none of its current actions justify deliberate provocations by the United States. It’s not clear just what Washington is protesting in the South China Sea. There are three possibilities, some or all of which may apply.

    One explanation may be that the United States is protesting against China’s claim to sovereignty over disputed features. But Washington has repeatedly said that it doesn’t take sides in the island disputes. An authoritative report last year from the Center for Naval Analyses in Washington concluded that ‘[t]he absence of an unambiguous legal case in any of these disputes reinforces the wisdom of the US policy of not taking a position regarding which country’s sovereignty claim is superior’.

    But FON operations against only China’s claims suggest that the United States has taken sides. Washington hotly denies this, but it is how people in the streets of Beijing, Hanoi and Manila see US actions. Resulting surges in nationalism in these capitals are not helpful for resolving the disputes.

    A second possibility is that the United States is protesting China’s claim to a territorial sea around built-up, low-tide features in the South China Sea. But only three features fall within this category (Subi, Hughes and Mischief Reefs) and China has not actually made formal claims to any territorial sea from these features. It would be preferable to wait until such claims were made before responding with diplomatic protests rather than ‘rocking the boat’ now. In any case, it’s a fairly trifling issue on which to risk a dangerous incident between Chinese and American forces.

    Finally the United States may be protesting a general threat by China to FON in the South China Sea. But China has repeatedly denied it poses such a threat. And with so much of China’s own trade passing through the sea it’s nonsensical to suggest that it would. American commentators invariably overstate the value of US trade passing through the South China Sea. They fail to recognise that the vast majority of US trade with East Asia does not go through the area. For their part, Australian politicians also often grossly inflate the amount of foreign trade going through the South China Sea. In the event of some crisis, the trade of other Northeast Asian countries could readily be re-routed away from the South China Sea albeit at some cost in time and distance.

    At the heart of the US protests are peculiarly American concerns about FON that relatively few regional countries share. In particular, these include the freedoms to conduct so-called ‘military surveys’ in the exclusive economic zone (EEZ) of another country. Another is the right of a warship to transit a territorial sea without giving prior notification to the coastal state.

    It looks as though the United States is trying to turn back the clock on the carefully balanced EEZ regime in United Nations Convention on the Law of the Sea. American commentaries regularly fail to acknowledge that navigational freedoms are not absolute in another country’s EEZ. Military activities in the EEZ should only be conducted with ‘due regard’ to the rights and duties of the coastal state. Much of what the United States calls military surveys really constitutes marine scientific research, which is under the jurisdiction of the coastal state.

    A group of Chinese warships recently transited through the US territorial sea around the Aleutian Islands. This led to claims from the United States that China, by not seeking permission to do so, had gone against its own policies of area denial. But China’s conception of FON is different to what the United States is contemplating in the South China Sea. Whereas sending ships patrolling into another country’s territorial sea specifically to demonstrate a right of passage could be a breach of innocent passage, the Chinese ships were on a direct passage.

    US commentators also express concerns that China intends to use various facilities it has built in the South China Sea, such as airstrips, for military purposes. But this is another myth. These features have no real utility as military ‘bases’ in view of their vulnerability and the difficulties of their re-supply.

    The United States frequently condemns China for ‘militarising’ the South China Sea. But increased American naval activity in the region and the threatened FON operations constitute greater militarisation. The United States is in conflict with China on all fronts – economic, political, strategic and military.

    As a middle-power and US ally with close ties to the region, Australia needs to be cautious in getting too involved in these bilateral tensions. Its best response at this time is to maintain the established pattern of Operation Gateway surveillance flights in the area. And it should be prepared to make a diplomatic protest should China make some formal claim with which Australia does not agree.

    Sam Bateman is an adviser to the Maritime Security Programme at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University. This article first appeared in the East Asia Forum on October 20, 2015.

  • Richard Woolcott. Foreign policy priorities for Malcolm Turnbull – focus on the region, get out of the Middle East, and other ..

    This can be an exciting time for Australia in that there is a coincidence of the need for long overdue foreign policy adjustments and the appointment of Malcolm Turnbull as Prime Minister. He has said he intends to be a forward-looking Prime Minister for the 21st Century. This is indeed encouraging but success will call for skilful negotiation in Cabinet and strong leadership over time. Mr Turnbull will have much more in common with Canada’s Prime Minister, Justin Trudeau, than he would have had with defeated PM Harper. They will meet later this year at the G20 and at CHOGM.

    Understandably the pressures on the new Prime Minister will be mainly domestic and on the economy. Foreign and security policies are naturally less immediate (although evolving situations e.g. Syria, ISIS, Russia, and an overhyped TPP, which has yet to be adopted by the U S and which does not include such major economies as China, India and Indonesia, call for prompt reactions and it would be unfortunate for Mr Turnbull to lock himself into positions now which he might find uncomfortable in two or three months).

    I consider there are eight policy issues which Prime Minister Turnbull could review and update later this year, or early in 2016.

    They are: –

    1. We need to refocus on the important interests in our own region – South East Asia, North Asia and the South West Pacific in what is now generally called the Asian Century. Former Indonesian Ambassador to Australia Sabam Siagian and editor-in-chief of the Jakarta Post wrote earlier this year the blunt commentary that “Australia is still stuck in the 20th Century mode. It is a monarchy, with a Head of State in London, and its security arrangements are largely Cold War relics… Australia is out of sync with the emerging geopolitical environment of Asia today”.

    2. We do need to establish an updated and more balanced approach to the vital relationship between the US and China. There is a danger that adversarial attitudes towards China could become a selffulfilling prophecy. The present debate on China mainly assumes that Australia has no choice but to support American primacy in Asia against a perceived rising Chinese hegemony. This is a simplistic approach which has been challenged by Hawke, Keating, Fraser, most former ambassadors to China and a numbers of academics. While China can be expected to resist American ‘hegemony’ in the Asian region, it accepts a constructive and cooperative US role in Asia.

    Australia should not take sides on China/Japan disputes, or on rival territorial water claims. Our focus should be on unimpeded passage through International waters and trade routes.

    3. We should withdraw our forces from Iraq and Syria. Our presence in the Middle East will not contribute seriously to defeating ISIS, or securing stable, democratic, uncorrupt governments in Iraq and Afghanistan. Our involvement was in support of the American Alliance, although US policies are demonstrably failing. The reality is our participation is essentially peripheral and symbolic. We should move out of this very complex changing kaleidoscope of numerous factions fighting each  other and cease pretending to ourselves and overseas that we can influence the outcomes. The considerable financial savings could be much better utilised in shaping the next budget.

    There were reasons for joining the US led Afghanistan invasion in 2002 but 14 years later, with 40 Australians killed, over $500 billion spent and more than 13,000 Afghan civilians dead, objectives once deemed to be indispensable such as nation-building and effective counter-insurgency, have been downgraded or abandoned because there are no longer adequate resources, time, or the US will to achieve them. The US public is now opposed to US ground forces becoming involved in further conflicts.

    4. We should look to consult diplomatically all of the main and influential countries of the Asia/Pacific region – the US, China, Japan, Indonesia, India, Russia, South Korea, Vietnam, Singapore and New Zealand – on all regional and international issues before the UN. Terrorism must be dealt with essentially within each country, although discussions on dealing with it internationally can be useful. While cooperation between our AFP and the Indonesian Police has been good, it is strange that we have been consulting the US and the UK about dealing with Islamic extremism and the ISIS but not until very recently with Indonesia, the largest and most moderate Muslim country in the world. Nor have we consulted closely regional countries like Malaysia, Singapore and the Philippines which have substantial Muslim communities.

    Australia need a fundamental change of our national psyche focused more on Asia than on our traditional links with the United States, the United Kingdom, Canada, New Zealand ( the “Anglosphere”), and Europe. We need a much more sustained conversation with our neighbouring countries in Asia and the South West Pacific.

    We should work discretely towards the evolution of an Asia/Pacific community, of which ASEAN would be a major part. Meanwhile we should use existing organisations that meet at Head of Government level, such as the G20, APEC (although it does not include India), the East Asian Summit (which does now include both the US and Russia), the UN Leader’s Week in New York, and the Commonwealth HoG meeting (a relic of British colonialism, but some Asian leaders attend and can discuss regional issues), which will meet in Malta on 28/29 November.

    5. In the long term no bilateral relationship will be more important to Australia than that with Indonesia. The stability, unity and economic growth of a predominantly (81%) moderate Muslim peaceful nation of 250 million, stretching across our North, a distance similar from Broome to Christchurch in NZ, is vital to Australia. Despite Government ‘spin’ to the contrary, the overall relationship is not good and needs nurturing, especially at the Head of Government level. The empathy towards Australia, evident in the 1980s and early 90s, has gone and needs to be rebuilt,

    Malcolm Turnbull as a new Prime Minister will have a number of opportunities to develop a personal relationship with the relatively new Indonesian president (Joko Widodo, widely known as Jokowi) at Head of Government meetings later this year. This will be an important step forward for Mr Turnbull and Australia if he can establish close personal contact.

    6. Mr Turnbull has already emphasised in Parliament on the 19th of October the major importance he attaches to strengthening the relationship with New Zealand following his visit. He suggested that we should in future work even more closely with New Zealand on a range of regional issues.

    7. In the years ahead Mr Turnbull will have an important opportunity to address, through a number of decisions, the international standing of Australia as a more independent nation with a foreign and  security policy based not largely on compliance with American policy or fear of China, but on its own genuine national interests. In this context, he will have the opportunity to adopt a more balanced position on Israel / Palestine issues. He will also be able to develop a sound position on the major global issue of Climate Change for the high level international conference to be held in Paris in December, which he intends to attend.

    Continuing foreign perceptions of Australia as a constitutional monarchy whose Head of State is the Queen of England (quaintly called here the Queen of Australia) and whose flag is dominated by the Union Jack, are sad anachronisms in the 21st. century. The establishment of the Republic of Australia will be, like Federation, a defining moment in the history of our country. This is not only a symbolic issue. It lies at the core of our national and international identity.

    Another prospect in the longer term would be to reconsider joining ASEAN, although we would need ASEAN to welcome this. Mr Turnbull could consider private consultations at the Head of Government, Foreign Minister, Defence and Trade ministerial levels regarding possible membership of ASEAN. If New Zealand did likewise it would be mutually reinforcing.

    This will not be easy now. 41 years ago Australia became ASEAN’s first dialogue partner and I hosted the first meeting overseas of the then five ASEAN Secretaries General at my home in Canberra. One course might be to start with seeking observer status as Indonesia’s other close neighbours, PNG and Timor Leste, have already had since 1976 and 2002 respectively. This would be a logical evolution of Australia’s long-standing engagement with Asia. As early as 1970 I considered this and, as Secretary of DFAT, discussed it with then-Foreign Minister Gareth Evans in 1990. Paul Keating had also suggested we should seek to join ASAEN. Unfortunately, it lapsed, partly because of other issues and following my retirement in 1992.

    8. Another positive change which Prime Minister Turnbull could make as soon as possible would be to sign up to the Open Government Partnership (OPG). Nearly 70 countries, including Indonesia, New Zealand, the Philippines, the US and the UK have already done so. Mr Turnbull has already said he wants to have a more transparent and open government. Joining would reinforce his comments.

    Finally, if Australia is to progress its involvement with the Asian region the Turnbull Government needs to give more thought to our style. We need to demonstrate a greater degree of cultural sensitivity. We should also show we are prepared to listen more and lecture less. This is essentially a question of presentation and diplomacy. Richard Woolcott 21 October 2015

    Richard Woolcott AC was Australia’s Ambassador to Indonesia and the Philippines as well as High Commissioner to Malaysia, Ghana and Singapore. He was the Australian Ambassador to the United Nations and President of the United Nations Security Council. He was Secretary of the Department of Foreign Affairs and Trade from 1988 to 1992.

  • John Tulloh. Turkey at a dangerous crossroad.

    Spare a thought for Turkey as it goes to the polls on November 1. It straddles Europe and Asia, but it is not sure if it is part of either. Nor is it part of the Middle East, yet it shelters more Arab refugees than any other country there. They number two million – mainly Syrian – who are not exactly welcome. It is the south-east European bulwark for NATO, but the EU has taken fright at the idea of a secular Islamic nation of 76,000,000 people becoming a member. It shares a large border with two of the most unstable states in the world, Iraq and Syria. It is overwhelmingly Sunni and has the ambitious Shia stronghold of Iran as another neighbour. Its two-year truce with the Kurdish PKK, a terrorist organisation, has been shattered. It stood by and did nothing while Islamic State (IS) roamed unchecked on its very doorstep in Syria, causing the refugee exodus. It now has IS jihadists in its midst inasmuch they were blamed for the recent Ankara suicide bombings which claimed 105 lives. And Turkey’s president has been accused of trying to manipulate the political process in order to become a dictator.

    The election is for a new parliament. It is aimed at President Recep Tayyip Erdogan reasserting his authority. He has ruled Turkey since 2003. But his Islamist Justice and Development Party (AKP) lost its parliamentary majority in the last election in June and now President Erdogan wants it back. He also wants more, according to his critics. One, Daniel Pipes, president of the conservative Middle East Forum, claims President Erdogan plans to establish a dictatorship, possibly hostile to Western interests, and even introduce sharia law. In the past five years under his watch, Islamic schools have proliferated and the number of students jumped from 60,000 to 1.6 million.

    Turkey has always been troubled by division: secular and religious, rich and poor and Turks (80%) and Kurds (20%). At one time, President Erdogan seemed capable of resolving those differences, according to the New York Times. ‘He sought peace with the Kurds, empowered the formerly oppressed religious masses and presided for a time over a robust economy’, it said. All that has now changed.

    ‘Turkey is so deeply polarised after 13 years of AKP. rule’, according to Soner Cagaptay, a Turkish analyst at the Washington Institute for Near East Policy. He now fears it is ‘about to come apart at the seams’. The prominent Turkish novelist, Eli Shafak, was quoted in news reports as saying ‘Today, so deep is the rift between the pro-government and anti-government sides that it cannot be bridged anymore, not even in celebration or grief’.

    It will be the fourth parliamentary election in just over 18 months. The best outcome would be a coalition with the main opposition, the Republican People’s Party (CHP), says former MP Suat Kiniklioglu, writing in the Huffington Post. ‘It would lessen the tension and polarisation in the country’, he says. ‘But the AKP has been used to running the country unchallenged for more than a decade and is not ready to share power’. One reason is that the CHP would want to pursue the matter of corruption allegations against President Erdogan and his son.

    The AKP’s chances have been boosted by German Chancellor Angela Merkel’s startling promise to support Turkey’s entry into the EU and ease visa and travel restrictions for Turks. Her promise was a surprise as she has long opposed Turkey joining the EU. But Turkey’s pledge to try to stem the flow of refugees to Europe, particularly to Germany where she faces an electoral backlash, was enough to change her mind or at least for now.

    Turkey’s Prime Minister, Ahmet Davutoglu, said Turkey was ‘not a concentration camp’ and would not host refugees permanently to appease the EU which has donated $4.7 billion towards their upkeep. ‘We cannot accept an understanding like “give us the money and they stay in Turkey”’, he said. A recent poll quoted by the Wall Street Journal said 70% of Turks want the Syrians to return home, not least because they are potential threat to jobs.

    The election is no threat to President Erdogan’s own position. But a majority victory for his AKP would enable him to achieve what he has long desired: to change the constitution to make his job, the presidency, the absolute ruler of Turkey and for 10 years.

    Daniel Pipes warns that ‘Whereas Ataturk and several generations of leaders wanted Turkey to be in Europe, President Erdogan brought it thunderingly back to the Middle East and to the tyranny, corruption, female subjugation and other hallmarks of a region in crisis’.

    Turkey’s powerful military, which has often intervened at times of crisis, will be watching developments with close interest.

    FOOTNOTE. Back in the 60s, I took the weekly train from Beirut to Istanbul. Although I bought only a second class ticket, I was put in an ancient first class sleeping car on the grounds that, as a Christian, I might get in the way of Islamic passengers with their daily prayers. We left Beirut at 7 o’clock on a Saturday night. The next day in Aleppo, we linked up with the weekly train from Baghdad which had a dining car. When would we arrive in Istanbul? The Turkish guard shrugged. It depended on how long it would take to get over some mountains in Anatolia without the need for back-up. The steam train panted into Istanbul several hours behind its supposed schedule. But no one was upset and everyone – Turks, Arabs and Christians – enjoyed the fellowship and hospitality of that journey. Would it be so today?

     

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

     

     

     

     

     

     

     

  • David Combe. Tony Abbott’s soul-mate has gone.

    After the second longest campaign in Canadian history – 11 weeks – finally Federal Election Day for Canadians had arrived on Monday, October 19.

    When I was moving to Canada 30 years ago, Gough Whitlam said to me that “There are no two peoples in the world who are so similar, have so much in common, and get on better than Australians and Canadians”. For some months, I could not see it, but after 4 years I knew it to be so true……except that the Scottish heritage of Anglophone Canadians makes them more reserved in expressing what they really think. Get to know them well enough and they will tell you, for example, what they really think of their southern neighbours! Their humour, like ours, has a large dose of self-deprecation at its base.

    But there are, of course, many differences. The dominant of those is its French history which impacts on everything – including (and especially) its politics. The Canadian Senate is appointed, so it has none of the idiosyncrasies of ours. However, with population overwhelmingly concentrated in two provinces – Ontario and Quebec – and its smaller provinces from Newfoundland to British Columbia spanning many different time zones, the House of Commons is very large. For Monday’s poll, it was enlarged by 30 to 338 Ridings (electorates in our terminology). So 170 was the ‘magic number’ for majority government – something not often achieved in its multi-party system. As in the UK, voting is voluntary and ‘first past the post’

    When the long campaign kicked off, Tony Abbott’s ‘soul mate’, Conservative Party Prime Minister Stephen Harper, had been in office for 9 years and was defending a strong majority won in 2011. At that election, the Liberal Party (the small ‘l’ liberal, or centre-left, Party of Lester B. Pearson, Pierre Trudeau and Jean Chretien) had collapsed winning only 34 seats. The role of official Opposition had been taken by ALP ‘sister’ New Democratic Party (NDP) in what was by far the their best Federal performance ever. The NDP’s triumph had been based on winning 50 seats in Quebec, once Liberal Party heartland.

    The first polling analysed by Eric Grenier (a sort of Malcolm Mackerras/Antony Green combination) on his splendid website ThreeHundredEight.com showed voting intention at 33.2% for the NDP, 30.9% for the Conservatives, and the Liberals trailing with 25.9%. His projections on the numbers were for the NDP and the Conservatives to win 127 seats each with the Liberals trailing well behind, but likely to determine who would form minority government (presumably the NDP) as coalitions are not part of Canada’s political history. Day after day, week after week, Grenier analysed and published an aggregation of latest polling macro, by province and by Riding – no mean feat given the uncertainties of voluntary voting and lack of a preferential system. Yet one ‘preference’ became very clear very early……Canadians wanted rid of a Prime Minister whom friends of mine had long dubbed ‘Richard Milhous Harper’.

    Then the race tightened up, as polling showed support for each of the three major parties at about 30% with small (and statistically insignificant) movements between the three week after week. Was Canada going to re-elect a Prime Minister whom at least two thirds of voters despised?

    After a major campaign of attack ads against their opponents, Harper chose to play wedge politics at its worst. An Islamic Canadian woman had taken to the Federal Court her right to wear a niquab in public at her citizenship ceremony while agreeing to remove it in private. The Court found in her favour, but in an attempt to exploit anti-Islamic sentiment in Quebec in particular, Harper’s Government appealed the matter to the Supreme Court of Canada. Harper now made this a major part of his campaign. ABC journalist Norman Hermant has quoted reports that he was advised to do so by brilliant Australian conservative strategist, Lynton Crosby, but I doubt this. However, the Leaders of neither the NDP nor the Liberal Party backed away from supporting Canada’s Charter of Rights and Freedoms, and for a time it looked as though the Conservatives had broken clear….that the politics of hate were working for them, as there was a decent kick up in their numbers.

    At about that time, a very good friend of mine in Toronto sent me the following under the heading On VISION:

    ‘I made a visit recently to the “I Want to Lead Canada” cafe. Three servers approached my table at the same time – they were all guys of course, although I did notice a woman server relegated to a corner section. Anyway, each of the three asked me at the same time what I would like. I replied rather emphatically that I hand a hankering for a meal-sized portion of VISION! 

    The weary-looking server with the playdough-mould hair and angry demeanour said that VISION wa…s too expensive and that I should opt for something within the budget. 

    The bearded server said that the fellow he replaced used to offer an appetizer-sized plate of VISION, but it was replaced with something more appealing to the masses when his predecessor died. 

    The younger-looking of the three, who had really nice hair, told me he used to know a CHEF who specialised in VISION, and he brought me this: 

    https://www.youtube.com/watch?v=qLR5aToS2Zg

    The ‘waiters’ in this metaphor are first, Harper; secondly NDP Leader Tom Mulcair who gained his position following the greatly mourned sudden death of Jack Layton who had led his party to its triumph in 2011; and the third, Liberal Leader, Justin Trudeau. The woman in the background is a reference to the Greens Leader.

    Then in the final weeks of the campaign, something special happened….bit by bit, the NDP vote intention eroded, and that of the Liberals increased. By late last week, the possibility of a minority Liberal Government increased, and by last weekend, that seemed certain with just the outside possibility of a majority for Trudeau in the House of Commons.

    On Tuesday, I settled down to watch the vote count on CBC. First, the Liberals made a clean sweep of all Ridings in the Atlantic Provinces starting with Newfoundland. But read little into that, we were told. Polls were just closing in Quebec, and Mr. Trudeau’s party would need to win at least 35 there to be sure of governing – even though we knew Ontario would strongly favour it.

    Suddenly, it was all over….short of a disaster in the Prairies and BC where the Polls were some way off closing, Justin Trudeau would be leading a majority government.

    That disaster did not occur. The Liberals won 40 Ridings in Quebec, took pretty much everything in Greater Toronto, and won more than any other party in all provinces except Prime Minister Harper’s Alberta, and Saskatchewan.

    The new government has 184 Members in the new House of Commons – 150 more than in 2011. Voter turnout was 68.5% – the highest since 1993, the last time a Conservative Government was executed. The new House includes 88 (or 26%) women; 10 indigenous MPs; 6 openly LGBT Members.

    And the vote by Party? Liberals 39.5%, Conservatives 30.9% and NDP 19.7%. So what happened between that first opinion poll assessment and election day? Do so many people REALLY change their minds in such a short timeframe?

    No, they do not. Combining NDP and Liberal voting intention from that first opinion poll, 59.1% intended to vote for one of the two major parties challenging the Harper Government. The combined vote of those two parties on election day was 59.2%! Canadians wanted one thing – to be rid of Stephen Harper – and they voted strategically to achieve that end. As the campaign evolved, in the Liberal Party, they saw a better prospect of doing so.

    What of the role of Justin Trudeau? Yes, he is handsome, he is charming, he is the eldest son of one of Canada’s most beloved Prime Ministers, and he DID withstand everything that his Conservative opponents threw at him during a deliberately long campaign intended to undermine confidence in him and to expose his alleged ‘L’ plates.

    But make no mistake….this was not a destiny ordained for him many years ago and for which he was always preparing. He has worked in real jobs (I had a work colleague 15 or so years ago in Vancouver whose children were being taught by him and who enjoyed a friendship with him. Then he was much more concerned about helping to prevent others dying on the ski slopes as his younger brother had done). When he did put himself forward for Liberal Party endorsement, it was for a Riding in Quebec held by the Bloc Quebecois, not the safe Liberal one he had been offered. And twice he declined pressure to submit himself for the arduous process of a Liberal Party Leadership Convention.

    In his victory speech on Election Night, he said: “We beat fear with hope. We beat cynicism with hard work, divisive politics with a positive vision that brings Canadians together”.

    Prime Minister Justin Trudeau will not be that man of vision in the youtube clip my friend sent me, but he has made a promising start. Already he has advised President Obama of the ‘good’ news that Canada will be an aggressive player in the fight on climate change, and the ‘bad’ news that Canada will be withdrawing its combat troops from the ISIS conflict. Will he restore Canada’s reputation as an important middle power which had the courage to stand up against pressure to join its southern neighbour in Vietnam and in Iraq? Let us hope so.

    David Combe was National Secretary of the Australian Labor Party 1973-81.

  • Jon Stanford. Australia’s New Submarine: What is its Mission?

    Recent papers published in Pearls and Irritations by Jon Stanford and Rear-Admiral Ian Richards have suggested respectively that:

    • the case for providing significant financial support to the naval shipbuilding industry is flawed, both on defence policy and industry policy grounds
    • there are unacceptable risks involved in building Australia’s proposed new fleet of submarines locally.

    In this article I seek to move back from the issue of local or overseas acquisition of the new submarines and attempt first to address the more fundamental question of what exactly the Australian government wants these submarines to do. That then leads on to the second question of what technologies the submarines will need to deploy in order to undertake this mission most effectively and at minimal risk to their crews.

    What is the new submarine for?

    The role for the new submarines was set out in the 2009 Defence White Paper prepared by the Rudd government. This remains a remarkable document, particularly in the context of a genre usually characterised by emollient phraseology, platitudes and evasion.[1] In setting out how Australia’s strategic circumstances have changed, largely due to the rise of China, it ventured into territory where previous Defence White Papers had feared to tread:

    “It is conceivable that, over the long period covered by this White Paper, we might have to contend with major power adversaries operating in our approaches – in the most drastic circumstance, as a consequence of a wider conflict in the Asia-Pacific region. In such a circumstance, it is not a current defence planning assumption that Australia would be involved in such a conflict on its own. But we do assume that, except in the case of nuclear attack, Australia has to provide for its own local defence needs without relying on the combat forces of other countries. The Government considered such contingencies because although they are unlikely, they are not so remote as to be beyond contemplation. …In such circumstances, in order to defend ourselves we might also have to selectively project military power beyond the primary operational environment described in this White Paper, for instance in maritime Southeast Asia.” (Page 65.)

    The key requirement here is for the ADF to be capable, not only of operating independently and without the protection of a ‘great and powerful friend’, but ultimately of unilaterally projecting military power a long way from home, in maritime Southeast Asia. Indeed, the White Paper explicitly states that “we will use strategic strike if we have to” (page 59).

    It soon becomes clear from the White Paper that the new submarine would discharge a number of roles, including that of being the primary asset for the delivery of strategic strike:

    “The Future Submarine will be capable of a range of tasks such as anti-ship and anti-submarine warfare; strategic strike; mine detection and mine-laying operations; intelligence collection; supporting special forces (including infiltration and exfiltration missions); and gathering battle space data in support of operations. “(Page 70.)

    How will the strategic strike capability be delivered? The acquisition of cruise missiles was seen as a key priority, to be delivered by the Royal Australian Navy (RAN), and, if operating in waters a long way from Australia, it seems clear that submarine launched missiles would be the preferred means of delivery:

    “The Government places a priority on broadening our strategic strike options, which will occur through the acquisition of maritime-based land-attack cruise missiles. These missiles will be fitted to the AWD, Future Frigate and Future Submarine. …The incorporation of a land-attack cruise missile capability will be integral to the design and construction of the Future Frigate and Future Submarine”. (Pages 70 and 81.)

    The 2009 White Paper has been quoted at length because it set out in quite precise terms what the future submarine’s multi-role mission would be. The 2013 White Paper, produced by the Gillard government, was far more reticent in every way than the 2009 version, and was virtually silent on the role required of the new submarine.[2] Yet while the tone may have changed, neither the strategic posture nor the requirements for the future submarine as laid out in the 2009 White Paper have been refuted or significantly amended in subsequent government statements.

    More recently, for example, as evidence of the changed emphasis since 2009, the previous Chief of Navy (2011-14), Rear Admiral Ray Griggs, defined the major operational task for the future submarine as “sinking hostile ships and submarines. In contrast, other roles such as intelligence collection, transporting special force teams and land strike using cruise missiles are very much secondary and not significant design drivers.” Yet force projection operations far from home for the submarines still appear to be high on the agenda. “The area of operations seems clear. Admiral Griggs considers the South China Sea as the area of most interest.”[3]

    In summary, therefore, while the tone may have become more diplomatic, in public at least, the overall mission of the future submarine is very much along the lines set out in the 2009 White Paper. If some roles have been downplayed by Admiral Griggs, none of them has been deleted from the list. Indeed, in proposing that the main area of operations for the future submarine will be the South China Sea, a contested and congested location not easily accessed from Australia, Admiral Griggs has endorsed a high risk, proactive role for the new boats a long way from base. This is entirely consistent with the 2009 White Paper.

    Technology: what kind of submarine does Australia need?

    What does this imply for the design of the new submarine? The problem is that some of the roles set out in the 2009 White Paper and later described by the then Chief of Navy can only be effectively discharged by a nuclear powered attack submarine (SSN). Undertaking strategic strike missions, for example, landing special forces or attacking warships and submarines in the South China Sea requires a submarine to have two important attributes apart from state-of-the-art sensors and weaponry.

    The first vital attribute is high speed. The 2009 White Paper tacitly acknowledged this (page 70): “long transits and potentially short-notice contingencies in our primary operational environment demand high levels of mobility and endurance in the Future Submarine”. A SSN can make 35 knots underwater indefinitely, while a conventional submarine (SSK) may travel at 20 knots using its batteries but only for very short distances. Using air independent propulsion (AIP) it proceeds at a leisurely four knots. The second attribute is a low indiscretion rate. A nuclear submarine never needs to surface when in its patrol zone whereas a SSK without AIP needs to come to periscope depth, where it can be detected by hostile forces, relatively frequently in order to charge its batteries.

    Overall, the high transit speed of a SSN and its ability to remain submerged for weeks on end provide immense strategic advantages. As the British demonstrated in the Falklands War after sinking the General Belgrano, the threat posed by the presence of one or more SSNs can lock up an enemy fleet in port and take it entirely out of the game.

    The government, therefore, has written a job description for a nuclear powered submarine. Yet the 2009 White Paper states clearly (page 70) that the “Government has ruled out nuclear propulsion for these submarines”. This decision has been endorsed by subsequent governments. There is an inherent contradiction here that needs to be addressed.

    To be sure, Defence has stated that Australia’s new submarine will have a greater ability than Collins to remain submerged for longer. Of the three contenders for the contract, both the French and German shipbuilders are offering AIP. This solution would allow the submarines to remain submerged for about two weeks. Speed, however, is limited to less than five knots and the AIP units are heavy and expensive.

    The third contender, the Japanese evolved Soryu class, proposes a different technology, with Lithium-ion batteries replacing lead acid batteries and without recourse to AIP systems. This is potentially a more effective solution and with the rapid development occurring in Lithium-ion technology may well become much better still in the future. More powerful batteries would allow a higher underwater speed, greater endurance and a lower indiscretion rate. Yet there are some significant problems to be overcome. For example, Japanese Lithium-ion batteries used in the Boeing 787 Dreamliner have been known to catch fire, an unacceptable outcome in a submerged submarine, particularly one that is operating in hostile waters.

    While an SSK using AIP or Lithium-ion may be quieter than a nuclear submarine, the advantage when compared to a modern American or British SSN such as Virginia or Astute is now marginal. This benefit is outweighed by a considerably slower transit speed for the SSK, slower speed when operating submerged and higher indiscretion rate.

    Until recently the RAN did not need to consider the acquisition of nuclear submarines in order to retain its technological edge in the region. Only the Americans and Russians operated nuclear submarines in their Pacific fleets and the games they played were predominantly with each other. In the Asian maritime region, first Australia’s Oberon class and then, in their early years at least, the Collins class were leaders in technology. A few other countries operated less effective conventional submarines but nothing that would cause any concern to the RAN.

    That situation has now changed substantially. Several countries in the region operate boats that are technologically more advanced than the Collins class. Even some SSKs, particularly those that are equipped with AIP, outclass Collins in important respects. Of more concern is the upsurge in nuclear submarine acquisitions. Apart from the United States and Russia, both China and India now operate nuclear submarines in the maritime Asia-Pacific and are building up their fleets. Some of these boats have the capability to attack Australian cities with ballistic and cruise missiles. China and India are also building SSNs designed to hunt and destroy other submarines, with the slower SSKs being most vulnerable to such attacks.

    The role of China’s nuclear submarine fleet is fairly clear. If positioned west of Hawaii, the new Jin class of ballistic missile submarines could threaten the whole of the continental United States as well as Australia. On the other hand, the role for the Shang class of SSNs apparently is to establish a strong presence in the South and East China Seas. According to one commentator:

    “One goal of Chinese submarines is to create an anti-access/area denial zone up to what it refers to as the First Island Chain, consisting of the Kuril Islands, Japan, Taiwan, and the South China Sea. The chain represents the absolute minimum to defend the Chinese mainland. The second goal would be to enforce China’s claims on the East and South China Seas.”[4]

    While China’s current fleet of nuclear submarines may lag behind western technological standards at this stage, that nation’s ability to catch up with the west in a short period of time should never be underestimated. Currently, for example, the civilian nuclear industry is developing at a rapid pace in China, with considerable resources devoted to small modular nuclear reactors (aka nuclear submarine power plants). China is also leaping forward in the area of defence electronic systems, particular sensors. Given that Australia’s new submarine will remain in service for perhaps 40 years, it is important to ensure that it is not outclassed before the first boat has left the shipyard.

    In a paper on the Future Submarine presented in 2014, Andrew Davies, a naval specialist at the Australian Strategic Policy Institute (ASPI), has analysed future trends in anti-submarine warfare. He concluded that developments in technology, particularly in sensors, would make life increasingly difficult for all submarines, but particularly SSKs. He stated that:

    “The design of the future submarine has to be cognisant of these trends, which will make penetration of adversary space or operations in contested chokepoints by the submarine itself very much harder. Basing our investment around traditional ideas of submarine operations isn’t likely to be a winning strategy a couple of decades from now”.[5]

    Davies goes on to summarise the implications of his analysis for Australia’s future submarine:

    “The net summary is that future submarines will need to:

    • operate away from chokepoints and contested spaces but be able to project influence into them
    • have a low indiscretion rate
    • be a hub for a suite of long-range sensor and weapon systems
    • be networked with other units, including electronic warfare platforms and systems
    • be able to manoeuvre quickly in response to a rapidly changing threat environment.”[6]

    Davies goes on to say: “of course, that list pretty much says ‘SSN’, but that’s not going to happen”. Because of that restriction Australia needs “to decide whether our subs are going to play in the highest end operations. If we decide we need to, we’re necessarily going up the risk reward curve for a conventional boat.” In layman’s terms, that means that if Australia decides to employ a SSK to undertake missions suitable only for a SSN, the lives of the crew would be put at high risk.

    Implications

    Drawing these threads together, it is not difficult to conclude that, unless the government downgrades the tasks it expects the future submarine to undertake, Australia’s next submarine needs to be nuclear powered. First, any SSK, even a leading-edge boat using Lithium-ion batteries, cannot dominate the battlespace in a region of the world where other countries are deploying nuclear submarines. Secondly, to send a conventional submarine into the South China Sea to attack hostile warships and submarines, to launch cruise missiles or conduct infiltration and exfiltration missions on a hostile shore would not be an efficient or effective use of naval assets and it would place naval personnel at very considerable risk.

    The next question is whether Australia is capable of acquiring and operating a fleet of nuclear submarines. Clearly there would be major hurdles, apart from the domestic political issues (incidentally, it would be impossible to build a SSN locally). First, we would need US support which is not likely to be forthcoming. This may well be negotiable, however, particularly if Australia agreed to assume a greater defence responsibility in the region in the context of the US strategic tilt to Asia.[7] Secondly, because we have no nuclear industry, conventional wisdom suggests Australia cannot maintain a nuclear submarine’s reactor. Perhaps the US Navy could be engaged to undertake this task, preferably in Australia but if necessary in Hawaii.

    If Australia were to acquire an established class of nuclear submarines from the US or Britain the cost could be substantially lower than acquiring a fleet of newly designed SSKs, particularly if they had to be built in Adelaide. We would certainly not require more than six SSNs and, in contrast to the three conventional submarine offerings currently on the table, we would be buying a tried and tested model. We could also acquire them much more quickly and allow the troubled Collins class to sail into a merciful sunset.

    Alternatively, we could accept that Australia would never go to war with a major adversary except as a member of a coalition led by the United States. In that case we could appropriately leave force projection activities in the South China Sea to the US Navy. The role of the ADF, inter alia, would then be to deny any adversary access to the approaches to Australia’s littoral. This may well be a much more realistic and less risky strategy.

    But that raises a critical question. Do we need to spend up to $40 billion on new submarines in order to defend Australia’s maritime approaches? The answer to this may well be in the negative because Australia is already acquiring a number of other advanced defence assets that can accomplish this. These include a new generation of frigates that will be highly capable in anti-submarine warfare (ASW). These will be networked into very substantial RAAF assets, including the six airborne early warning Boeing Wedgetails, up to 12 Boeing P-8 Poseidon long-range maritime patrol aircraft, 36 Super Hornets (including 12 of the very advanced electronic warfare ‘Growler’ version) and 72 F-35 joint strike fighters. We already have an excellent aerial refuelling capability. With its ability to locate and destroy hostile submarines as well as surface ships, the new Poseidon in particular will be an important asset in denying access to Australia’s approaches. It is therefore difficult to see how a SSK would be required to play a role here.

    Finally, to venture into more sensitive territory, it is not difficult to deduce that the main reason the US is keen for Australia to acquire a new generation of SSKs is not power projection but rather the contribution they would make to intelligence gathering, specifically in the area of communications electronics support measures (CESM). The Kestrel CESM system fitted to the Collins class, for example, provides “wideband signal search, narrowband audio interception and direction finding (DF) over the HF, VHF and UHF bands”.[8] Apart from the considerable strategic benefit offered by the intelligence it provides, this capability presently gives Australia valuable ‘coin’ in the intelligence sharing agreement with the US. Whether or not it could be provided safely and effectively by sophisticated aircraft (manned and unmanned) or satellites rather than submarines is a key question.

    Prime Minister Turnbull has stated that, across the broad spectrum of government policy, all options are on the table. In that context, mature analysis of these strategic considerations, before committing to buy very costly submarines, is a major priority. The issue of whether or not the submarines should be built in Adelaide pales into insignificance next to these fundamental questions.

     

    Jon Stanford is a Director of Insight Economics. He had a significant career as an economist in the Australian Public Service, ultimately in the department of Prime Minister and Cabinet. He has worked extensively on economic and policy issues around defence procurement and naval shipbuilding both in the public service and subsequently as a consultant. 

     

    [1] Australian Government (2009), Defending Australia in the Asia Pacific Century, Defence White Paper, Canberra.

    [2] Australian Government (2013), Defending Australia and its National Interests, Defence White Paper 2013, Canberra, pages 81-82.

    [3] Peter Layton (2015), “Australia’s next submarine – will it be the Soryu”, Defence Today, Vol 11, No 4, page 8.

    [4] Kyle Mizokami (2013), “Asia’s Submarine Race”, USNI News, US Naval Institute, November, http://news.usni.org/2013/11/13/asias-submarine-race

    [5] Andrew Davies (2014), Trends in submarine and anti-submarine warfare, Australian Strategic Policy Institute, Canberra, http://www.aspistrategist.org.au/wp-content/uploads/2014/04/ASPI-submarine-conference-2014-Davies.pdf

    [6] Ibid.

    [7] In recent times the US has been more forthcoming in terms of its willingness to transfer sensitive defence technologies to Australia. To date, for example, Australia is the only country outside the US to acquire the highly advanced electronic warfare EA-18G ‘Growler’ version of the Super Hornet fighter-bomber.

    [8] Daronmont Technologies, http://www.daronmont.com.au/dartweb/index.php/projects/kestrel

  • Ian Richards. The Submarine Menace

    Way back in the 1980s, then Defence Minister Kim Beasley gave birth to the greatest industrial White Elephant in the history of our nation  –  the establishment of the submarine construction facility in Adelaide,South Australia.   So much has been written and said about the Collins Class submarine construction  project that I do not need to elaborate upon it.  Suffice it to say that it was succinctly described in the media  as a “disaster”. It would be hard  to find many who would disagree.

    Politicians of both persuasions have since that time  prostituted their principles in pursuit of their holy grail – VOTES.  In this case, votes in South Australia. . The beauty of these kinds of long-term projects from a Minister’s perspective is that while they get the kudos from announcing the project and cutting a ribbon, they will be safely drawing their superannuation when the full horror of a disastrous acquisition begins to unfold.

    As a result we are now embarked upon the second saga in this sorry tale.  We are building three orphan Destroyers  unique to Australia.  As an alternative, we could have purchased three US built ARLEIGH BURKE class  destroyers – considerably more capable ships – plus a hundred fully equipped regional hospitals for the same total project  cost.  The media reports that the  first ship is way over budget and three years late.  This augurs badly for the future of these ships – if construction delays resulted from unmanageable complexity – and why else??  – the lifetime logistic support will be a nightmare. .  As Australian orphans we will have to provide a costly  inventory of lifetime spares – rather than tap into the US stockpile if we had purchased the ARLEIGH BURKEs. The initial and annual  costs of the Destroyer dedicated bureaucrats in the Defence Materiel Organisation  will amount to a staggering figure.

    A passing comment by an industry rep at a Sydney Trade Fair  some years back perhaps says it all  – “The propeller shafts were designed in Finland, manufactured in Holland and will be powered by what is known in the trade as ‘the bastard Caterpillar’, a US Caterpillar diesel modified by the Spaniards”.  I cannot vouch for his accuracy, but I suspect the principle in his comment is correct. The first of class is already effectively three years old  –  the second and third will be five? six? years out of date on commissioning. Ten years after commissioning, how many of the companies providing installed equipment will still be manufacturing suitable spares?

    The Government is now faced with a decision on the procurement of new submarines.  For a moment, leave aside manufacturing or employment considerations and look only at the requirements for the defence of Australia.

    A fundamental consideration must be – “Conventionally armed conventionally powered submarines have made no significant contribution to strategic imperatives or military operations in the past 70 years”.

    At a Naval seminar some two or three years ago the Chief of Navy laid emphasis on the transition of the Navy to an amphibious capability greatly enhanced by the new CANBERRA class helicopter carriers. An overbalance of submarine capability does not fit into this theme.

    Submarines are a major all-out- war weapon against a major foe.  When our projected  new submarines  are torpedoing  Indonesian, Chinese, Indian,Russian merchant ships and warships or our very expensive very advanced projected  new submarines are firing missiles into Shanghai, or Djakarta or Delhi or Vladivostok  our new submarines could be usefully employed. Short of such a scenario, our new submarines will be of little consequence.

    That said, a case can be made for a small number of modest capability submarines in a balanced Australian Defence Force. A force of 12 submarines for Australia as proposed by the previous Government is nothing short of absurd.

    Looking now at the manufacturing and employment considerations, surely we have demonstrated with the Collins Class and now the Air Warfare Destroyers that it is not possible for a small nation with limited requirements and limited high tech industrial infrastructure to build very advanced warships or submarines in tiny numbers other than at prohibitive cost and with production delays and lifetime logistic problems.  Argentina, a country not too dissimilar to Australia, demonstrated abundantly in their disastrous  submarine building programme why not to go there. “Building submarines” is of course a misnomer  –  we are not “building” submarines, but building a metal box . At least  95% of the contents will be  made overseas – all the weapons and most of the systems and sub-systems will be foreign made. Bought in penny packets, the cost of “making” a motor car in this fashion would be huge  –  for a submarine, even more so. It is almost certainly less costly to buy a submarine complete off the shelf than to buy all the components to assemble it in Australia. The Australian “building” thus adds no value but huge cost to the equation.

    If we were determined to build high tech high risk submarines in Australia, surely we would have chosen one of our industrially developed areas rather than a charming rural backwater that has a demonstrated incapacity to build merchant ships or even motor cars competitively.

    There are so many arguments against this project.  But the White Elephant is trumpeting to be fed, spurred on by its clamourous mahout, the South Australian Parliament.

    The submarine Project is a serious menace to the wellbeing  of Australia’s future taxpayers. It is for the Government to show its wisdom in deciding whether or not  to continue with a project that will extract  $20,000,000,000 or $30,000,000,000 from them  with little improvement in the Nation’s defence. There are many other projects that would be more valuable, create more employment  and justify such expenditure.

    Ian Richards, AO, retired as Rear Admiral, Royal Australian Navy, in 1984. He variously commanded HMAS Perth, Stuart and Third Destroyer Squadron. He was Director of Naval Plans and Chief of Joint Operations, Defence. He was Deputy Chief, Naval Staff, when he retired as Rear Admiral.