Entitlement makes up for lost production


Joe Hockey was fond of talking about the end of the age of entitlement, basically meaning that people should not expect support from government and should buy their services in the market — including health and education services if he had had his way. There are, however, various good reasons why government should be fully involved in welfare and the delivery of services. I will look at one of them, one that we do not often think about.

Early this year in his pieces on tax reform, 2353 pointed to the fact that couples with young children may look to government for financial support because the children are non-productive members of the family. The question is whether that is a legitimate claim on the government. Joe Hockey would likely have said not but, historically, I believe it is because it is government, and society in general, that has played the major role in creating that situation by regulating access to the labour market.

The economic role of children has changed as society has changed. In hunter-gatherer societies children of both sexes from a very young age assisted in the collection activities of their mothers — they actually learned by being involved. As the boys got older, they would join their fathers, uncles and other males in the hunt and learn to track, pursue and kill game.

In agricultural societies (and even on modern farms), children also contribute from a young age. In Australia in the 1800s, after schooling became widespread, it was still common in rural areas for school attendance to drop significantly at harvest time as the children’s first priority was to help on the farm, and that applied to both female and male children. As an example, in 1870 at a place then known as Moorwatha in south-western NSW, a regular school attendance of over 40 dropped to fewer than 20 at harvest time.

In the early years of the industrial revolution, children as young as 7 or 8 worked in factories and mines but, even in Britain from the 1830s, the government changed the rules to limit the hours children worked and the age at which they could.

From the 1930s to the 1960s in Australia it was common for male children, usually around 12 to 14, to work as paperboys on city corners or walk suburban streets selling their newspapers, or to see them assisting with the daily delivery of milk or bread. (Who remembers milk and bread deliveries?)

So it can be argued that until about the mid 1900s children were not unproductive members of a family but were essential economic contributors. It was only the wealthy who had unproductive children (and, as much as I would like to, I won’t get into the argument that they also became unproductive adults).

We also made formal education for children compulsory and gradually increased the years of schooling that we thought necessary. Early on it was normal for children to leave education at the end of primary school (aged about 11 or 12): then 14 was made a compulsory age for schooling, and then 15. We now encourage everyone to complete Year 12 (aged 17 to 18) — some, but not all states have made 17 the new minimum age for leaving school — and then to undertake further tertiary education at TAFE or university so that ‘children’ now may not complete their education until they are at least 19 or 20, if not older, in effect giving up from 5 to 10 years of productive work.

In our modern society, students can find part-time work from age 15, particularly in the retail and fast food industries, and still remain in education. In that regard, there is still some scope to contribute economically but it is now more limited.

If society and government have changed the rules so that children can no longer contribute economically to their families as much as in the past, then who has the responsibility to make up for that lost production?

In many early societies, elderly people were acknowledged as the repository of wisdom, of experience, life skills and knowledge of the world in which a community operated. Even if they were no longer physically productive, they may know the best foods, the best places to search for food. They retained the knowledge of the medicinal qualities of plants. They were sought out and valued for that knowledge. That changed with the means of retaining knowledge in books, then those books being printed and becoming widely available. Now we have computers, the internet and the knowledge explosion. Older people are now often seen as ‘behind the times’ but that doesn’t mean they still don’t have extensive knowledge of life skills, of the informal rules that operate in their communities and emotional knowledge and understanding.

In some societies elders were (and still are) given additional status by the practice of ancestor worship. As the elderly approach the time at which they will join the ancestors they are cared for by the living to ensure that they continue to contribute to their descendants’ good fortune after they pass over.

Pensions were introduced partly to meet the needs of a growing population. It was a way of providing for people when they became too feeble to work. In the 1800s in England, older people often ended their days in ‘workhouses’ and later ‘alms houses’. A growing population meant it was cheaper to provide pensions and allow elderly people to support themselves rather than build many more alms houses. Australia never had a system of workhouses, so aged pensions were introduced, initially at the state level, some years before they were in the UK.

The other argument, based on Australia’s lead in social welfare, was that after people had worked for over 50 years, originally from age 12 or 14 to 65, they had made their contribution to society and deserved an adequate retirement. (It was a similar argument used to justify long service after each ten year period of service.)

Then came the baby boomers. Long term projections at the time raised the prospect that when the baby boomers entered the workforce there would not be enough jobs. There are two means by which the size of the available workforce has traditionally been managed: by lengthening the period of education and/or lowering the retirement age. To ensure enough employment would be available for the baby boomers, Australia relied mainly on lengthening the period of education, thus allowing time for more of the then existing workforce to retire before the baby boomers entered. We also allowed early retirement in some cases without changing the official age of retirement. In the current climate, with fears of a smaller workforce as the baby boomers retire, we have focused on increasing the retirement age rather than lowering the age for compulsory education. In Europe, facing a similar problem, many governments initially lowered the retirement age and are now increasing it again.

On the other hand, much modern work is information based, rather than relying on physical labour, and there is no good reason why older people cannot continue in such work. They would often be the keepers of corporate knowledge. With the knowledge explosion, we seem to have forgotten the old adage about learning from the past and not repeating its mistakes. In Australia people who lose a job when they are over 50 have considerable difficulty finding new work and often become long-term unemployed. Their life-time skills and knowledge are disregarded as irrelevant in our modern world.

I have a personal example when a young woman from another government department suggested her department had a ‘new’ idea for Aboriginal affairs. I informed her that it had been tried over 15 years previously and not worked: if it was to work, it required acceptance of higher costs and the government had not then, nor when we spoke, been prepared to accept those costs. I might say that without my corporate knowledge a mistake would have been repeated. Why such corporate knowledge is now seen as ‘old fashioned’ is a mystery to me.

Although the government in recent years has been encouraging people to remain longer in the workforce and offering incentives for employers to retain older people, it does not yet appear to be happening to any significant degree. The government allows the market to determine what it does and employers are not taking up the opportunities that changes in government policy are providing. So there is much lost productivity, for individuals, their families and the economy.

Longer periods of education are justified not only in terms of managing the size of the workforce but because more knowledge is available for learning and many jobs in the new economy require higher level skills. Hockey and his fellow neo-liberals have been keen to increase university fees on the basis that graduates will have access to higher incomes — that may be true but comes in return for giving up years of potential earning. That lost earning capacity comes at a cost not merely to the individual but to their family — which is one reason why participation of lower socio-economic groups in higher education has not improved as much as expected.

The point is that it is actually the government that is determining the period when people can be economically productive members of society.

Despite governments having over the years made the rules that reduced the productive activity of children and the elderly, the likes of Hockey, and other believers in the neo-liberal agenda, suggest that services for the young and old should be provided by the market — rather than alms houses we now have privately owned retirement villages and the encouragement of private schools. Can you see the inconsistency in that approach?

How can the young and the elderly purchase in the market when the government has put in place rules that restrict them from earning in the market? They are left with only two options: reliance on the earning capacity, and support, of the productive members of their families or reliance on government assistance, whether in cash or services. To the extent that the changes have reduced the total productive activity of families, by removing the young and the elderly, then surely it is logical that government meets the costs of the changes it has made.

I am not suggesting that we should turn back the clock to the worst of child labour, or elderly people working until they drop, but we need to acknowledge the historic changes that have taken place in our society, that have changed the economic contribution of the young and the elderly, and consider who bears the responsibility.

If it is government, as the political representative of society, that has changed the opportunity for effective economic productivity for children and the elderly then why shouldn’t it be government that accepts the cost? The argument becomes a market-based argument, not a welfare argument — which should be acceptable to Morrison, Hockey and their ilk: as a society we have, even if for good reason, removed the right of children and the elderly to participate in the labour market and therefore we, as a society, through our government, have an obligation to make up for that lost production for the individuals and their families.

What do you think?
As Ken has presented a very different and unusual argument supporting government provision of welfare and services, we will be very interested in your reaction. Does Ken’s historical argument stand up?

Next week, as the weather forecasters are predicting a severe El Nino this summer, Ken takes a look at the state of water in Australia and some of the politics involved, in ‘Where does all the water go?’.


The year of morals and ethics


It is likely that 2015 will be remembered around the world as the year when morals and ethics overcame deception and greed. There are a number of examples that could be given with regard to investment funds, rorting allowances and living circumstances as well as just corporate greed. Let’s just confine ourselves to a few.

In August this year, Fairfax and the ABC reported on a joint investigation into the chronic underpayment of wages to employees of 7-Eleven franchisees. According to Fairfax, 7-Eleven has 620 stores in Australia, predominately on the east coast. The joint investigation discovered that there were significant differences between the payroll records and the actual working hours of a number of employees — mostly overseas students in this country on student visas (which have restrictive work conditions).

The results of the investigation were reported by Fairfax on 29 August and broadcast by ABC on its Four Corners program on 31 August 2015. By 2 September, there were moves to call the 7-Eleven franchisor to appear before a Senate committee.

While the owners and operators of 7-Eleven may not be appreciating the attention at the moment, it seems that Fairfax and the ABC have reported fairly and accurately on a systemic failing of a large company. The company concerned is not denying the allegations, rather it has set up an ‘independent panel’ to assess the claims of affected employees (who are paid through the franchisor’s office) and to work with the Fair Work Ombudsman in the prosecution of a Sydney franchisee. The chairman of 7-Eleven Australia for many years, Russ Withers, as well as the General Manager Operations, Natalie Dalbo, have subsequently stood down.

Michael Smith, former Director of the Australian Institute of Company Directors and iiNet, was installed as Chairman of 7-Eleven with a brief to fix the problem and repair the reputation of 7-Eleven. He was reported as commenting:
7-Eleven was the tip of the iceberg for wage exploitation of young and foreign workers in Australia, adding: "We have a problem in this country."
Similar staffing accusations have been made against Australia Post contractors and United Petroleum franchisees which adds some veracity to Smith’s claim.

Clearly there is an issue. Unfortunately, the issue of deception is not limited to Australia. Around the world there are various regulations surrounding the emissions that motor vehicles are permitted to pump into the air. Some Volkswagen vehicles in the United States were discovered to be emitting up to 40 times the volume of some chemicals than they should have been. You can read about how the deception was discovered here and how VW organised it here.

After a number of high ranking VW employees ‘falling on their swords’ over the last month or so, the new CEO of Passenger Cars, Dr Herbert Diess, claimed the company ‘did some things that were wrong’. Surely an understatement from a moral point of view.

In the case of both 7-Eleven and VW, while the morals may be questionable, the objective was clearly to cut corners and enable a larger return to those that have a financial interest in the company. As a result of the reaction to the publicity regarding wage underpayment, the 7-Eleven franchise system in Australia has been altered to give those that actually operate the stores more than the previously contracted 43% of the store’s profit, and VW will be working out how to retrofit something like 11 million cars around the world so that they perform and emit the quantity of chemicals, as originally specified in the glossy brochure, with oversight from various countries that do care about emissions levels. (It is a telling point that in Australia, the ACCC is the agency investigating VW, not for the excessive emissions but for a breach of advertising standards.) In either case, there was short term financial gain with, one suspects, a fair degree of long term financial pain ahead.

While we could claim money is a motive for large companies to attempt to deceive, when governments do the same thing you have to ask why.

Days after the 2013 election, then PM Abbott and then Immigration Minister Morrison announced ‘Operation Sovereign Borders’ where Abbott effectively said that he would implement his ‘no more boats’ slogan — whatever it takes. One of the early actions was to withdraw information from the public, claiming ‘operational security’. In their submission for the 2014‒15 federal budget, the Australian Churches Refugee Taskforce argued:
In 2013-14 Australia will spend almost two-thirds as much locking up in detention a few thousand people seeking asylum, as the entire UNHCR spend in the last financial year assisting tens of millions of refugees and asylum seekers worldwide. This is a grossly disproportionate amount of money and is unjustifiable waste in terms of both the financial and human costs; with men, women and children being held in inhumane conditions in detention camps offshore.
In addition:
The publicly known allocations to offshore processing alone for the Department of Immigration for 2013-14 thus far are in excess of $3.28 billion. This figure excludes other associated costs which have been earmarked as commercial in confidence and not released, costs for these operations borne by other departments or arms of government, and other significant incentives offered to those countries in order to gain agreement with these operations.
For reference:
Yet by comparison, in 2013 the United Nations High Commission for Refugees (UNHCR) announced that its annual budget (composed primarily of voluntary donations) had reached a ‘new annual high of US$5.3 billion’ at the end of June 2013. The UNHCR has staff of more than 7,600 people in over than 125 countries and helps tens of millions of people.
In the 2014 budget the Abbott/Turnbull government was attempting to introduce a $7 ‘co-payment’ for consulting with a medical practitioner in Australia and ensuring that those under 30 who were unfortunate enough to be unemployed would have to wait six months to receive help from the social security system. Those measures were justified as helping to ‘repair’ the ‘budget emergency’. The same people were spending $3.28 billion of your and my money on fulfilling an election policy that is inherently xenophobic and of little value to Australia.

In addition to the extravagant waste of money that could have been spent helping those in need or creating infrastructure (after all Abbott claimed he was to be the ‘infrastructure Prime Minister’), Australian military units breached Indonesian territorial waters on several occasions which created a gulf in the bi-lateral relations between Australia and Indonesia. Towing back boats is also probably illegal:
International maritime law prohibits Australia from interfering with boats that fly the flag of another country on the high seas for the purpose of preventing their entry into Australia. Prohibited interference on the high seas includes transferring passengers onto Australian vessels or “towing back” the vessel.
For those who managed to evade the ‘tow back to Indonesia’ option, the Australian government has another form of torture for the innocent refugee. These ‘lucky’ people are flown off to detention centres in Nauru or Manus Island — part of PNG — to fulfil the ‘promise’ that ‘boat people will never live in Australia’. The treatment of those sent to Nauru can be summed up by the story of a Somali woman, allegedly raped by security guards on the Island, flown to Australia for an abortion and returned to Nauru before the procedure, apparently just prior to legal proceedings occurring to prevent the woman being returned to Nauru. While the Government claimed the woman had changed her mind about undergoing the abortion (a claim disputed by her legal team), an academic writer has suggested that the actions of the Australian government are similar to the ‘extraordinary rendition’ process practised by the USA during the war against Saddam Hussain:
Extraordinary rendition depended on the CIA’s ability to exert de facto control over its allies while remaining at arm’s lengths from the dirty work they performed.

Australian refugee policy works in the same way.

“People who are in the regional processing centres are the responsibility of either the Nauruan government or the PNG government,’ Dutton told Emma Alberici on the ABC’s Lateline program earlier this month.

Of course, Nauru was formally administered by Australia until 1966, just as PNG was until 1975. Both nations are heavily dependent on Australian aid. When they were asked to host detention centres, the suggestion was, as Marlon Brando might put it, an offer they could not refuse.
Until February 2014, the Salvation Army had been providing recreational and mental health services to refugees on both Nauru and Manus Island in PNG. The contract with the government was cancelled late in 2013 by then Immigration Minister Morrison. Morrison danced around the reason for the cancellation as well as refusing to discuss who would take over the provision of humanitarian services:
“I wouldn't be making any comment on those matters at this stage, only to say that the contract arrangements for our offshore operations are in the process of being determined with a view to improving our operational effectiveness at all of those centres based on everything we've been gleaning for the past 13 weeks since we've been in office," he said.

When told the Salvation Army had confirmed the contract termination, Morrison refused to say whether another provider would be brought in to provide the services, saying: "I provided the answer I'm giving today."
Could it be that the reason for the cancellation was actually in the same news report?
In the past, Salvation Army workers have blown the whistle on harsh conditions at both Manus and Nauru.
Roll forward to October 2015 and nothing has changed. Fairfax reported:
Charities working in immigration detention centres were asked to pay multimillion-dollar bonds that could be forfeited if they spoke out against government policy, as the Coalition sought to maintain secrecy over border protection.

In what critics say is the latest evidence of the government's determination to control information about its immigration detention program, aid agencies including Save the Children and the Australian Red Cross were asked to offer "performance security" — in one case, of $2 million — during negotiations over contracts relating to work caring for asylum seekers and refugees.
Without trying for a Godwin, are the Governments that were led by Rudd, Gillard, Abbott and Turnbull so concerned about the uproar that evidence of the true conditions on Manus and Nauru would bring, they tried to deny culpability? It didn’t work in Nazi Germany, it didn’t work for 7-Eleven, it didn’t work for VW so why on earth does the Australian government believe it’s going to work for them?

There has been one Australian journalist permitted to visit Nauru in the past 18 months and he comes from The Australian, an outlet that is usually friendly to the Liberal/National Government. This Guardian article reports on the lack of journalists going to Nauru, the $8,000 non-refundable application fee is apparently a significant disincentive!

There is still a month or so left in 2015: wouldn’t it be nice if the (forced) re-discovery of morals and ethics in the corporate world extended to the Australian government? Both 7-Eleven and VW have admitted error and claim they are working to correct the failures of the past. While it may all be smoke and mirrors, there are certainly processes in place to watch the two companies’ new-found honesty and credibility. Various governments around the world are certainly watching VW’s rectification process as the Fair Work Commission is watching 7-Eleven.

If the Australian government came clean on ‘offshore processing’, our budget position would be close to $5 billion better off; the refugees held in what are reported to be sub-human conditions in Nauru and Manus Island would be allowed to come to Australia (along with others in refugee camps around the world) to prove their credentials, with the potential to be re-settled in a kind and humane manner; our culture would be enriched (as the various waves of immigration over the past 40,000 years have done); and the Australian government wouldn’t have to tie themselves in knots defending the indefensible. It’s logical, honest and needs to happen, so that next time we sing the national anthem, we actually mean the fifth and sixth lines of the second verse.
For those who've come across the seas
We've boundless plains to share
What do you think?
Oh what a tangled web we weave! When large corporations are held to ethical standards and own up to their breaches, why can’t we expect the same of governments? Have we become so cynical of politics, of election lies, of ‘core and non-core’ promises, that we no longer expect ethical behaviour of our politicians? If that is the case, we have indeed reached a sorry state in which politicians have woven their own web of deceit far removed from ethical standards.

Next week Ken presents a very different take on the reasons why government is obliged to provide welfare and services in ‘Entitlement makes up for lost production’.


You can't patent ethics



Recently you may have missed the news that Yvonne D’arcy won her case in the Australian High Court. D’arcy had been involved in legal action against Myriad Genetics, a US biotech firm that developed a test to determine if people have a predisposition towards breast cancer. This was ground breaking stuff — and showed that, at least sometimes, the human will overcome corporate goals.

To discuss why this result is so important, we need to go back to the early years of the 21st century — 2003 to be exact. A quick disclaimer is required here. My medical training is limited to occasionally being able to get a ‘band-aid’ to remain where I want it for a period of more than a couple of hours: so the explanation of why this court case and its implications are important isn’t full of medical English.

In 2003, scientists completed the mapping of the human genome: in essence humans could now read and manipulate the biological codes written in the 3 billion building blocks of who we are and how we exist — our genome (or DNA). The formal project took 13 years. Although DNA had been identified 50 years prior to the finalisation of the Genome Project, and some items of DNA were worked on prior to ‘the project’, it took a while to work out what the 3 billion building blocks actually did. While it took 50 years to gain the understanding, now that we have it, those with the knowledge can compare what is in your body to what is expected to be there and identify a treatment for you, rather than for the average person of your age, gender, weight and so on, which leads to less adverse side effects and the better use of resources.

U.S.News reported:
Genomic medicine may help determine a person's risk of developing several specific medical conditions, including:
Cancer
Cardiovascular disease
Neurodegenerative diseases
Diabetes
Obesity
Neuropsychiatric disorders

Researchers are actively investigating the genomic and genetic mechanisms behind — and developing predictive testing for — such diverse medical conditions as:
Infectious diseases, from HIV/AIDS to the common cold
Ovarian cancer
Cardiovascular disease
Diabetes
Metabolic abnormalities
Neuropsychiatric conditions, such as epilepsy
Adverse drug reactions
Environmental exposure to toxins
It is possible to ask your general practitioner to arrange for your DNA to be mapped to identify potential problems. Before you go rushing down to see your doctor, however, consider this: if you discover that you have a predisposition for a form of cancer, you would have to disclose that information to your partner, your family as well as potentially those that make a business decision to insure you. In addition, in a similar way to saying those that live in Southern Tasmania are less likely than Queenslanders to acquire skin cancer, while you may have a predisposition it doesn’t necessarily follow that you will acquire the particular cancer. In May 2013, actor Angelina Jolie decided to undergo a preventative double mastectomy due to family history of breast cancer, supported by testing that revealed she carried mutated BRCA1 and BRCA2 proteins — indicators of a predisposition towards acquiring breast cancer. She had no signs of breast cancer when she underwent the operation and while the probability is that she would have developed the condition, it’s not a certainty.

Those who have, or have seen those close to them, endure cancer treatment over the years would be aware that medical advances, such as better testing, have meant that treatments for cancer are more effective and less debilitating now than they were 10 or more years ago. While in the past, it was common for people to lose their hair and be incapacitated for days after treatment; it is a far less common occurrence today. To an extent, this is an outcome of personalised medicine; the science has identified the correct targeting and dosage of the medicine to reduce adverse side effects while still being effective.

Medical science could now go from ‘taking a punt’ on a standardised dose of medicine having a beneficial effect to creating medicine based on the person it is meant for. Personalised medicine is still in its infancy — there seems to be a lot of potential for further advances. As you would expect however, some of the testing and development for the processes to be used is expensive. And here is the point of this article.

Some companies will develop a process, be it for medicine, software or vehicle safety (as examples) and patent it. According to IP Australia (the Government body that registers patents in Australia), a patent is:
… a right that is granted for any device, substance, method or process that is new, inventive, and useful. A patent is legally enforceable and gives you (the owner), exclusive rights to commercially exploit the invention for the life of the patent.
Others may determine that the invention is so important to humanity or their reputation that they decide not to profit directly from the invention. You sometimes hear of ‘open source’ computer software — it is software that is developed by a group and freely available for use by anyone. The theory is that others will improve further on the developed software, to the benefit of all.

Some things cannot be patented: again according to IP Australia:
You cannot patent human beings or the biological process for their generation, artistic creations, mathematical models, plans, schemes or other purely mental processes.
The Human Genome Project has identified that a piece of protein known as BRCA1 and BRCA2 suppresses tumours in breasts and other organs by trying to fix damaged DNA or destroy what it can’t fix. A company in the USA called Myriad Technologies developed a test to determine the ‘health’ of the BRCA1 and BRCA2 protein and patented the mutated ‘indicator’ proteins that it identified during its research.

Myriad Technologies launched their product that would test for the mutated BRCA1 and BRCA2 protein in 1996. Myriad, a spin off from the University of Utah and others, had a business practice of ensuring exclusivity for its testing product to allow a return of the money that investors placed into the company. Myriad, which commenced operations in 1994, employed around 2,000 people, was publically traded and boasted revenue of USD723.1 million in 2015

After Myriad had sent a number of research bodies ‘cease and desist’ letters in regard to the identification of mutated BRCA1 and BRCA2 protein, the US Association of Pathologists as well as some researchers took Myriad to court over the patenting of ‘non-patentable material’. After a prolonged period and a number of court cases, the plaintiffs won the final avenue of appeal in the US court system, thus invalidating the patents.

Yvonne D’arcy — assisted by a well-known legal firm — was going through a similar struggle in Australia. After an appeal to the High Court, she won the case, which ensures that others can supply test kits for the proteins in question. A legal precedent has now been created, making it more certain that the court system will not entertain future claims of a similar nature.

Unfortunately it was not the first time that a company that commercialises medical research had relied on exclusivity to gain a return on their investment. In 2004, a subsidiary of the Mayo Clinic in the USA commenced offering testing for some auto-immune diseases where the drug dosage had to be managed to ensure benefit to the patient, rather than buying the ‘test kit’ from Prometheus, who licenced the technology embedded in the tests from a Montreal hospital. Prometheus sued the Mayo Clinic subsidiary in the California District Court and lost. The case was appealed through the US Court system leading to the patent being invalidated.

Medical research is expensive and has to be done correctly. That is why it is so expensive. When the product has an unintended side effect, the results can be deadly. Thalidomide was ‘invented’ in 1957 and was routinely given to pregnant mothers in the late 1950s and early 1960s to overcome the effects of ‘morning sickness’ across various countries, including Australia. Unfortunately, the drug caused a large number of birth defects and miscarriages. While the drug is still in use, regulators across the world introduced controls over the development and usage of drugs as a result of the shortcomings surrounding the inappropriate use of that drug early in its life.

So where to from here? We now have the technology to determine at a human protein level what is needed to sustain a healthy life — and the technology to individually treat people to rectify mutated or defective DNA on a personal level. Unfortunately the research and development of these options is not cheap. Our society operates on the basis that we are all entitled to receive reward for our labour — regardless of the type of labour. By the same token, the cost of research and some profit for the drug development company could preclude the availability of the drug for those without sufficient income.

Yvonne D’arcy and her legal team have made a stand that suggests that companies that go from nothing to over USD700 million in revenue in a period of about 20 years is not equitable or fair to those that cannot afford the testing that is potentially life saving. As a result, the testing for the ‘breast cancer’ DNA should be a lot cheaper due to competition. In contrast the medical development company would suggest to you that they need to make money ‘while the sun shines’ as the next project may cost tens of millions and then be a complete failure at the final hurdle before release.

While no one would want another Thalidomide tragedy, the cost to government of health care in Australia is increasing rapidly. There is a need for proper research, development and testing — all of which costs money. While former Treasurer Hockey’s claim that ‘The starting point is if our health and welfare and education systems stay exactly the same, Australia is going to run out of money to pay for them’, might be overblown, there has to be a point where the ethics of trying to provide a reasonable quality of life for people and the cost of doing so can balance.

If there were no legal way to protect the investment made in researching, developing and commercialising a test or drug that contains human proteins — and is therefore not able to be patented — would the test or drug come to market? There are other options to commercialise the product and retain some control but they would reduce profit margins. Would that be acceptable to the company shareholders? The dilemma is profit versus human condition. It’s a shame that (in Australia anyway) only ethics towards shareholders is legislated.

What do you think?
The world of medical research and new drugs and tests is a complex one. As 2353 explains, attempts to patent genetic material have been overturned in US and Australian courts but will that slow down essential research if companies cannot protect their ‘discoveries’? There are many conflicting issues involved that need to be guided by medical ethics but do profits or ethics come first?

Next week 2353 continues looking at ethics when he compares the ethical behaviour of some corporations and our government in ‘The year of morals and ethics’.

Are you sure you’re not a radical?


Back in September the government released its radicalisation awareness kit. The example contained in it of radical greenie Karen became the centre of attention in the twitterverse, on social media and in the mainstream media but should our concern end there?

All the detail and the booklet is available on the Living Safe Together government website. It was prepared on expert advice but how much was reworded by the public service on the orders of ministers and ministers’ offices we will probably never know.

It identifies three issues or three steps:
  • radicalisation
  • radicalisation to violence
  • violent extremism
Radicalisation: a process during which an individual’s beliefs move from being relatively mainstream to being supportive of drastic change in society that would have a negative impact on the rights and freedom of others. It does not necessarily mean a willingness to use violence to realise those beliefs, but some individuals come to believe that violence is justified to achieve ideological, political or social change.
That definition, from the glossary in the booklet, ignores that many radical ideas actually have as their aim the improvement of the rights and freedom of others, not just a negative impact. In other parts, the booklet actually acknowledges that when it states:
These attitudes differ significantly from how most members of society view social issues and participate politically. In most instances such behaviour does not pose a danger and can even benefit the Australian community. [emphasis added]
So the booklet is treading a fine line between radicalism and radicalism associated with violence but, in my view, does not do it well. Despite the statement quoted above, the overall impression is that radicalism will most often lead to violence.

It insists that Australia is a free society and people can express their views in many legal ways but radicalism is dangerous as soon as non-legal means are used (or ‘criminal activity’ as it is termed). The booklet concedes that some such activities may not cause serious harm but are still illegal: such as vandalism, minor property damage, trespassing or protesting in a violent way. It does state that:
Many forms of activism … can be disruptive but are often used simply to draw attention to a cause through peaceful means. This is a legitimate expression of freedom of belief and free speech in Australia.
The phrase ‘radical activism’ is used but never explained or explored. That term would better fit some of the minor illegal activities listed above: after all, how violent is trespassing? Instead the booklet seems to make a leap straight to violent extremism. Its occasional statements to the contrary seem to get lost or are ignored in making the link between radicalism and violence.

The well-publicised case study of Karen the environmentalist clearly shows the booklet’s blurred line between ‘activism’ and ‘violent extremism’. Karen’s activities, as listed, fit the description of activities that do not cause serious harm and it is in relation to Karen that the phrase ‘radical activism’ is used but her case study appears in the section on ‘violent extremism’. Surely there is a difference between trespassing, even spiking trees (for which a warning has been given), and planting a bomb in a public place? — but this booklet does not make that distinction. Even the experts whose research and information was used said that the example of Karen was a real-life case but had been shared with the department, one said, ‘as an example of someone who in fact did not radicalise’; another said she was a radical ‘but that does not make her a violent extremist’.

The booklet says the following on violent extremism:
If a person or group decides that fear, terror and violence are justified to achieve ideological, political or social change, and then acts on these beliefs, this is violent extremism.
The problem with that description is that it can also be applied to governments — the war in Iraq was to achieve ‘regime change’. History also shows that violence often arises in response to the violence of the state. When peaceful protests are met by water cannon, tear gas, baton charges, or in more extreme uses of force and violence, shooting into the demonstrators and using tanks, people movements often form a militant wing. The Black Panthers in America arose from the violence meted out to the non-violent protests of the civil rights marchers. The ANC in South Africa created a militant wing in response to violent government suppression of demonstrations. The current civil war in Syria arose from the reaction of the Assad government when it sent tanks against the mass street demonstrations opposing the government — people decided they needed to defend themselves. My point is, the resort to violence is not always a simple choice made by a radical group to achieve its aims but can arise from the actions of the state, when what start as peaceful protests are met by state-sanctioned violence.

While the booklet mentions ‘terror’, it does not explain it but I think there is an important distinction between terrorism and other acts of violence in support of radical ideas. While not supporting extreme violence, I must point out that current terrorism is often aimed at the civilian population. While there were examples of pure terrorism, in the 1960s and 1970s, there were also many overseas militant groups who targeted government and infrastructure and often gave warning of their attacks to avoid, or at least minimise, potential loss of life. Attacking infrastructure, while disruptive to the general population, put pressure on governments in terms of the cost of restoring services. I consider that modern terrorism, and what I would call genuine terrorism, targets the civilian population with the intent of creating fear and terror and attempting to put pressure on governments in that way. They should realise that it has never worked. Even the Blitz on London can be seen as a terrorist act in this context: Hitler turned the Luftwaffe from bombing military targets (airfields) and factories, to heavy bombing of the civilian population of London. He hoped that would pressure the British government to come to terms with him. It didn’t happen.

The booklet mentions potential sources of radical information which an individual may seek out:
Along with physical social networks, literature and music, the internet is often used by individuals to seek out perceived justifications or rationalisations of their use of violence.
A moderate statement except for the inclusion of music. The booklet does not make music a major issue but it is mentioned as well in the case study of Karen: turning to ‘alternative music’ was presented as one step on her road to radicalism. I hate to tell them but they should listen to a lot of folk music if they want to hear anti-establishment, anti-government messages. Over the centuries folk music has been important in supporting the oppressed and Ireland and many countries in South America have a long tradition of revolutionary music. I would no longer be termed a revolutionary but I still enjoy immensely listening to political and revolutionary folk songs: does that make me a radical inclined to violent extremism? — according to this booklet, perhaps it does.

The booklet lists behaviours that indicate an increasing level of intensity towards radical violent extremism, and labels the behaviours as: ‘notable’, which should be addressed by those close to the person; ‘concerning’ which may require responses from a number sources, including law enforcement agencies; and behaviours requiring ‘attention’. To list some:
  • The individual begins to identify with a group or ideology that is very different from the mainstream. (notable)
  • Changes in normal behaviour may also occur. (notable)
  • The person becomes closed to those whose explanations or views do not agree with their ideology. (concerning)
  • They may begin to use language advocating violence or aggression. (concerning)
  • They are very hostile towards people they see as the ‘enemy’ including law enforcement and the government. (attention)
  • They see using violence as a way of achieving their ideological goals as acceptable and necessary. (attention)
Some of those would still fit me: I hold an ideological view that is different from the mainstream, in fact, I pride myself on it; I don’t think my normal behaviour has changed but that may be because I have held a radical view for so long; in many situations, I do see government and law enforcement as the enemy of the poor and oppressed; and I do accept that, in some circumstances, violence is acceptable and necessary, particularly in response to state violence. Luckily Australia is not so bad that I would apply all those views here.

Now Tony Abbott: he certainly held a radical view different to the mainstream, as evidenced by the popular rejection of his neo-liberal agenda in the 2014 budget; he was certainly closed to opposing views, including on climate change; and he used the language of aggression against his ‘enemies’ and certainly saw that as a means of achieving his political and ideological objectives, the only difference being he was in government and could legitimately use law enforcement and violence. So was Tony Abbott also a radical inclined to violent extremism? — perhaps so if you believe this booklet.

When you have two opposing ideologies like that and one is being enforced by the state, is there a reciprocal right to violence to oppose the state? That is the key philosophical question but, as I explained earlier, the violence should be directed against the state and not inflicted upon the civilian population if it is to be justified — otherwise, in my terms, it does become terrorism plain and simple.

While the booklet pays lip service to freedom of ideas and expression, it comes down strongly on the side of peaceful protest by legal means. If, however, governments change the laws, as Bjelke-Petersen did, to restrict demonstrations, then which rules apply? — the right to express dissent or the obligation to obey the law. In other words, legal protest may not always be possible, and this booklet cannot cope with that situation.

The booklet is very careful not to target Muslims and does use examples from the right and left of the political spectrum. It adds that religion can be a factor in underpinning radicalism and violent extremism but makes sure that it also mentions the violence of the more extreme Christian anti-abortionists. The Minister Assisting the Prime Minister on Terrorism, Michael Keenan, however, made clear:
Despite the environmental case study, Mr Keenan said the main targets of the booklet were young people at risk of being radicalised by Islamic groups such as Islamic State.
So despite the efforts made to retain a ‘neutral approach’, Keenan laid bare the real intention. The NSW Teachers’ Federation suggested the booklet was ‘not to make anyone feel safer but to engender fear and intolerance’. I’m inclined to agree because, as I have pointed out, there are statements dotted throughout the booklet that offer a quite realistic assessment but they are over-shadowed by the general tone that any radicalisation is ‘bad’ and leads to violence. That is also what made me question whether words had been added, beyond the original words of the experts, to ensure that message came across — the experts’ own comments seem to confirm that.

Gary Bouma, Emeritus Professor of Sociology at Monash University and the UNESCO Chair in Intercultural and Interreligious Relations — Asia Pacific, one of the experts quoted in the booklet, has said:
… it was never intended to be distributed to schools.

“It was meant for professionals who are leaders in communities, and to be used in training sessions to make people aware of the background of social and cultural factors that lead in very rare cases to radicalisation,” he said. [emphasis added]

“We workshopped it with communities … then out of the blue the Attorney General’s Department decided to send it around to schools.”
The overt purpose of the booklet is, I think, legitimate. It is valid to try to stop young people being attracted to terrorism but its approach also threatens what I would consider legitimate radical activism which may include illegal activities that do not cause major damage nor harm to people. In that regard, the underlying purpose of the booklet is to maintain the status quo: you are allowed to protest, to express dissent, but only within the law, no matter how repressive those laws may be. You are a radical if you wish to change society, even without resorting to violence. As Michael Brull put it in an article for New Matilda:
The paper sets up only one type of violence that it rejects in every instance. That is, it always rejects violence devoted to radically changing the status quo. Violence used to uphold the status quo, however, is passed over in silence. Seeking change is by definition violent extremism. Accepting how things are is tacitly assumed to be ideologically neutral. Seeking change is treated as suspicious and problematic in a way that keeping things the way they are is not.
In that sense one can see the conservative mind-set driving the approach — any change is threatening. Where does that leave ‘progressives’, let alone radicals? If one can take account of all that is said in this booklet, it could be said to be relatively neutral, but that is not the prevailing message that comes through and if that message was to be believed then almost anyone demanding social or political change would be classified as a radical capable of violent extremism. It is itself an extreme message that appears to have twisted what the experts involved were saying. Perhaps it is best seen as a remnant of the Abbott era.

What do you think?
With Abbott gone we may hear less about ‘radicalisation’ but the booklet is out there — it was sent to schools. If Ken is right, the real message to young people is to ‘toe the line’ and not demand change in society. Without the ‘radicals’ of the past we would not have some of the freedoms and rights we do today, so such a message is for the conservative maintenance of society. It should not go unchallenged.

Next week 2353 discusses corporate attempts to patent genes in ‘You can’t patent ethics’.


Won’t get fooled again

Last week, we published an article demonstrating that Prime Minister Turnbull really hasn’t changed all that much. While he has fiddled around the edges and has shown some ability in attempting to explain policy better, Australia is still treating refugees who attempt to come here abysmally; there is still an expenditure ‘problem’ rather than looking at expenditure and revenue (tax); there is no change from the expensive and unproven ‘direct action’ environmental package, same sex marriage or becoming a republic.

The Nationals have an important role to play in the current coalition government: they are the people that give Abbott or Turnbull the numbers to govern. The Liberal Party controls 75 seats in the House of Representatives — they need 76 for a majority. Apparently, each time the Liberal Party leadership changes the coalition agreement is re-negotiated. This time, the agreement (which hasn’t been made public) apparently documented a number of issues from the Abbott government that were to remain as Coalition policy.

Turnbull has history as one of the more progressive members of the Liberal Party. He was Opposition Leader when Prime Minister Rudd was working on an emissions trading system and supported the concept. The ultra-conservative faction of the Liberal Party was aghast, organised the numbers and replaced (by one vote) Turnbull with Abbott. With the signing of a new coalition agreement, plus a list of policies that won’t change, and possibly a separate letter regarding policy before they would re-sign the coalition agreement, it’s easy to suggest the Nationals, in their eyes at least, believe they ‘Won’t get fooled again’.


Turnbull has bigger problems than keeping the Nationals happy. While they ‘talk tough’, it is easy to argue that in the past the Nationals will compromise their principles for the smell of ministerial leather.

Turnbull’s first problem is Tony Abbott. At the time of writing, Abbott was indicating that he would stay on as a Member of Parliament. Abbott, while promising to get out of the way, has recently ‘subjected’ himself to interviews from some of his favourite media ‘players’ — Ray Hadley, Neil Mitchell and The Daily Telegraph. While some form of justifying his actions and protecting his heritage is natural, Mark Kenny, writing in Fairfax publications begs to differ:
His assertion that he could have done a David Cameron, and be re-elected despite a period of being down in the polls, is fanciful and speaks to the depths of his office's self-delusion.
The Political Sword has previously touched on the war between the conservative and moderate sections of the party, as played out inside the Coalition, News Corporation and in the wider community.
The political blame games have begun in earnest. Probably the first off the block was Abbott’s Chief of Staff Peta Credlin. A few days after the elevation of Malcolm Turnbull to the Prime Ministership, former Prime Minister Abbott’s Chief of Staff Peta Credlin gave a speech at a ‘Women of the Future’ event in Sydney.

Peter Costello, hardly a friend of Abbott’s appeared on Four Corners and claimed it was almost certainly the right decision to elevate Malcolm Turnbull.

Andrew Bolt made an appeal that Abbott really was a ‘decent bloke’ and that a number of his positives – such as his community service through Lifesaving – was ridiculed and thrown back at him. Ray Hadley raged against the 53 ‘dunderheads’ that voted against Abbott.

It seems that some within the organisation [News Corp] have decided that Abbott lost and have (perhaps reluctantly) thrown their support behind Turnbull as Prime Minister. Others haven’t.
While their ‘standard bearer’ is sitting there on the backbench, there will be mutterings regarding his ‘wasted’ skills in a similar way to those made by Rudd supporters after Gillard became prime minister. While Gillard initially made Rudd Foreign Minister, we know how well that worked. Rudd resigned as Foreign Minister (from overseas) and sat on the backbench for some time before his successful challenge. In addition, when conservative radio announcer Alan Jones lectured Turnbull he ‘had no hope of ever being the leader, you have got to get that into your head’, there is obviously some element of revenge that is yet to be extracted, as it seems that Jones is always right — just ask him. When you consider that Abbott era Minister Abetz has threatened to cross the floor if ‘necessary’, and both Abetz and Bernardi have openly discussed the formation of a ‘new’ conservative party in Australia, it’s probably fair to suggest (with a hat tip to Monty Python’s Dead Parrot sketch), that Abbott isn’t dead, he’s just resting. While it’s probably labouring the comparison a tad too much (sorry), Abbott sitting on the backbench ‘pining for the fjords’ of leadership claims he ‘refuses to snipe’ but will be in an ideal position to emulate Rudd and attempt to gather followers and take back the leadership/prime ministership.

Turnbull also has to manage expectations. The elevation of a new leader brings an opportunity for all to attempt to promote solutions for their own specific needs and wants. As an example, this article suggested at the start that Turnbull hasn’t made any immediate changes to refugee policy, environmental policy, same sex marriage or promotion of a debate around the republic.

The Western Australian and Queensland governments are confidently predicting funding for public transport. The overturning of the emasculation of the original National Broadband Network (NBN) is being promoted by others, while muzzling the overreactions of government organisations such as Border Force are being questioned as well. Again without much surprise, the New South Wales Teachers Federation is asking Turnbull to deliver on the (ALP’s) Gonski reforms to education.

For the record, TPS isn’t the only media outlet asking for change in Australia’s refugee policy. A group of coalition and independent politicians are asking Turnbull to heal the ‘weeping sore’ of Australia's treatment of asylum seekers on Manus Island and Nauru. Gillian Triggs, Australia’s Human Rights Commissioner is also asking for change In response to recent rape allegations made by refugees on Manus Island, Turnbull claims he is ‘concerned’ but the policies are working.
"The one thing we know is these policies, tough though they are, harsh though they are in many respects, actually do work, they save lives," he said.

"This is not a theoretical exercise anymore."

He criticised former Labor prime minister Kevin Rudd for dismantling the Howard era offshore processing regime, arguing the decision cost billions of dollars and an unknown number of lives.

Mr Turnbull said he personally argued against the Rudd government changes.
Turnbull, to his credit has sat down with representatives from business, community groups and organised labour on 1 October to discuss an economic way forward. While Turnbull was talking about reform and the reporting on the ‘mini-summit’ seemed positive:
The Turnbull government has reached in-principle agreement with unions, employers and welfare organisations to reduce a raft of concessional taxation arrangements that benefit the rich, as all sides hailed the prospect of a new era of consensus and co-operation in Canberra.
And:
In his first major interview since taking over as head of the Business Coalition for Tax Reform, Frank Drenth, whose lobby group includes the nation's biggest business groups including the Australian Bankers' Association, Australian Chamber of Commerce and Industry, Australian Industry Group, Business Council of Australia, Financial Services Council, Minerals Council of Australia and Property Council of Australia, said business was open to having a debate about the areas that were seen by the previous Liberal leadership as taboo.
Greg Jericho, writing for The Guardian questioned the reality of the debate over economic reform, suggesting that ‘reform’ just means ‘policy that I agree with’. So ‘having the debate’ over subjects that were ‘taboo’ according to the previous leadership is probably useless unless some action takes place. Jericho’s suggestion is:
You want to change Australia’s tax system, our IR system, our competition laws? Great, but tell us why and how that will improve our economy, and tell us who will be affected and how. If you need to say it will improve productivity, tell us how and explain what you mean by that word — because profit does not equal productivity.
Turnbull in his first month has created an atmosphere where business, government and the unions will talk to each other to make all our lives more equitable — which is better than Abbott could achieve in two years. That’s a brilliant outcome isn’t it? Well — no so fast.

On the same day as the economic ‘mini-summit’, where seemingly everything was on the table, Abbott made the decision to have a chat with 3AW’s Neil Mitchell. The chat was on air. So despite Turnbull trying to change the discussion, the day’s memorable headline was that Abbott hadn’t ‘forgiven’ Turnbull. By comparison, Gillard seems to have ‘moved on’ by limiting her comment on past political events and pursuing her interests on the larger stage that being a former leader of a country gives you. Sitting on a stage in New York City as an equal with Michelle Obama, Charlize Theron and others discussing how to improve educational outcomes for girls worldwide is a class act.

Turnbull obviously made a number of commitments to fellow conservative politicians to gain power. There also seems to be some disgruntled Liberal and National Party members along with some members of the media. Human nature would suggest that people seek a rallying point for their discontent. In politics now — as was the case in 2012 and 2013 — they have a former prime minister sitting on the backbench, to some extent twiddling his thumbs. It would seem to those that are not members of the inner circle (such as me) that it would be easier to seek to influence others to support the failed ‘hero’ rather than form a new political party. A challenge to Turnbull is almost inevitable unless he retains the Abbott policies — Abbott, Abetz and Bernardi have almost said so. If Turnbull does retain all the Abbott policies, there are a significant number of generalist and special interest groups that will vote for anyone but Turnbull.

Turnbull is a ‘failed’ opposition leader, now prime minister. A raft of groups from ultra-conservative to progressive have placed trust in Turnbull to further their particular interests. While some see Turnbull as the saviour, it is probably better to remember Turnbull was rolled the first time when he agreed with an environmental policy that subsequently demonstrated efficiency and proof of concept. We know now that he is surrounded by those who won’t allow him to change the world and get away with it. That should ensure we ‘won’t get fooled again’.

What do you think?
Turnbull may have won the Liberal Party leadership and the prime ministership but as 2353 points out his troubles aren’t over. Conflicting expectations have been created for both the conservatives and progressives. Whether Turnbull can meet those expectations is debatable. But, if we are aware of them then 2353’s words may be true and we ‘won’t get fooled again’.

Next week we go back a little in political time when Ken takes a closer look at the radicalisation awareness brochure released in September, in his ‘Are you sure you’re not a radical?’


Same old same old

[Can you pick the difference?]

On 14 September, Malcom Turnbull was elected leader of the Liberal party and, as a consequence, became the 29th prime minister of Australia. There was an almost immediate change in the timbre of political discussion. But has anything else changed?

For example, Peter Dutton retained his position as Minister for Immigration and on 24 September, in response to another small wooden boat carrying 18 asylum seekers being stopped (or disappearing into the ‘operational’ black hole), said that the government’s policies had not changed.

The day before Turnbull had suggested that policies relating to the Nauru and Manus Island detention (or processing) centres could be reconsidered by cabinet but in a later interview on the same day reiterated the existing policy regarding people arriving by boat:
“We cannot take a backward step on this issue,” he said.
“There will be no resettlement of the people on Manus and Nauru in Australia.
”They will never come to Australia.”
Scott Morrison replaced Joe Hockey as treasurer in the Turnbull ministry and in his first press conference as treasurer on 23 September basically promised that the government would continue cutting costs (aka reduce government services). He insisted:
“We have a spending problem, not a revenue problem.”
He vowed to pursue the Coalition’s savings measures from the last budget, in particular, the changes to Family Tax Benefit system the Senate has rejected.
It was noted by the reporter that he used the phrase ‘work, save and invest’ numerous times throughout the press conference (another three word slogan — perhaps he just can’t avoid old habits — although Labor has since discovered that it was used in John Hewson’s Fightback in 1993.). I think that reflects the business focus of the government. I’m not sure how one could apply that phrase to a cleaner on minimum wages: work — yes; save — a bit hard on the minimum wage, or less in some cases; invest — invest what, the five cents they have left or the debt run up on the credit card just to meet living expenses! I think it is clearly a phrase aimed at the traditional Liberal heartland of small business and was perhaps deliberately spoken for that reason — unless, of course, they think the workers, savers and investors are three different groups of people, which is possible.

That night on the 7.30 Report, Leigh Sales challenged Morrison on his spending versus revenue statement and his answers were less than convincing but reinforced the view prevalent under Abbott that cutting government spending, rather than raising taxes, was the preferred option:
… to ensure that we spend taxpayers’ money the best way we can and we raise as little as we need of it and we spend as little as we have to of it to ensure we get the right balance.
Despite Sales pointing out that revenue was not even meeting the government’s own forecasts, Morrison insisted he was not in the camp that thought spending issues could be solved just by raising taxes. Sales pointed out that, currently, while expenditure may be 26% of GDP, revenue had fallen to 23.5%. Morrison avoided a direct answer and pointed out that revenue was projected to rise to 25% of GDP: ‘If you trust the projections’ Sales retorted.

I find it mystifying that in relation to raising taxes to increase revenue, he said:
… I have to focus on the things that I can control and what I can have an influence over is how much the Government spends of taxpayers’ money.
Is he suggesting that he has no control over taxes? I suggest that he has a few more briefings from his treasury officials before attempting another interview — he is the treasurer, after all, not the finance minister.

On 27 September, it was revealed that Health Minister Sussan Ley had commissioned a review of the 5,700 medical services subsidised by Medicare. There are some valid reasons for such a review but other commentators have pointed out that a Liberal government review of anything is usually code for a cost cutting exercise. I agree and, given the approach laid out by Scott Morrison, it is certainly not going to lead to an increase in funding.

There was one flickering light at the end of this tunnel when Finance Minister Mathias Cormann announced on 28 September that superannuation would be considered in the government’s white paper on taxation. That was a change on Abbott’s statements that his government would not change superannuation concessions. It raises the possibility that the Turnbull government may be prepared to consider raising revenue in that way — despite what Scott Morrison had been stating only five days earlier. It is interesting also for the fact that Labor has already indicated that it will consider changes to high-end superannuation, so is this no more than a positioning for the next election? — if there is little to choose between the parties in terms of policy then it may come down to a contest between leaders and, at the moment, Turnbull would win that fight.

Another aspect of the announcement was that Cormann made it on Sky News before Morrison also became involved. That was a change. Under Abbott, he would likely have made such an announcement himself. Morrison had also suggested on the 7.30 Report that the prime minister would only be involved in budget discussions on strategic issues. There were reports that Abbott had involved himself in all aspects of the Liberal’s first budget in 2014. So it appears Turnbull may be returning to a more traditional form of government with greater responsibility left with ministers (at least for now). In that regard, it was also interesting to note that the new education minister, Simon Birmingham, made the announcement that legislation for the deregulation of the higher education sector would not be brought back to parliament before the next election.

Turnbull himself has, so far, had little substantive to say. He has made two major announcements: one on the $100 million package for domestic violence and the other a $1.3 billion spend on vehicles for the Australian army. Neither of those announcements, however, can be credited to the Turnbull government. The army vehicles have years of history, including the production of prototypes and testing by the army, and the announcement was just the completion of a long process. And the domestic violence announcement came so soon after Turnbull became prime minister that it is highly likely the package had been in development by the public service for some time. It is interesting to speculate what impact those announcements may have had if Abbott had announced them.

Turnbull did undertake a number of interviews and make appearances soon after he became prime minister: on the 7.30 Report, on Sunrise, on The Today Show, with Michael Brissenden on ABC radio, and with David Speers on Sky News. He said little of substance in any of these interviews — accepting that he had not yet been two weeks in office.

He made clear that he would be retaining the existing policies as regard same sex marriage — a plebiscite, although he has hinted it may be held earlier than was envisaged under the Abbott approach — climate change and, as discussed earlier, ‘boat people’ (and he did not mention the republic). When asked whether that was consistent with his earlier comments and, sometimes, criticism of those policies, he had two answers. Firstly, that he had in fact supported the government policies as a member of cabinet and secondly:
Well, there will be changes to policy if they don’t work as well as we think, or we think others can work better. Again, none of this is written in stone, but my, what I’m saying is I don’t have any plan to change those policies because everything we see at the moment suggests they’re working very well.
So he does not rule out policy change but is being very careful how he words his approach to it. He has also emphasised the need for such changes to come from ministers and be agreed by cabinet: he is trying to avoid the criticism of his first term of Liberal party leadership when it was said that he tried to run the show himself as evidenced by his agreement to an ETS with Rudd even though it was opposed by many in his party. The other side of that coin is that to achieve policy change he will need to carry the Right of the party with him. He has tried to retain its support with people like Dutton and Morrison in his cabinet but it leaves open the possibility that a minister may, as Turnbull did himself, express public views that are not consistent with government policy. It is still a potentially unstable situation.

He did, however, make some comments that may show where his real interests lie:
We have to lift our productivity. We have to be more innovative, more competitive, we have to be more productive.

What you will see is the Government proceeding to deliver on an economic reform agenda that will promote productivity, will promote innovation, and will continue to promote business confidence and investment.

Well, the industrial relations reform, which is — labour market reform, is a — has been a very vexed one. … I think the important thing is to seek to explore ways in which we can achieve more flexibility, higher levels of employment, higher levels of business activity … the challenge for us is not to wage war with unions or the workers they — that they seek to represent, but really to explain what the challenges are and then lay out some reform options.
Three key points to note from those statements are:
  • the repeated need to improve ‘productivity’
  • the way he equated ‘industrial relations reform’ with ‘labour market reform’
  • the way the government will ‘lay out some reform options’ after explaining the challenges.
Turnbull’s approach was challenged by Terri Butler and Andrew Giles in an article in The Guardian on 28 September. They argued that labour productivity has actually increased in recent years and that it is multi-factor productivity that has slowed: multi-factor productivity takes account of the contribution of technology, advances in knowledge and improvements in management and production techniques in increasing output. Turnbull has not made clear whether he takes that wider view or is adopting the business blueprint that increased productivity means decreasing the cost of labour (attacking penalty rates and conditions).

Butler and Giles also suggest that Turnbull’s explanation that options will be laid out after explaining the challenges ignores that a genuine consultative process includes agreement on what are the challenges. Turnbull claimed to have such agreement in the economic leaders’ meeting he held on 1 October but there is no indication of agreement on the measures required. That will remain a decision for the government and on early Turnbull utterances it is not likely to do the workers any favours.

In essence, Turnbull is currently mouthing platitudes towards workers but there still appears an underlying neo-liberal approach giving prominence to the market and possibly further deregulation of the ‘labour market’.

We also have Turnbull’s political judgment. It was questioned after the Godwin Grech affair. Has he learned lessons from that? The appointments of Sinodinos and Brough to his cabinet may suggest not: they both have issues of integrity hanging over them, let alone possible legal issues.

In his first incarnation as Liberal leader, it was said that he was inclined to waffle. That has been evident in some of his early interviews as prime minister but, in his defence, he has not yet had anything substantial to speak about. He has promised to ‘explain’ government positions to the electorate but whether he can strike the balance between Abbott’s three word slogans and his own proclivity to waffle, remains to be seen.

So we have, at least for now, the same old policies, and at least some aspects of the same old Turnbull. Whether he is able to change his nature and change some of the policies appears to depend on whether or not he is able to gain support from the Right of his party in both the cabinet and party room. As 2353 suggested last week, we could be in for an interesting ride.

What do you think?
Can a leopard change its spots? Can a Turnbull change its nature? Many questions about the ‘new’ Turnbull will only be answered by the passage of time but they are questions of which we must be aware and that we must keep in mind if we are to judge his future performance.

Next week we continue the Turnbull theme when 2353 suggests we ‘Won’t get fooled again’.


Pass the Popcorn


It is now a month into the prime ministership of Malcolm Turnbull. Based on previous history, Turnbull is considered to be a ‘left wing’ Liberal, judging on his pronouncements over the years — being in favour of emissions reduction, same sex marriage, Fibre to the Home (FTTH) internet connections and other issues usually attributed to ‘the greenies’ and ‘latte drinkers’ from the ALP. When Turnbull outmanoeuvred Abbott, there was a delay in the necessary trip to the Governor-General to be sworn in as prime minister as the Nationals (the junior partner to the Coalition) wanted some additional conditions added to the agreement between the Liberals and the Nationals in order to retain the Coalition. Most of these conditions were to ensure the conservative policies espoused by the Abbott government were retained.

So far the major difference between Abbott and Turnbull seems to be actions like the release of a policy to inject $100million into programs to eliminate domestic violence and assist the victims. Announced by the newly minted Minister for Women, Michaelia Cash, and flanked by Turnbull and Rosie Batty (current Australian of the Year and domestic violence elimination advocate), Turnbull’s contribution was to correctly state that being disrespectful to women was ‘un-Australian’. It is doubtful the previous holder of both the prime ministerial and minister for women roles would have made the same statement. However to give the previous incumbent some credit, pulling a policy like this together probably started under his tenure.

The political blame games have begun in earnest. Probably the first off the block was Abbott’s chief of staff Peta Credlin. A few days after the elevation of Malcolm Turnbull to the prime ministership, she gave a speech at a ‘Women of the Future’ event in Sydney. In the speech, she argued that she was not responsible for the demise of Abbott, she did not control access or policy in the prime minister’s office and she refused to be defined by ‘insider gossip’. Credlin also claimed:
… she had been unfairly targeted by the media because of her gender and that there were different standards applied to women in powerful jobs. “If I was a guy I wouldn’t be bossy, I’d be strong,” she said. “If I was a guy I wouldn’t be a micromanager, I’d be across my brief, or across the detail.

“If I wasn’t strong, determined, controlling and got them into government from opposition, then I would be weak and not up to it and should have to go and could be replaced. So, it’s very binary when it comes to women.”
Katherine Murphy, writing in The Guardian disagrees, as does Barrie Cassidy from the ABC and Michelle Grattan who writes for The Conversation. Murphy, Gratten and Cassidy paint a picture of a controlling person who isolated her ‘boss’ from reality to such an extent that he didn’t see the writing on the wall. The obvious response to Murphy, Grattan and Cassidy is ‘well they would say that, wouldn’t they’ as each has written critical articles on Abbott and his government in the past. When Janet Albrechtsen writes a similar opinion piece in The Australian (paywalled), maybe there is some truth to the claims. (It is interesting that this type of writing is only done after the demise of the victim such as Rudd or Abbott — but that is a discussion for another day.)

Peter Costello, hardly a friend of Abbott’s, appeared on Four Corners and claimed it was almost certainly the right decision to elevate Malcolm Turnbull. Part of the justification was:
I think probably in the end it was the polls. That a majority of his colleagues felt that they were not going to win the next election and in those circumstances they decided to effect a change.
Clearly the conservative political media identities weren’t happy and they were prepared to let everyone know about it. On Channel 10’s The Project, Andrew Bolt made an appeal that Abbott really was a ‘decent bloke’ and that a number of his positives — such as his community service through Lifesaving — was ridiculed and thrown back at him. Ray Hadley raged against the 53 ‘dunderheads’ that voted against Abbott. Alan Jones wasn’t in a good mood either:
Judas, Judas, people not happy, the way it’s done, I mean the way it was done was beyond belief. The way it was done, unbelievable.
According to The Saturday Paper, the ascension of Malcolm Turnbull has fuelled a war within News Corp Australia. It seems that some within the organisation have decided that Abbott lost and have (perhaps reluctantly) thrown their support behind Turnbull as prime minister. Others haven’t. It must have been galling for some News staff that Turnbull started and finished the day after the demise of Abbott on ABC programs. On his radio program, Bolt declared that:
“We’ve actually won. Me and Alan,” he boasted. “We’ve house-trained Turnbull … we knocked him into shape, Alan and I.”

Then at tortuous length, he went on to enumerate all the ways in which Turnbull now was presenting as a convincing analogue of Tony Abbott, all because of the brilliance and courage of himself and Jones.

“Alan and I will bask in our success,” he concluded. “Behold our neo-Turnbull. Let the Left weep.”
Our good mate Cory Bernardi has a long history of opposing Malcolm Turnbull. It probably started when then opposition leader Turnbull sacked Bernardi from his front bench in 2009. In 2010 Bernardi was at the [US] Heartland Institute’s convention claiming that ‘Malcolm misled us’; in 2013, he was ‘advising’ Turnbull to accept the conservative position on same sex marriage; and as recently as early September complaining that, while his new NBN connection was fantastic, the organisation of NBNCo (part of Turnbull’s then communications minister responsibilities) was less than acceptable. He (along with Andrew Bolt) is openly talking about setting up a new party — one would assume for ‘true’ conservatives.

Apart from the problems involved in running the country, Turnbull seems to have a fundamental problem in policy and governance within his party. The Nationals have an agreement that some of the more contentious Abbott era policies will remain in place. The Bolts and Jones’ of the media seem to think that while they haven’t anointed the current prime minister, they have his measure. Meanwhile the Australian public seem to think that Turnbull will cure all the ills of the Abbott era. Effectively Turnbull can’t win. Turnbull needs the Nationals as he cannot govern in his own right — he needs 76 House of Representatives members to do so. He has 75 MP’s that identify themselves as Liberals. If he doesn’t keep the Abbott era policies he stands to lose the Nationals and the conservative media as well as the ‘right wing’ of the Liberal Party who may decide that the Bernardi party isn’t a bad place to be (with a further reduction in the number of Senators that Turnbull can rely on). If he doesn’t change policy from the Abbott era, while the Nationals and right wing will stick with him, he stands the risk of being seen as trying to sell the same agenda from a better postcode, in a nicer suit.

Either way, Turnbull’s initial bounce in the polls is not a precursor of success. While the ‘preferred PM’ statistic has changed significantly, the ‘two party preferred’ has only moved a few points, and recent history in Queensland and Victoria would suggest that 51-49 in your favour is not an election winning lead. While it all seems calm and serene on the surface, it is probably a reasonable assumption that just under the water, the business of working a way through the policy problem is being worked on night and day.

So Turnbull has to negotiate a Senate that he doesn’t control; a former chief of staff who is out for revenge — claiming the gender card as there is no other basis for the argument; potentially an ex-prime minister who will sit and stew on the backbench becoming a lightning rod for discontent in a similar way to Rudd and Keating; sections of the media that believe and publicly proclaim they have the sole prerogative to pick the prime minister of this country; members of his own party who are talking about leaving; a large section of the public who are expecting change for the better; along with an Opposition that is, according to the opinion polls, knocking on the door of majority popularity. All of these groups will have no problem in finding any number of statements Turnbull made in the past that directly contradict his political party’s current policy settings. While wise people change their mind when presented with additional information, Turnbull is already looking vulnerable on the continuation of the Abbott ‘Direct Action’ climate change policy.

The next few months are probably going to have more twists than the latest action movie. A comfy seat, dimmed lighting and popcorn seems to be appropriate.

What do you think?
Another former Liberal prime minister once said ‘life wasn’t meant to be easy’ and that may be true for the new prime minister. Can he ride the waves and survive the swirling currents around him or will he wipe out?

Next week Ken continues our look at new PM Turnbull in ‘Same old, same old’. And also watch out for pieces on this theme by Ad Astra on TPS Extra.


The philosophical myth of neo-liberalism


In my pieces I often refer to neo-liberalism. As explained in my pieces last year, ‘Whose freedom?’ and ‘Whose responsibility?’, the neo-liberal idea of freedom is based on the rational self-interested individual and it also adopts the approach of ‘negative’ freedom (following Isaiah Berlin as explained in ‘Whose freedom?’): that is freedom from interference or coercion. It is the modern version of the old libertarian.

It is also based on the principle of property rights: that I am the owner of myself and of everything I create and I should, therefore, be free to determine what I do with that property.

Their approach, however, has a problem. Its logical and pure outcome is anarchy. That comes about because if we are each rational individuals able to make rational decisions in our own self-interest, without the need for external influences to direct us towards beneficial decisions, then there is no need for government or rules — that is total freedom from interference. Can you imagine such a world? Neither can any but the most extreme libertarians and neo-liberals. But they do like the idea of ‘small government’, minimal tax and minimal regulation.

Political philosophers have often begun with what they term the ‘state of nature’, a construct meant to envisage human society before political structures. Hobbes and Locke ended up with opposing views on that ‘state’: Hobbes thinking it was one of constant conflict and Locke seeing it as harmonious, although with the potential to lead to conflict. What they did agree was that there was a ‘social contract’ whereby people gave up some of their freedom for the protection of the state, or government. Hobbes saw that leading to the need for strong government and consistent enforcement of the rule of law to restrain the inherent conflict, while Locke saw the government as existing only because the people granted it the capacity to exist — the state’s primary role was to protect the individual’s property (including the person). Locke is considered the ‘father’ of liberalism.

For neo-liberals, however, the ‘social contract’ raises a philosophical problem because it is seen as binding the property rights of future generations. For them, if a ‘social contract’ exists to give rise to government, and a monopolistic power of protection and coercion, it should be renegotiated by each generation. Otherwise they are back to their state of pure anarchy. So they needed another way to explain how government arose and it was provided by a philosopher in the 1970s — Robert Nozick.

Nozick posited that ‘the state’ could arise from the actions of individuals. While he saw rational individuals acting ‘morally’ in the state of nature (as Locke did), there could arise occasions where some did not act ‘morally’ forcing those under attack to join ‘mutual protection agencies’:
These agencies sell security packages like a free market economic good that individuals in a state of nature would surely buy for self and property protection.
So the individuals become clients of the agency when they purchase its protection. The steps involved in those mutual protection agencies developing into a state are:

  • A mutual protection agency becomes a dominant or pre-eminent protection agency in its territory.
  • It becomes what Nozick calls an ‘ultra-minimal state’ when it gains a monopoly on force in the region, even though protection is still purchased as an economic good.
  • The minimal state emerges when the first two conditions are met but the agency also extends protection to non-clients within its territory — which then comes at a cost to its clients.
For neo-liberals, this approach follows market principles and is based on the rational self-interested individual voluntarily purchasing protection from ‘the state’. The state then also has a role in stopping people enforcing their own protection against other individuals as it has the monopoly on coercive force.

It was not just the explanation of the rise of the state but the implications it gave rise to that attracted neo-liberals.

Nozick considered that the state’s single proper duty is the protection of persons and property and that it requires taxation only for that purpose. Taking tax for redistributive purposes is on a par with forced labour:
Seizing the results from someone’s labor is equivalent to seizing hours from him … If people force you to do certain work, or unrewarded work, for a certain period of time, they decide what you are to do and what purposes your work is to serve apart from your decisions. This process whereby they take this decision from you makes them a part-owner of you; it gives them a property right in you.
So from the neo-liberal perspective, taxation, other than to provide for protection of the person and property, gives the state a property right over us and therefore is an intrusion on individual rights — someone else is deciding what to do with the results of an individual’s labour. (Hockey’s claim that we work more than a month just to pay for welfare can clearly be seen as based on this argument and seemed to be driven by the false assumption that everybody else, not just he, believed it.)

Nozick also saw no philosophic problem with inequality. As each individual owns the products of their own endeavours and talents, it is possible for an individual to acquire property rights (as long as they are not gained by theft, force or fraud) over a disproportionate amount of the world: once private property has been appropriated in that way, it is ‘morally’ necessary for a free market to exist so as to allow further exchange of the property. And the individual then has complete control as to how that property is passed on. So it is logically okay for someone to inherit a fortune having contributed nothing to gain that wealth: reward for effort or just desert do not come into it for Nozick — it is only property rights and market mechanisms that count. ‘Reward for effort’ has remained, however, in the neo-liberal lexicon to justify the extreme wealth that some, like Trump, have obtained and to allow them to argue that the less successful have simply not put in enough effort.

There is also no such thing as the ‘common good’ in this approach, only individuals:
While it is true that some individuals might make sacrifices of some of their interests in order to gain benefits for some other of their interests, society can never be justified in sacrificing the interests of some individuals for the sake of others. [emphasis added]
In summary:
The state then can be seen as an institution that serves to protect private property rights and the transactions that follow from them regardless of our thoughts of some people deserving more or less than they have.
You can see why neo-liberals and capitalists generally were happy to have such a philosophic basis for their actions (even though Nozick later retreated from some aspects of it).

That whole approach adopted by the neo-liberals, and their economists, ignores the evidence that humankind is a social animal (see ‘Whose responsibility?’ linked at the start of this article). I won’t reiterate that aspect but want to consider the evolutionary psychology theory around ‘coalitions’ — which are also part of our social being. Basically it says humans have an evolved tendency to form coalitions, a stronger tendency in men than women according to the researchers. It also leads us to recognise categories of ‘us’ and ‘them’. For prehistoric humankind, this may have been an essential element for survival: an ability to recognise those whom one could trust and rely on from those who may pose a threat or, at the least, not provide support or assistance when needed. It also included a major element of reciprocity: I will support others in the coalition because I know they will in turn support me.

Modern experiments have suggested that the need to form coalitions can over-rule ‘race’ as a categorisation. That has led some to suggest that ‘race’ is merely a form of coalition that can be over-ruled by circumstances. (Categories based on age and gender are not affected in the same way.)

The reciprocal nature of coalitions has been tested against ‘game theory’. In game theory it is said there are three basic approaches: co-operate with opponents to maximise group benefits (but at the risk of being suckered); free-ride (try to sucker co-operators); or reciprocate (co-operate only with those who show signs of co-operation but not with free riders). Economists talk about an equilibrium being achieved in which individuals adjust their behaviour in order to maximise their own gains; but evolutionary psychology says that these approaches will not be equally represented in society, that there are ‘evolutionary stable strategies’ hard-wired into the human brain (which can be over-ridden but remain a default position). In recent experiments, the evolutionary approach has come out on top. In a series of four-player games 63% were found to be reciprocators, 20% free-riders and 13% co-operators but, more importantly, the researchers were then able to predict the result of further games because most individuals did not change their strategies (or did not adjust their strategies to maximise personal gain as the neo-liberal economists predict) — the missing 4% in those numbers could not be readily fitted to the three categories which, I assume, means they did change strategies and that may also suggest that only 4% of the population utilise the neo-liberal position. If reciprocity is such a highly valued approach, then it supports the view that we are hard-wired to identify and participate in coalitions and are also hard-wired to identify ‘cheaters’ or ‘free-riders’ — which is what governments are appealing to when they refer to ‘dole bludgers’ and ‘welfare cheats’ when cutting social welfare payments.

Political parties themselves are a coalition and have a coalition of supporters. Those coalitions are quite strong: Obama can be elected as a Democrat despite his race. That is one reason the old adage of ‘never discuss politics or religion’ has some validity. It is to enter into a discussion in which coalitions are already strongly formed and expressing your opinion may only identify you as an outsider.

We must also remember that coalitions can be flexible. People can come and go, or join a different coalition. Coalitions may also disappear completely if the reason that gave rise to them no longer exists or its leader falls and the coalition fragments.

Politics and religion, however, are now institutionalised, so they can continue irrespective of their original purpose and irrespective of movements in the coalitions associated with them. In evolutionary terms we looked to physically strong, reliable and trustworthy leaders if we were to join a coalition in the first place — it may have been to raid a neighbouring village. In our institutionalised coalitions, changes of leadership do not really change the structure of the coalition but we still carry that evolutionary approach and see a change of leader as a potential threat to the coalition – á la the public reaction to Rudd being dumped. The Turnbull ascendancy has been easier. The major difference would appear to be that Abbott was already in a position where he was no longer seen as a trusted and reliable leader of a coalition, although he was attempting still to portray himself as a strong leader — one out of three wasn’t good enough!

What I find fascinating is the contradiction between the two approaches I have described. Despite a natural propensity to form coalitions and engage in reciprocity, the neo-liberals continue to tell us that we function as individuals seeking only our own advantage. From the evidence, it is based on a philosophical myth that ignores the way humans actually behave. It is a construct of an ‘economic being’ that appears to have little relationship with reality.

It leads to businessmen expressing their natural humanity by forming coalitions, locally, regionally and nationally, while at the same time fighting the very existence of workers’ coalitions (unions).

We have our current government, itself derived from coalitions (the Liberal and National parties as separate coalitions of like-minded people who have the same or similar goals — their formal ‘coalition agreement’ so as to govern is a different matter). Although arising from coalitions, in the evolutionary sense, the government insists it should treat us only as individuals and ignores the coalitions we may form.

Despite insisting on the economic individual as central to policy, Abbott commonly resorted to the ultimate coalition — nationalism — to justify his leadership: there were people out there ‘coming to get us’; we had ‘Team Australia’; and you were either with us or against us and, if against us, may lose your citizenship. A blatant appeal to our evolutionary trait of identifying ‘us’ and ‘them’. While Turnbull may not play the nationalism card, he has made it clear that his will be ‘a thoroughly liberal government committed to freedom, the individual and the market’, exactly the foundations of the neo-liberal approach. As this was from his oral victory speech, it is not clear whether he meant ‘liberal’ or ‘Liberal’, and I did note that different on-line media sites used those different forms of the word, but it does not change the point that, either as a Liberal or liberal, he is promising a neo-liberal approach.

Stressing individuality supports the success of the rich businessman (like Turnbull) but leaves the poorer individual helpless (and, ironically, more dependent on government or community support). It basically matches Nozick’s view that inequality is irrelevant.

Logically, the government cannot have it both ways: we are either all individuals, in which case nationalism has no place and business coalitions should be ignored, or we are all members of various coalitions, from the nation state to local groupings, and the government should recognise those coalitions, engage with them and recognise them in policy. Instead it engages with the business coalitions but insists the rest of us are mythical individuals and Turnbull’s words in his victory speech suggest that is unlikely to change.

What do you think?
Heavy, ay? If the economic individual created by neo-liberalism is a myth, where does that leave the philosophic basis of the Liberal party? Should a Liberal party even exist? — it is, after all, a coalition. Should government policy, as Ken suggests, focus on groups, the coalitions we naturally form, rather than the individual? Would that work? Let us know what you think.

Next week 2353 looks at some of the turmoil created by Turnbull’s ascension to prime minister in ‘Pass the popcorn’.


The silent majority


It’s not a secret that former Prime Minister Abbott is a ‘committed Christian’. Former Prime Minister Rudd also wore his Christianity on his sleeve — frequently shown on the Sunday night news answering questions outside a church in his electorate. Both are entitled to their beliefs, as are the 30% of Australians who consider their religion to be important in their lives.

None of us should really care if politicians choose to spend some time in a Christian church on a Sunday morning. We should be concerned, however, about the way religion is creeping into public life. Around half of Abbott’s federal cabinet was Catholic — and, as with other belief models, there are different ‘levels’ of belief. Abbott’s Defence Minister Kevin Andrews was much more (small ‘c’) conservative and could not support issues in which the Catholic Church’s formal teaching was overturned —such as same sex marriage. Newly minted Prime Minister Turnbull is a (small ‘l’) liberal Catholic who morally and ethically has no difficulty claiming to support issues such as same sex marriage while being a regular Catholic churchgoer. The Saturday Paper reported on a speech by the Liberal Party hopeful before the Canning by-election, who proudly claimed growing up in Victoria and accompanying his religious minister father on trips around the parish, as well as the work he and his wife do with their church group, as examples of why he would be a good member of parliament.

Former Prime Minister Menzies founded the Liberal Party in the 1940’s as a secular party in which people would have a forum to debate and discuss ideas — the best to be implemented in government — so why has that changed? The Saturday Paper discusses research from Paul Pickering (from the ANU) dating from 1998 where he compared the first speeches of the 1975 and 1996 cohorts in Australia’s parliament. (Both years were when the Coalition regained power from the ALP: in 1975 Fraser defeated Whitlam, and in 1996 Howard defeated Keating.)
“The rise of concern with the family appears to go hand in hand with an increase in religiosity in Australian politics,” wrote Pickering. “Where God received only one reference in the first speeches of the 1975 cohort … the first speeches of the ‘Class of 96’ contain numerous references to God and Christian principles.”

Pickering’s analysis highlighted something else, too, which he described as a “shrill chorus of anger”. He cited numerous examples of new members railing against “minority groups”, about “thought control and social engineering”, and about “political correctness”. And against government itself. Tony Smith, who replaced Bronwyn Bishop as speaker, warned against “the insidious rise and rise of the state”, which he likened to a “great praying mantis”.

There were no such expressions 20 years prior, Pickering noted. He characterised the class of ’96 as “the children of the ‘common sense’ revolution”.
Some of those who are overtly Christian frequently claim that, due to their faith, they have a higher understanding of morals and ethics than the 70% who claim to have no religion. Demonstrably, it’s a fallacy.

Josh Duggar was an Executive Director of Family Research Centre (FRC). His parents are Jim Bob and Michelle Duggar, parents of 19 children, who preach their belief in their god across the USA. He is married with four children.
Among the many initiatives he was involved in with the group were ones that firmly campaigned against equal rights for LGBT Americans, the legalization of same-sex marriages and a woman's right to choose.

In his role as Executive Director of FRC Action, he said in one interview that he was committed to 'taking the message of faith, family and freedom all across America.'

Josh also bragged that his family was the 'epitome of conservative values.' His opposition to gay marriage while at the FRC was based on his belief that it threatened family values.
Josh Duggar resigned his position with FRC after his name and details were found in a list of 37 million customers hacked from the Ashley Madison website — that promoted ‘cheating’ on customers’ partners.

If you have the time you could also search for information on the rise and fall of Jimmy Swaggart, as well as ponder the link between tithing and the growth of the property portfolio owned by Hillsong, which started 30 years ago in a church hall in Sydney and now spans the world.

People with religious beliefs are not all bad. The Political Sword has previously published an article on our TPS Extra site about the work of religious people who have genuinely dedicated their entire adult lives to helping others. Some religious people find other ways to promote their beliefs, such as the Anglican church in Gosford New South Wales. Rod Bower, the priest at the church, regularly changes the signboard outside the church and seems to have a rather good ability to make pithy comment on current events, comparing them to genuine Christian values. One of his recent signboards is pictured at the top of this article and quotes Abbott in the dying days of the Gillard government, a statement that came back to haunt him towards the end of his prime ministership. Apparently the CEO of Transfield was not happy with one of the recent signs — ‘HESTA divests Transfield. Good on ya’ —and asked to speak to the Bishop who supervises the Gosford Anglican Church:
Bishop Thompson said the Transfield chairwoman was "concerned to engage with the church in the light of Father Bower's messages".
He supported his priest, even if Transfield saw him as troublesome.
It seems that those with a strong religious belief have the same range of human behaviour as anyone else. Some live their values on a daily basis; others are found on websites that promote cheating on their partners. So why do some of the 30% with religious beliefs attempt to claim moral superiority and dictate terms to the 70% who don’t have a strong Christian religious connection? Are the silent majority ‘less worthy’ people because they don’t regularly darken the door of a Christian church?

Is it a fear of the unknown that makes traditional Christian values seem safe to a proportion of the 30%? Most Australians are of European descent and there is still a significant number of the Australian population who, at formative periods of their lives, were told that the Chinese, Japanese, Italian, Greek or Vietnamese nations were the enemy due to war or massive immigration at some point in our history. To an extent the people from the Middle East are being characterised in a similar way today as they have a different culture and religion from our European ‘norm’, as do the majority of refugee seekers. Psychologists have demonstrated that it doesn’t take much for a person to demonstrate xenophobic tendencies more or less ‘on demand’.
Researchers are discovering the extent to which xenophobia can be easily — even arbitrarily — turned on. In just hours, we can be conditioned to fear or discriminate against those who differ from ourselves by characteristics as superficial as eye color. Even ideas we believe are just common sense can have deep xenophobic underpinnings. Research conducted at Harvard reveals that even among people who claim to have no bias, the more strongly one supports the ethnic profiling of Arabs at [US] airport-security checkpoints, the more hidden prejudice one has against Muslims.

But other research shows that when it comes to whom we fear and how we react, we do have a choice. We can, it seems, choose not to give in to our xenophobic tendencies.
Self-professed ultra-conservative Liberal Senator Cory Bernardi has frequently commented on the dangers of Islam:
A frequent commentator on the ‘dangers’ of Islam, Bernardi has the Koran on his iPad but acknowledges he hasn’t read it, except for the passages he quotes to advance his arguments. He doesn’t know the ‘five pillars’, or basic tenets, of the Islamic faith. He claims his warnings about Islam are based on the “unique perspective” he gained while travelling in Europe where, he says, Muslim migration has led to “almost unprecedented levels of social unrest”.
He goes on:
“I keep saying this is not about Muslim people,” Bernardi insists. “A lot of Muslims eat pork, there’s a lot of Muslims who don’t pray five times a day or go to mosque, there’s a lot of Muslims who decide to drink alcohol. There’s a lot of Muslims who are terrific people, that are fantastic, like people of any faith.”
In other words: Muslims are fine, as long as they don’t practise their beliefs. In Bernardi’s maiden speech he —
extolled the importance of a strong economy, small business, the defence industry and entrepreneurship, and derided the “new culture of rights” in Australia. He thanked his mother for staying at home to raise him, hailed “the sanctity of human life” and marriage as “a sacred bond between a man and a woman”, and pledged: “I shall be guided by my conscience, my family, my country and my God.”
There is a large leap of faith (sorry about that) required to make any logical sense out of those quotes and how they can be the belief system for one person. Bernardi is guided by the sanctity of human life and is guided by his particular version of god. Yet he likes Muslims who effectively forgo the tenets of their particular religion to fit into Bernardi’s particular version of a ‘normal’ society. The terrifying thing is that Bernardi seems to have gained significant assistance from the American Tea Party.

To be fair, Bernardi isn’t the only one with this peculiar mindset. The Psychology Today article referred to earlier in this article reports on an experiment performed by an American researcher:
Psychologist Markus Kemmelmeier, at the University of Nevada at Reno, stuck stamped letters under the windshield wipers of parked cars in a suburb of Detroit. Half were addressed to a fictitious Christian organization, half to a made-up Muslim group. Of all the letters, half had little stickers of the American flag.

Would the addresses and stickers affect the rate at which the letters would be mailed? Kemmelmeier wondered. Without the flag stickers, both sets of letters were mailed at the same rate, about 75 percent of the time. With the stickers, however, the rates changed: Almost all the Christian letters were forwarded, but only half of the Muslim letters were mailed. "The flag is seen as a sacred object," Kemmelmeier says. "And it made people think about what it means to be a good American."

In short, the Muslims didn't make the cut.

Not mailing a letter seems like a small slight. Yet in the last century, there have been shocking examples of xenophobia in our own back yard. Perhaps the most famous in American history was the fear of the Japanese during World War II. This particular wave of hysteria lead to the rise of slurs and bigoted depictions in the media, and more alarmingly, the mass internment of 120,000 people of Japanese ancestry beginning in 1942. The internments have become a national embarrassment: Most of the Japanese held were American citizens, and there is little evidence that the imprisonments had any real strategic impact.

The targets of xenophobia — derived from the Greek word for stranger — are no longer the Japanese. Instead, they are Muslim immigrants. Or Mexicans. Or the Chinese. Or whichever group we have come to fear.
The Howard, Rudd and Abbott governments were past masters at the art of creating xenophobia, using terms such as ‘illegal immigrants’ and ‘boat people’ for refugee seekers who have every right to seek asylum in Australia. Sure, some of them don’t follow the same holy book as Howard, Rudd or Abbott claimed to do but neither do 70% of Australians who completed the last census. It is too early to determine if the Turnbull government is going to display any more genuine Christianity and humanity in relation to refugees, although there doesn’t seem to be any real impetus for meaningful change.

Unfortunately the actions of people such as Howard, Rudd or Abbott demean the community service performed by religious organisations such as the Anglican church in Gosford or the people we looked at some time ago in this article on TPS Extra. It’s also interesting that Catholic and Anglican Bishops are ‘pragmatic’ about the introduction of same sex marriage, yet the people paid to make these decisions are kicking the can down the road, one would assume to avoid upsetting a proportion of the 30% of the population that find religion important in their lives.

How do the religious political conservatives justify their belief that the majority of citizens in a country should be bound to their beliefs? It would be interesting to hear how Howard, Rudd, Abbott, Bernardi and so on can justify their actions with the teachings in their preferred holy book of ‘Do unto others as you wish them do to you’ (Luke 6:31).

What do you think?
Who is the real silent majority? — the committed Christians or the 70% (as 2353 points out) of Australians who are not regular church goers or have no religion. And are the 30% now trying to impose their views and values on the rest of us? Does it become a problem when such people are in our parliament, and leading our nation, and making decisions that influence the future of our nation?

Next week Ken will expose ‘The philosophical myth of neo-liberalism’.


Another failure in Aboriginal and Torres Strait Islander affairs

What is wrong with this paragraph from a report in July regarding the Aboriginal and Torres Strait Islander work-for-the-dole scheme?
A Territory community’s work for the dole program is about to collapse, with accusations a Sydney-based company stands to keep receiving funding while nothing happens on the ground and jobs hang in the balance.
Yes, another Aboriginal project is in danger of collapse. And, yes, the government appears to be doing nothing. But the big one that is ‘wrong’ to me is the reference to ‘a Sydney-based company’. What is a Sydney-based company doing running a work-for-the-dole scheme in a remote Northern Territory Aboriginal community? How does it effectively manage the scheme from 4000kms away? The fact the report suggests that the scheme may be about to collapse, even though the Sydney company is still receiving funding, indicates to me that perhaps it cannot manage from that distance.

That is a result of a process begun in the Howard years, and continued unfortunately during the Labor years, that put many services for Aboriginal and Torres Strait Islander communities out to a bidding process (not formally but effectively a tender). Even though Aboriginal and Torres Strait Islander community organisations could bid to provide services to their own community, or even to all communities in a local area, bids from distant organisations often had a price advantage. Ability to deliver the service to Aboriginal and Torres Strait Islander people in a culturally appropriate manner was part of the considerations but price was still a driving force — a government attempt to constrain funding.

In those circumstances, much depends on the people assessing the bids. In my day, many public servants working in Aboriginal and Torres Strait Islander affairs would have said that the condition regarding the ability to deliver the service in a culturally appropriate manner was paramount and as long as the price wasn’t outrageous that would over-ride pure price considerations — in economic terms, we were prepared to pay a premium for appropriate services. Many younger people who have grown up in decades of neo-liberalism and economic arguments of ‘price efficiency’ may take a different view.

The scheme that report refers to is now known as the Community Development Program (CDP) and is a result of a long history going back to the Community Development Employment Projects (CDEP) program in 1977. And there is a slightly longer history necessary to explain how CDEP came into being.

For a long time many Aboriginal people in remote areas had been employed in the cattle industry but were paid what was called a ‘training wage’ or ‘allowance’. In 1965 the then Commonwealth Arbitration and Conciliation Commission ruled that Aboriginals should be paid award wages under the Cattle Station Industry (Northern Territory) Award 1951. Were the station owners happy to pay award wages? Of course not, and the result was widespread unemployment for Aboriginal people in northern Australia. At the time Aboriginal people could not receive unemployment benefits if they were living on missions or reserves (which many stockmen would have returned to after losing their jobs) and there was still a ‘work test’, which basically meant that work had to be available but one was unable to obtain it — that continued to mean that many living in small remote communities where there was no available work were not eligible for benefits. Aboriginal and Torres Strait Islander people had only become eligible for social security benefits in 1966 and the requirement regarding missions and reserves wasn’t removed until 1976. But with so many then unemployed, and as the rules changed and the number eligible for and receiving unemployment benefits grew, the elders, in particular, became concerned about this ‘sit down’ money and the social problems it was causing in communities. So in 1977, CDEP was introduced.

Under CDEP, an amount equivalent to the unemployment benefit that otherwise would have gone into a community, plus a component for on-costs, was paid to the local Aboriginal organisation and people could then earn the equivalent of their dole by undertaking local work — the original work-for-the-dole scheme. Over the years a number of problems arose.

One was that CDEP was used to provide work in municipal services such as waste disposal, generator maintenance, road maintenance within the settlement and so on. That has led in more recent years to the commonwealth government demanding that states and local government take on that role as they do for other citizens. The jobs still need to be done but the commonwealth is insisting that the cost is met by the states (it is that which gave rise to the decision in WA to consider closing many small, remote communities).

Another was that as CDEP was expanded beyond remote areas, some Aboriginal organisations used CDEP labour to support the development of local businesses (as was intended under the original guidelines). In small regional towns the non-indigenous businessmen felt that gave Aboriginal businesses an unfair advantage. Unions were also concerned that non-award wages could be paid for work that was covered by awards. Under Keating, the new rule was that CDEP should be paid at award rates (where an appropriate award existed) and people work only as long as was required at the award rate to earn the equivalent of the dole. That also meant they were covered by normal industrial conditions, including health and safety, payment of superannuation, and so on. If organisations or businesses had the money, they were allowed to provide ‘top-up’ wages for extra work, without the person losing their CDEP entitlement.

CDEP had also expanded into urban areas where it was meant to focus on preparing people for mainstream work. The rationale, however, was that Aboriginal and Torres Strait Islander people would be more likely to use an Aboriginal and Torres Strait Islander service than go to a job centre. Under Howard that was abolished. Eventually CDEP was again restricted to remote areas but that was also abolished in the NT during the intervention. When it was brought back, it returned to being a straightforward work-for-the-dole scheme and was rejigged as the Remote Jobs and Communities Program (RJCP) under which people worked 16 hours a week for their Newstart allowance. Many people left the scheme (some received other welfare payments) and the ‘sit down’ money problem was re-created. That has now been rejigged again as the CDP in remote areas.

What have all these changes achieved? — very little.

The original idea was to provide some work in areas where there was little or no work available; it could provide activities that would combat social problems (such as ‘night patrols’); and projects could include economic ventures, town management activities, social advancement and environmental improvement.

In considering work in remote areas, it is interesting to note that non-indigenous people in remote areas have the lowest unemployment levels of any location in Australia, lower than urban and regional areas. That arises from the fact that most whitefellas don’t stay in remote areas unless they have work — as soon as the work ends, they leave. Aboriginal people, on the other hand, are bound by their culture and the need to maintain ‘country’ to remain there. That is why it is so difficult when governments talk about the need for Aboriginal and Torres Strait Islander people to be in employment. Jobs are scarce in such areas. I have personally witnessed examples where communities took on more people in the available positions than was actually necessary: that led to the funding for the positions being spread over more people so that they each received less than they were entitled to — which also led to problems, with people complaining of being underpaid. They were being underpaid but it was a genuine attempt to provide work to as many people as possible and keep young people in the community.

As CDEP moved between departments its purpose changed: at one time being little more than a welfare program, at another taking on stronger employment aspects. A more detailed political history of CDEP is provided in an address by Will Sanders here.

What seems to have been lost in many of the changes are the social benefits of the original scheme.

By the time ATSIC was managing CDEP, it was viewed as the one program over which Aboriginal and Torres Strait Islander communities actually had some control. All the talk of self-management meant little when the use of almost all of the funding that went into Aboriginal and Torres Strait Islander communities was governed by external decisions. CDEP allowed communities to make decisions about what work they would support, what work they viewed as important for their community — in some communities it could include undertaking traditional activities. (Many Aboriginal artists in the NT were receiving CDEP ‘wages’ before it was abolished.)

With the bidding process and organisations from 4000kms away winning contracts to provide the services, support for the social aspects of the program seems to have disappeared. We are almost back to a 1930s ‘guardianship’ model where we seem to believe that Aboriginal and Torres Strait Islander communities cannot make decisions in their own self-interest and cannot manage money. That has been a Liberal mode since the Howard years. When Herron came in as the first minister for Aboriginal and Torres Strait Islander Affairs in the Howard government, ATSIC was directed to audit every Aboriginal and Torres Strait Islander organisation to see if they were ‘fit and proper’ bodies to receive government funding. The new government believed there was waste and inefficiency, if not outright rorting. Only 60 out of 1,122 organisations were found to have breached funding conditions and the majority of breaches were for minor matters such as late submission of financial returns (there was no identified fraud): it was pointed out that the conditions were often so detailed that it was difficult not to breach some of them but 95% of organisations had managed it. The audit had been conducted by an independent organisation, KPMG, but it was not the result the government had wanted. The Aboriginal and Torres Strait Islander Social Justice Commissioner later compared the outcome of that audit to an audit of mainstream companies:
In contrast, “a 1997 survey of company fraud showed that roughly half the 490 large Australian companies surveyed had experienced significant fraud in the last two years”.
The audit also recommended:
… training for administrators of Aboriginal organisations for example, in financial management expertise, but noted that budget cuts imposed on ATSIC in the 1996‒1997 Commonwealth budget had resulted in the termination of the Community Training Program, significantly reducing “the capacity of ATSIC to fund management training in organisations”.
So even for what problems there were, the government had effectively cut the capacity to do anything about them. The approach underlay the government’s attitude to CDEP — it could not understand why Aboriginal and Torres Strait Islander organisations should have control of the money and, as shown earlier, the current approach means that money is again often controlled by outsiders.

Under the new CDP, people will be required to work 25 hours each week: a Christmas shut-down, some holidays and cultural leave are now included but weren’t in the original proposal. The CDP model pays lip service to ideas coming from the community but still insists getting people into jobs is the key outcome. I just do not see that there will be enough jobs. During the mining boom, which was seen as a possible source for Aboriginal employment in remote areas, I pointed out that modern mining is not labour intensive and even if every single mining job (including management positions) in remote areas was given to an Aboriginal person there would still be thousands unemployed — mining was not the answer.

The current minister Nigel Scullion’s description of the new CDP sounds eerily familiar to the original guidelines for CDEP:
In many communities there will be opportunities to establish businesses that can support the needs and desires of local people. Some communities will want activities that support critical issues like housing repairs and maintenance. In others, there may be a need to support older members of the community in aged-care facilities or their own homes, or to support children in school.
Even where jobs are available in remote areas, they tend to be jobs that rely on government funding, such as ‘shire’ work, environmental work, even work in schools. Yes, they are ‘real’ jobs but as we have seen so often their tenure can be precarious when governments change.
Most of these jobs are currently filled by people from outside of communities. There is no reason local people cannot be skilled up to take on these jobs.
Those words from Scullion are true but they have been said since the 1970s. The reason that approach has not had great success in that time is that it doesn’t recognise the Aboriginal perception of work. A traditional Aboriginal person may see a job as a way of getting money to meet an immediate need: once that need is met, the job is superfluous until another need arises.

More importantly, our view of regular work, five days a week for 48 weeks (allowing for annual holidays), is not appropriate in the still traditionally-oriented communities. There is much traditional business to attend to and that can take time: and, in the event of a death, most, if not all, workers will stop work for a time as traditional mourning activities (‘sorry business’) take place. If there are important jobs that need to continue every day, Aboriginal people themselves know that they are better off having a whitefella in that job who does not have to stop work for as long: it is probable the person would be required to stop but would likely be excused from the full mourning period and, of course, is unlikely to be directly involved in the actual ceremonies of ‘sorry business’.

I have an example concerning an Aboriginal man I knew personally. He had worked as a town clerk in a predominantly Aboriginal community and he had worked as a teacher at a distant location. It was while he was teaching that a death occurred in his home community. He returned home for the ‘sorry business’ but was then found by the elders to be responsible for the death: his absence had led to him not performing his ceremonial obligations and this had broken the ‘balance’ between life, land and spirit, contributing to the death. He was exiled to the bush for six months — which obviously meant he was unable to fulfil his whitefella-work obligations. In such circumstances, how can we demand that Aboriginal people take on work as we see it? How well does an organisation 4000kms away understand such circumstances; how well can it respond in a timely way when ‘blackfella business’ has to take precedence?

The only real answer to this problem is a completely different model that does not put a whitefella-style job as the ultimate outcome; a model that recognises traditional lifestyles and accepts them; that allows people to work when they want to but attend to traditional activities when they are obligated to. It would be a model that is entirely different to anything we have seen so far, that recognises Aboriginal and Torres Strait Islander culture as important enough to maintain. Perhaps recognition in the constitution will allow a basis to consider such a model but it will also require a change in mind-set of politicians and public servants.

The words of Canadian singer-songwriter, James Keelaghan, are an appropriate ending for this piece, and would make an apt plea by Aboriginal and Torres Strait Islander people to us whitefellas:
Take a walk under my skies
Try to see it once the way I do
If you look out through my eyes
You’ll find a different point of view
What do you think?
‘When will they ever learn?’ We have had a commonwealth Aboriginal and Torres Strait Islander agency since the 1970s, now over 40 years, and still there are seemingly intractable problems. But are many only ‘intractable’ because they are viewed from a whitefella perspective? Is Ken right in suggesting that more attention needs to be paid to the Aboriginal and Torres Strait Islander perspective?

Next week 2353 goes ‘where angels fear to tread’ to discuss the modern influence of religion in politics in ‘The silent majority’.


Pluto and the conservative mindset


In 1930, Clyde W. Tombaugh found a ninth planet in our solar system and, after a time being known as ‘Planet X’, it gained the name Pluto. Contrary to popular belief, the planet wasn’t named after the Disney character or the nuclear element plutonium; rather the planet was named after the Roman God of the Underworld as suggested by an 11 year old girl from England who was given £5 as a reward for her effort.

By the early 2000s, advances in the design and accuracy of astronomical instruments demonstrated to scientists that Pluto didn’t qualify as a planet as it didn’t meet the criteria:

  • It needs to be in orbit around the Sun — yes, so maybe Pluto is a planet.
  • It needs to have enough gravity to pull itself into a spherical shape — Pluto…check.
  • It needs to have “cleared the neighbourhood” of its orbit — Uh oh. Here’s the rule breaker. According to this, Pluto is not a planet.
Where Pluto apparently fell down is that it is located in the middle of a belt of small planet-like objects — so it hasn’t ‘cleared the neighbourhood’ of other objects.

There was considerable coverage of the downgrading of Pluto when it occurred and New Mexico in the US actually legislated that when Pluto traverses the skies of the state of New Mexico, it is still a planet!

One of the scientists who made the declaration that Pluto didn’t make the cut as a planet was Neil deGrasse Tyson. As well as a host of scientific awards, Tyson won the (US) People Magazine’s ‘Sexiest Astrophysicist Alive’ award in 2000 and an Emmy nomination in 2014. Charlie Pickering recently interviewed Tyson on the ABC’s ‘The Weekly’ and discussed some of the notoriety he gained as a part of the panel of scientists that decided that Pluto was not a planet, but a dwarf planet. There apparently were two groups of people: those that accepted the decision realising that over the 70 years since Pluto was discovered advances in technology had made a re-evaluation of the planet status warranted; while the second group had a number of issues with the decision primarily due to the letter writers learning that there were nine planets in the solar system — ranging from Mercury to Pluto — and no one had the right to change the basis of that absolute truth.

So why is The Political Sword suddenly interested in a discussion from around 10 years ago on the status of a (dwarf) planet that is located on average 39.5 Astronomical Units (the distance from the sun to earth is one AU) from the sun? Basically — we’re not. We are interested in the discussion between Tyson and Pickering on the science behind it. While some could accept the change in status for the dwarf planet formally known as Pluto, others could send Tyson a letter 10 years later saying that they had now researched the matter for themselves, decided Tyson was correct and apologised for calling Tyson a ‘poo poo head’ some time in the noughties (the discussion starts at around 1 minutes 43 seconds into the YouTube clip linked above).

Tyson talked about the distinct difference in the way the brain works in people. Some are able to take on new facts as they are determined and others don’t seem to have that ability. For the purposes of this discussion, let’s call those that will take on board the research of others as progressives, and those that believe the facts are immutable as conservatives. The example of progressive and conservative thinking has been done to death in regard to the environment, so let’s look at the economy instead.

There is an argument that Australia, together with the rest of the developed world, is entering the post-industrial economy and experiencing the end of capitalism. The development of the post-industrial economy is linked to the supply and availability of information. Building consumer goods, digging fossil fuels out of the ground and other activities that have sustained the Australian economy for a century are becoming, and will be part, of the ‘mix’ in the future. Australia will, however, gain a greater proportion of its national income from activities that involve the ‘sale’ of our knowledge and skills.

For example, motor vehicle manufacturers have decided that it is no longer profitable to screw their products together in Australia. While this will cause considerable grief for those who have been employed (in some cases for decades) in manufacturing Holden Commodores or Ford Falcons, General Motors, Ford and Nissan will still have considerable workforces based in this country for the foreseeable future — despite the media reports. The difference is that the work performed has a greater technical and intellectual input, be it designing and testing vehicles for worldwide markets or casting items with a great deal of complexity for a number of global vehicle models.

You are reading another demonstration of the information age — The Political Sword. This blog, along with our other site TPS Extra, is put together by a small group of people that live somewhere between Brisbane and Melbourne using the internet, email and the very occasional phone call to co-ordinate the information and work flows that are necessary. This blog is accessible in most parts of the world, costs us very little to publish and you nothing to read. Prior to the internet, someone with very deep pockets would have had to fund the printing and distribution of this article — and even then it would have not been accessible around the world at the same time. Prior to printing, records were usually kept by monks who spent their entire lives recording history. Today, information is all around us and the storage of it is cheap.

So how is the current government handling this structural change in the Australian society and economy? Rather than accepting that coal is a fossil fuel that some suggest may soon be a ‘stranded asset’, the government is attempting to change the law so that a large coal mine can be developed in Central Queensland. When the newly blackshirted “Border Security’ promise to check people’s visas on the streets of Melbourne was cancelled due to community protest, ‘our’ Prime Minister claimed they ‘should not be demeaned’.

The current government promised to stop the boats. When it was determined by others, based on information retrieved from elsewhere in South East Asia, that the boats hadn’t really stopped as claimed, our government responded that it doesn’t comment on ‘on water’ matters and tightened independent access to the charmingly named ‘Offshore Processing Centres’ (where processing refugees for settlement in Australian seems to be the last item on the agenda).

Australia over the years has entered into a number of trade agreements that in theory allow better access to markets and lesser trade barriers. Australia along with a number of other countries around the Pacific Rim have been negotiating a trade agreement for the past couple of years. If you are an Australian, you have no formal way to access the proposed agreement, which may contain clauses that override our national interests for corporate interests. If you are a stakeholder and live in countries including the USA, you do.

The ALP started a process when in power of creating a world class telecommunications system across Australia that would allow all Australians to access information on the internet much faster than most can today using digital cable to each household and known as the National Broadband Network (NBN). One of the current Government’s claims before the election was that the system that was under development was more than needed. (Stop fast Internet anyone?) While the rollout of digital cable continues at a snail’s pace, a recent Senate enquiry has determined:
The Australian people are being kept in the dark by the minister and NBN Co on the cost and rollout timeframe of the NBN.
It has been demonstrated in the past that in any period of uncertainty, those that take the lead do better. Mark Zuckerberg has made billions in the past decade or so by providing a system (Facebook) for people to freely and easily converse with their friends and soak up information — even if the information are the problems that can only be experienced in a first world economy, such as photos of last night’s dinner. Others with a large volume of resources such as Google have tried to manufacture rivals, with limited success.

So how does our government attempt to keep pace with the change to society that we are currently experiencing? In short, they are trying to keep the genie in the bottle. This is where the discussion between Charlie Pickering and Neil Tyson at the top of this article kicks in. You may recall they discussed how some people could accept new facts and assimilate them while others couldn’t. The Abbott government seems to be of the latter mindset. Above are a couple of examples of reactions to events that in the stated views of Abbott or his ministers are inimical to Australian society. There are plenty more, such as same sex marriage, education standards, tax reform and so on.

Conservative leaders in Australian politics were not always so intent on keeping the status quo. It seems that conservative leaders from Menzies to Bjelke Petersen could analyse new information and make decisions based on the material at hand. While the ALP started the Snowy Mountains Scheme, construction continued through the 23 years of Liberal rule from 1949 to 1972. While some changes were made, the NSW Liberal premiers continued the construction of the Sydney Opera House and surprisingly Bjelke Petersen’s National Party introduced and funded rail electrification at 25Kv to the Queensland rail system. At the time 25Kv electrification was new and is better technology than the 1500v systems in New South Wales and Victoria.

Abbott is a Rhodes scholar. Despite how and why he achieved the honour, he got there. There are two possible options for his reluctance to meet and adapt to the societal norms of the 21st century: either he believes that the ‘large C’ conservative values will win him power at the next election or he genuinely is one of the people that Tyson claims can only understand the rote learning he experienced decades ago.

The last 100 plus opinion polls would suggest that his performance does not meet the expectations of the Australian community. It could be argued that opinion polls are just opinion — but those that conduct the polls have businesses to run and frequent large discrepancies from reality would quickly end the pollsters’ business operations. So it could be said that you would have to be living on another planet to bet on (large C) conservatism as a winning strategy as Abbott seems to be doing.

The other option is therefore more likely. Abbott came from nowhere to cause a hung parliament in 2010 and win the 2013 election. In the opinion of those who are of the same mindset — winners are grinners — and there is a certain amount of blindness that comes from belonging to a winning team. Abbott’s mind cannot grasp the new information in relation to burning fossil fuels; cannot fathom how the society he lives in has moved on from the ‘meat and three veges’ on the table every night for the family comprised of ‘mum, dad and the two kids’; and is kicking the can on contentious issues, such as climate change, the republic, tax reform and same sex marriage, down the road for the next parliament to deal with. Should Abbott get back in, the can will be kicked further.

While Abbott’s mindset is not unique, it is taking the ‘first mover’ advantage away from all of us especially in relation to adjusting to the new knowledge and information economy of the 21st century. That will be an ongoing problem for all of us.

What do you think?
Like those who rejected the downgrading of Pluto as a planet, 2353 shows that Abbott and his ilk refuse to accept new information. Abbott is avoiding contentious issues like marriage equality, despite opinion polls, and will continue to do so. He is avoiding economic changes, pretending that we can continue forever to just dig and sell our minerals. As 2353 concludes, that approach is not in the best interests for the future of Australia.

Come back next week when Ken will discuss ‘Another failure in Aboriginal and Torres Strait Islander affairs’.


Bankers 3 Democracy 0 with Abbott running the sideline


In a piece in June, ‘The unhappy marriage of democracy and capitalism’, I discussed the then situation in Greece and the way democracy was being ignored by the wielders of economic power, particularly the bankers and the power brokers of the financial system. Since then the bankers have won, the Greek parliament has passed legislation to introduce further austerity measures and the people have rioted in the streets.

Greece was in a cleft stick. A majority of Greeks did not want to leave the Eurozone but nor did they want more austerity. The European Central Bank, the IMF and the European Commission (representing the other European governments that had provided funds to Greece) left them with Hobson’s choice — accept austerity or leave the Eurozone. The Greek government still opposed the outcome in principle but felt it had no choice: it could meet only one of the democratic demands placed upon it by the people, not both. The bankers had won by backing the Greek people and its government into a corner.

The Greek situation, however, is symptomatic of a much wider problem across most democracies in the world today but has brought it clearly into focus: it is now the bankers, the financial system, and the so-called rules of (neo-liberal) economics that dominate government thinking, not the will of the people. In an article in The Guardian in July, George Monbiot referred to it as ‘the financial elite’s war on democracy’:
The IMF is controlled by the rich, and governs the poor on their behalf. It’s now doing to Greece what it has done to one poor nation after another, from Argentina to Zambia. Its structural adjustment programmes have forced scores of elected governments to dismantle public spending, destroying health, education and all the means by which the wretched of the earth might improve their lives.

The same programme is imposed regardless of circumstance: every country the IMF colonises must place the control of inflation ahead of other economic objectives; immediately remove barriers to trade and the flow of capital; liberalise its banking system; reduce government spending on everything bar debt repayments; and privatise assets that can be sold to foreign investors.
It is a gloomy picture but, I think, we can all recognise it. In this new world, it is not governments, but the bankers, who rule. We have only to look at a common approach in many countries, namely the central banks adopting inflation targets, generally around 2%. Predictable inflation is considered necessary for economic planning and allowing consumers to feel confident, but for consumers and producers it is the predictability of inflation, not so much its rate (unless it has become hyper-inflation), that is important.

Financiers are more fearful of inflation because it has a major impact on financial assets. A simple example: I borrow $10,000 at 10% with an estimated 0% inflation, meaning I pay back $11,000; but if inflation rises to 5%, that $11,000 I pay back then has a purchasing power of only $10,475 — the bank has effectively lost $525. When we are talking of major international financial institutions, and the huge amounts they are dealing in, small variations in inflation can affect their bottom line, unless it is kept low and within a small predictable range.

Australian banks learned that lesson during the high inflation of the 1970s. Until then, most home mortgages were on a fixed interest rate (set by the government as I recall) for the life of the loan but banks stood to lose heavily in the 1970s and now are allowed to offer ‘variable’ interest rates so they can adjust to inflation. But that also means the borrower never gets ahead. Previously, as the years went by, the repayments became a lesser portion of the take-home wage, leaving the borrower with more disposable income — to boost consumption and thereby the economy — but now that is less likely to happen, or occur at a much slower rate and only to the extent that wage rises exceed inflation and the bank’s interest rate. So the overall economy doesn’t benefit from the current approach.

So the question is who benefits from all these efforts to keep inflation at 2-3%? Who benefits when a country adopts austerity measures which often cause deflation? Using that same example of the $11,000 loan repayment, if inflation became a deflation of minus 5%, I would effectively be paying the bank $11,550 in purchasing power.

But deflation is bad for the economy and for government coffers, as Greece knows. If growth turns negative, that means not as many goods and services are being purchased, not as many people are required to produce goods and provide services, and less tax flows to the government. It doesn’t, however, stop the financiers making money: they may even make more as people (even governments) may borrow more to overcome the loss of income.

So who do you think benefits the most?

It is not the people, as shown in the Greek situation. Governments have abandoned the people and, therefore, by definition, democracy. They no longer listen to the people but to the financiers and ‘the markets’.

In an article in The Monthly, Richard Denniss argues that we, the people, are being blinded by ‘econospeak’ and being led to believe that governments in making their decisions have to be conscious of the reactions of ‘the markets’. He writes that we should remember that ‘markets’ per se do not have feelings, do not have needs or demands. What we refer to as ‘markets’ is actually people buying and selling and attempting to manipulate trading for their own advantage. Denniss gives an example of ‘econospeak’ with his own translation into everyday English, which emphasises that it is really the feelings, needs and demands of rich and powerful individuals we are talking about:

  1. Markets reacted angrily today to news that the government is considering tightening thin capitalisation provisions that have provided foreign investors with strong incentives to expand their Australian operations.

  2. Rich people overseas reacted angrily today to news that they might have to pay tax on the profits they earnt in Australia. After the government announced that it was considering clamping down on some of the most lucrative forms of multinational profit-shifting, some very wealthy Americans threatened to take their bat and ball and go home if they were forced to pay tax.
We are being fed this propaganda constantly with the media now reporting numerous times each day on ‘the markets’ and stock exchange indexes from around the world. It suggests, as Denniss writes, that the markets ‘are watching and judging us’. We are meant to believe that this constant diet of market reports is important.

It is all crap!

When I was growing up we didn’t hear about the stock market. There was a page somewhere in the newspaper giving the previous day’s prices but we skipped that page. The stock market was called ‘rich man’s gambling’: where I lived, people gambled on the horses, most often with the local, illegal SP bookie. What changed? Why did ‘the markets’ become the be-all and end-all of economic progress? (And we could ask why in a free market economy was the off-course SP bookmaker made illegal and driven out of business?)

Joint stock companies have existed for a long time, in which people raise money, and spread risk, by allowing other people to purchase a share in the company. Stock markets (exchanges) were meant to be an organised way of allowing trade in those shares. It did mean that shares could be traded without affecting the company itself — it was only a change in ownership of a small portion of the company.

When companies are successful, more people want to buy shares in them and the share price rises purely on the old law of supply and demand. Hence England had the ‘South Sea bubble’ early in the 1700s. It involved the South Sea Company taking over a large portion of the English government’s debt following the ‘War of the Spanish Succession’, in return for trading rights in the Spanish colonies of South America and in the West Indies (referred to as the ‘south seas’ at the time). By the treaties at the end of the war, the company, however, was allowed only one ship per year to South America. Despite that, it was able to sell its shares because the government was paying 4% on its debt and the company ran an effective marketing strategy. Share prices rose quickly from £100 to £1000 before the bubble burst. The company had also encouraged share purchases by lending money to people to buy its own shares. Of course, it was those who were leveraged in that way who lost most when the shares crashed: the crash was started by the directors of the company selling their shares because they knew the ten-fold increase in the value of the company existed only in the shares and was based on nothing substantial. As a result, in 1720, the British government banned the issuing of stock certificates. (It was enforced for only a short time although not repealed until 1825.)

Bubbles keep happening, usually followed by a depression or a recession. Apparently the only difference between a market ‘crash’ and a ‘bubble’ bursting or a market ‘correction’ is the size of the devaluation of the market. (One article I read suggested that the fall had to be greater than 20% to be more than a ‘correction’, but that still means that many people will lose a lot of money.) Often, as after the South Sea bubble, these bubbles are followed by a burst of government regulation but ‘markets’ can now avoid such intervention by claiming it is only a ‘correction’.

Has anything changed? We have returned to laissez-faire capitalism under the new guise of ‘market liberalism’ and neo-liberalism. As George Monbiot wrote:
Neoliberalism is inherently incompatible with democracy, as people will always rebel against the austerity and fiscal tyranny it prescribes. Something has to give, and it must be the people. This is the true road to serfdom: disinventing democracy on behalf of the elite.
Monbiot argues that the imposition of budget surpluses as the target of governments (it is, for example, written into Eurozone rules) is the new ‘gold standard’ that limits public spending and what governments can do to stimulate employment. A limit on spending, either by the gold standard, or the new requirement for budget surpluses, effectively leaves the rich and the financiers in control. If a government needs more money it either has to take more ‘gold’ from the wealthy — and they have the ‘gold’ to be able to fight that as we saw when the mining companies successfully fought the mining tax — or borrow money. Borrowing money: doesn’t that mean the financiers are involved? — funny that! And if governments allow inflation to rise, they effectively pay back less money, so the financiers also want low inflation so they don’t lose.

The big financial institutions (and rich individuals) also invest their surplus funds in stocks as a way to make more money — or so as their surplus money is not sitting idle, as they would see it. So who has a vested interest in ensuring that we are all worried when the markets fall, or that we should be worried by the market’s reaction?

We gave the Reserve Bank the power to determine interest rates and the guideline that it should aim to maintain inflation between 2% and 3%. We were told that it removed monetary policy from politics. But why should it be removed from politics? Governments are meant to make political decisions and to the extent that inflation and interest rates affect people, they involve political decisions. By removing that power from political considerations, we effectively abandoned a part of democracy’s capacity to influence the market: that is control, in the broader interest of society, the behaviour of banks and wealthy individuals. That can only be a neo-liberal decision (even if Labor originally set the inflation target) that supports laissez-faire capitalism and its financiers.

And running the sidelines we have our current government. Abbott and Hockey have repeatedly told us that surpluses are sacrosanct and that, when we don’t have one, we have to cut government spending to ensure that eventually we do. They look to the markets to justify their decisions, but who do the markets represent? — it is not the people. They say we need less government regulation in the market but who benefits from that? — they tell us it will benefit workers in the long run but that’s what ‘markets’ always say, while the corporation owners and the bankers reap the benefits now.

I will end with something said by Sir Isaac Newton, after he lost £20,000 in the South Sea bubble:
I can calculate the motions of heavenly bodies, but not the madness of people.
I think ‘the madness of people’ still dominates the markets, despite what the neo-liberals, the economic rationalists and the Liberals tell us. In that regard, it is not a firm basis on which to run an economy.

What do you think?
Ken may have nailed his colours to the mast with this piece but has he also nailed the bankers there? Around the world new grass-roots political parties are emerging and, in some countries, enjoying electoral success, as people become disillusioned with the way the current political system is dominated by financial interests. It is not yet happening in Australia but Labor should remember that it began as a grass-roots party, created to give the workers a political voice. If Labor returns to its roots, it can still be the people’s party in Australia.

For next week, you can ponder what is the link between the (former) planet Pluto and Tony Abbott? Find out in 2353’s ‘Pluto and the conservative mindset’.


The challenge of renewables


Later this year a conference will be held in Paris that will determine the global response to climate change. While the international jockeying has commenced, it seems there is a ‘tipping point’ that, if exceeded, will ensure that the world will never be the same again. Australia’s contribution is being keenly watched.

Australia was one of the first to introduce an Emissions Trading Scheme (misnamed by both sides of politics as ‘the carbon tax’) and certainly the first to almost ditch it. The ALP at its recent conference has committed to generating 50% of Australia’s electricity using renewables by 2030. It seems the current government has yet to make up its mind. Given that the world’s environment is warming and 2014 was the warmest year on record, doing nothing is not an option — and if the worst result is that fossil fuels last longer, is that a bad thing?

The ALP’s commitment to 50% renewables made some people happy but others were claiming the costs could be excessive. Abbott went as far as claiming that the ALP policy would cost $60 billion — pity the claim was based on a calculation ‘on the back of an envelope’.

The reality is that, according to the International Monetary Fund, Australia will subsidise coal, petroleum and gas consumption to the value of $41 billion during 2015.
Australia's current electricity mix can supply power at about $30 to $40 per megawatt-hour, according to estimates provided by the Grattan Institute.

If we were to build new fossil fuel power plants today they would produce power at about $50 to $75 per megawatt-hour based on the same Grattan model. New wind power would cost about $80 to $90 per megawatt-hour, while large-scale solar would be about $180 (Estimates by other groups put the cost of new coal power at higher rates.)
As the article points out, this is just the cost of generation — not the cost of the environmental mitigation required from burning fossil fuel.

Not everyone agrees on the costs. Alan Jones claimed on Q&A during July that:
“Eighty per cent of Australian energy comes from coal, coal-fired power, and it’s about $79 a kilowatt hour,” he said. “Wind power is about $1502 a kilowatt hour.”
He was spectacularly wrong (and to his credit he did apologise for the error), but there seems to be a trend here of plucking numbers out of thin air and constructing an argument to ‘demonstrate’ the economic madness of renewable energy.

While the IMF has new coal-fired power stations at a slight cost advantage (before the ‘on-costs’) over renewable power, Bloomberg has a different view:
By Bloomberg New Energy Finance’s most recent calculations a new wind farm in Australia would cost $74 a megawatt hour.

“A new large-scale photovoltaic project would cost $105,” says the firm’s Australian head, Kobad Bhavnagri. “A new coal-fired power station would cost $119. And a new gas base-load station would cost $92. So both wind and solar are already cheaper than coal.”

What’s more, says Bhavnagri, the cost advantage of non-polluting energy is rapidly increasing. “Wind is already the cheapest, and solar PV [photovoltaic panels] will be cheaper than gas in around two years, in 2017. We project that wind will continue to decline in cost, though at a more modest rate than solar. Solar will become the dominant source in the longer term.”
The Saturday Paper reports that Bloomberg has determined global spending on the construction of renewable generation capacity since 2013 has been higher than coal, gas and oil combined. The trend is likely to escalate. On top of that, electricity demand across Australia is reducing. Stanwell Power in Queensland closed down two generation units at its Tarong Power Station — citing lack of demand in 2012. Renew Economy reported:
The closure of the two units at Tarong follows the closure of the ageing 600MW Munmorah power station in NSW, Stanwell’s 125MW Swanbank B power station in Queensland, and the 240MW Playford B and the 520MW Northern brown coal generators in South Australia. Energy Brix has also reduced output. Northern recently reopened and will operate in the immediate future only in summer, when demand is higher.
Climate Works Australia, a partnership between the Myer Foundation and Monash University, has prepared a report, housed on the United Nations Sustainable Development Solutions Network, that discusses the probability that Australia could effectively be ‘carbon neutral’ by 2050 while maintaining current economic growth. Denmark is targeting to be completely free of fossil fuel by 2050. They are well on the way, having around 40% renewable energy on their electricity grid now. The New York Times reports that there are a number of practical problems in the transition to a completely fossil-free future, from winter nights with little wind through to ‘range anxiety’ for electrically driven vehicles.

The Danes are now subsidising fossil and nuclear power stations to remain on-line to cover eventualities such as still nights, as the cost of fossil or nuclear electricity production exceeds the price the generators can sell electricity for. Believe it or not, some Australian states are having the same issue. In Australia, electricity is traded on a ‘market’ across Queensland, New South Wales, Victoria and South Australia. Queensland and South Australia have excess generating capacity so they can sell surplus electricity into the market, which acts, as economists will tell you, ‘rationally’ (the price paid for surplus electricity is governed by the demand for the product). Electricity generators make decisions on how much electricity they will produce based on the expected return from the market meeting or exceeding the cost of generation. If the generators miscalculate the demand, the price paid for electricity increases rapidly, causing generators to increase production. If there is a surplus of electricity available, the price goes down. Those that can change production quantities quickly make more money than those that can’t. On occasions during the middle of the day in July 2015, the wholesale price for electricity in Queensland was a negative value rather than the ‘normal’ $40 to $50 per megawatt hour. While not the sole cause (the infrastructure allowing Queensland to ‘export’ power to Southern States was not working at full capacity):
The influx of rooftop solar has turned this model on its head. There is 1,100MW of it on more than 350,000 buildings in Queensland alone (3,400MW on 1.2m buildings across the country). It is producing electricity just at the time that coal generators used to make hay (while the sun shines).
If Queensland has excess power during the time that is usually profitable for power generators, and South Australia has the capability of operating entirely from renewable energy, as occurred late in 2014, the world is changing without waiting for the government to change.

Ergon Energy in regional Queensland (which is owned by the Queensland government) is conducting a trial of battery storage for the power generated from solar panels in a domestic environment which, if successful, will allow the use of domestic solar panel generated power at night or if it’s raining heavily. The Queensland government is also planning to install a number of renewable energy powered electric vehicle chargers along the Bruce Highway, which runs from Brisbane to Cairns.

Clearly the world is changing. It is conceivable that in the not too distant future we will be able to power our houses using electricity generated on the roof and stored in batteries under the house. Our cars will be plugged into a charging point each night and when we do want to travel further than the battery capacity, there will be a recharging station en-route (in a similar way to filling the car at the petrol station). Both of these fundamental changes will reduce our need for fossil fuels as well as infrastructure such as power lines. These fundamental changes will also reduce the business plans of a number of companies to historical artefacts. These companies are in a similar position to the tobacco companies were some years ago when the evidence that smoking is hazardous to health was overwhelming but before cigarette packet warnings and education programs were introduced.

The problem for energy companies is that if they don’t adapt, they will gradually fade away. However, there is an economic problem here — who will be the first to try and adapt to a new business model that addresses the rise of renewable energy, potentially giving their competition a ‘free kick’? The first to withdraw from the traditional generate, distribute and retail business model will leave a hole in the market that others will attempt to fill, so unless the strategy is planned and executed correctly, the early adopter could fail completely. While Ergon is conducting a trial of battery storage, they are a government owned business with a legislated supply area and no competition — so they effectively have a monopoly. The business and economic risks of the trial are significantly less in Ergon’s case than they would be in the case of Origin or AGL.

This doesn’t explain the Abbott government’s reluctance to support renewable energy. The Abbott government has reduced the RET (Renewable Energy Target), instructed the CEFC (Clean Energy Finance Corporation) to remove funding from ‘established’ renewable technology — which was profitable to the agency and the government — and launched various hysterical campaigns on wind farms, emissions trading schemes and aspirational targets for the move to renewable energy by the country over the next 15 years.

It is even harder to understand Abbott’s responses when it is considered that Pope Francis (the spiritual leader of all Catholics — including Abbott) has released an encyclical that not only acknowledges climate change caused by humans burning fossil fuels, but demanded immediate action to stop the world becoming ‘an immense pile of filth’:
In the encyclical, titled Laudato Si (Praise Be), On the Care of Our Common Home, Francis advocated a change of lifestyle in rich countries steeped in a "throwaway" consumer culture and an end to an "obstructionist attitudes" that sometimes put profit before the common good.
Not that Abbott is alone in ignoring the Pope’s ‘teaching’. Father James Grant is an adjunct fellow of the IPA (Institute of Public Affairs) and wrote an article in The Australian (which is paywalled) on 10 July entitled ‘It’s unchristian to oppose coal generated power’. However, we can all read the smackdown of the article and the government’s lack of action written by Neil Ormerod and published in Eureka Street. Ironically, Eureka Street is published by the Australian Jesuits, the Catholic order that Abbott tried to join when younger.

The scientific and moral debate on climate change is over. Climate change is real — we are all are causing it. So why do Abbott and other conservatives continue to ‘fight the fight’? Is it, as Pope Francis commented, because profit outweighs the common good? Abbott is probably finding it hard to justify to other countries why they should purchase greater quantities of Australian coal at the same time that our national consumption is reducing dramatically. Or is it that the government is so bereft of capability to devise and implement cutting edge policy that the easy option is (with apologies to 1914 ALP Leader Andrew Fisher) resist to the ‘last man and the last shilling’ with a determination to (in the words of Churchill) ‘never, never, never give up’.

What do you think?
As 2353 points out, the world is changing. Why can’t Abbott accept the reality when even his beloved markets are reading the writing on the wall, are reacting to climate change and the challenge of renewables? We are seeing more investment banks divesting some of their fossil fuel assets as they foresee that they will, in future, become stranded assets. And yet Abbott continues to live in a different reality and will fight the changes to the last man. How can one man be so obstinate and ignorant and yet lead our country?

Next week Ken returns to his theme of the bankers versus democracy in his piece ‘Bankers 3 Democracy 0 with Abbott running the sideline’.


Funding health: part 2


This week I focus on the future of commonwealth government health funding and begin with consideration of the role of the Medicare levy in commonwealth government spending.

While health expenditure may increase so does revenue from the Medicare levy so long as wages and the workforce continue to grow. In constant (2012‒13) prices, the revenue from the Medicare levy grew faster than the growth in government health expenditure for six of the eleven years between 2003‒04 and 2013‒14. The levy revenue increased by 57% in that time (from $6.5b to $10.2b in constant prices) while commonwealth government health expenditure increased by 61.5%. In the early half of those years the levy provided around 17‒18% of commonwealth health spending but since 2009‒10 has been around 15‒16% and is currently about 16%. What the year-by-year figures actually suggest is that the Medicare levy covers a greater proportion of health costs when the economy is doing well and falls when the economy is performing poorly, so changes are not just a result of increased health spending. It is a concern currently that unemployment has increased and wages growth has slowed, both of which will impact Medicare levy revenue in the short term.

The fastest growing area of health spending by the commonwealth government is actually the subsidy for private health insurance. The private health insurance rebate cost the government $5.5 billion in 2012‒13 having risen from $1.4 billion in 1999‒2000 and in the Hockey 2014‒15 budget it was predicted to grow faster (by 5.9%) than Medicare costs (3.5%). What does the government get for that? The AIHW figures for 2012‒13, remembering they were for total health spending, show that private health funds contributed about $11.8 billion but the government spent $5.5 billion to achieve that, leaving a nett benefit of $6.3 billion. But private health funds also pay for dental, optical and other services and actually contributed about $8 billion to the major commonwealth costs of hospital and referred medical services (under Medicare, private health funds make no contribution to unreferred services) — so it could be argued that the real nett benefit to the commonwealth government was $2.5 billion. The Grattan Institute has estimated that the extra cost to public hospitals, if the private health insurance rebate was abolished, would be $2.5 billion, leaving the government $3 billion in front, which is $500 million more than the real nett benefit it currently achieves.

Treasury and the Intergenerational Reports (since 2002) have been continually arguing that the rising health spending in the coming decades is due to the ageing of the population. The 2010 Intergenerational Report (IGR) suggested that 40% of the projected increase came from ageing and population growth: the balance was through technology changes and demand for higher standards in health services. The 2015 IGR, however, suggested that non-demographic factors will actually account for 80% of the increase in health spending — ageing alone contributes only 10%, with the other 10% simply from population growth. If that sort of reduction in impact is repeated in the next IGR, ageing may not contribute at all to increases in health funding!

The other issue to consider in relation to meeting rising health costs is that government revenue generally grows, as a result of growth in GDP and wages, and it is usually just the speed of that growth that varies. Since 2003‒04 the only decline in revenue came in the years 2008 to 2010 when we were affected by the GFC: the final budget outcome was $4.8 billion lower in 2008‒09 than the previous year and another $6.2 billion lower the following year. Long term studies suggest that we can expect such short-term economic downturns about once every 8‒10 years.

As I pointed out in ‘Abbott continues to tell porkies’ government revenue has been revised downward on a number of occasions in the past three years. Despite that, the total revenue has still been slightly higher each year: $360.2 billion in 2012‒13, $374.0 billion in 2013‒14 and estimated to be $384.1 billion in 2014‒15 (the last figure is that included in the 2015‒16 budget papers, not the original budget figure). Earlier forecasts had suggested that revenue could be as high as $407 billion in 2013‒14, so there has certainly been a considerable slowing of the growth of government revenue and programs introduced on the basis of those earlier forecasts are now causing fiscal problems.

It is that ‘normal’ growth that allows governments to implement new programs as well as meet rising costs. Problems arise, as at present, when growth slows and those programs that have been introduced earlier, based on the previous forecasts of growth, still require increased spending — that is when expenditure starts to exceed revenue. But it also suggests that it only takes a few years before that revenue rises again at a faster pace to cover expenditure. It is interesting that the 2007 IGR predicted long term ‘real’ GDP growth of 2.5% (below the historical average of about 3.3%) but the 2015 IGR now places that long term GDP growth at 2.8%. Calculating from the size of the current economy, the cumulative difference of that apparently small 0.3% in the two projections is enormous: a difference of about $500 billion in the size of GDP in 40 years. And, of course, such a large difference also makes a significant difference to the government’s revenue — a difference of about $120 billion in 40 years (at the current revenue share of GDP). So very small differences in parameters make significant actual differences in GDP and government revenue and that is important in considering whether we can meet future health costs — remembering that this is based on ‘real’ growth after inflation.

The biggest danger to future commonwealth government revenue, as claimed in the IGR, is that the ageing population will lead to a relatively smaller workforce. Whereas in 1974‒75 the ratio of workers to aged people (the ‘dependency ratio’) was 7.3:1, it is projected to be 2.7:1 by 2054‒55. On the other hand, that was one reason the GST was introduced so that those who are not in the workforce are still contributing to revenue — except all that revenue goes to the states. But the IGR still predicts a 62% participation rate in the workforce and a much larger population with that average 2.8% real increase in GDP — so where is the problem?

What does that mean for health funding? Since 2002‒03 health funding has actually fallen slightly as a proportion of the commonwealth government’s total spending: from 17.4% in 2002‒03, reaching a peak of 18.2% in 2004‒05 to 2006‒07, a low of 15.1% in 2008‒09, and is now 16.1% — if it was still at 17.4% an extra $5 billion would have been available in 2014‒15. So there is a clear argument that it is not rising health costs that are impacting overall commonwealth government spending. On the basis of the proportional fall in health funding, it could actually be argued that funding that would otherwise have gone to health has been diverted to other programs.

As the data in Part 1 indicated, health costs aren’t out of control but the number of services is climbing and an ageing population may contribute to that rise: the most recent IGR, however, as stated above, considers that only 10% of the increase in costs will be a product of the ageing population. There will be other increases in health costs unrelated to ageing: for example, AIHW has projected rising rates of diabetes as a result of obesity. Dealing with obesity, and hence avoiding future costs associated with diabetes, is a matter that relates mainly to primary care.

The cost of GP services (non-referred) is already fully covered by Medicare and it could be said that it is the referred services that are causing the shortfall in the Medicare levy but individuals already contribute 16% of the cost of referred services — and that is the additional out-of-pocket contribution over and above the contribution through the Medicare levy and general taxes.

If ageing is the problem it is made out to be, the problem it gives rise to is some level of increased services and Abbott’s new ‘price-signal’ by stealth (the freezing of the Medicare rebate) will not significantly change that. Most people don’t go to the doctor simply because they can but because they need to and, in that regard, it is probably true that an ageing population may lead to some increase in the use of health goods and services (but, I repeat, even the government’s own report says only 10%). To the extent that people do put off seeing a doctor, it may lead to late identification of conditions, thus allowing them to develop into chronic conditions and so a greater burden on the health system and health funding. Alternately they will attend emergency rooms at public hospitals where they do not need to pay, only increasing the burden on public hospitals. Either way, it will not be beneficial nor cost efficient.

All in all, the Medicare levy works well for what it is intended — an equitable distribution of costs — and it works well when the economy is working well. The private health insurance rebate could be abolished and the government would be better off — keeping it is ideological, in support of private enterprise (privatised medicine). As pointed out previously on TPS, there is considerable scope for raising revenue by addressing tax expenditures, without directly raising GST, income or company taxes, or even the Medicare levy. There are many ways of meeting future health costs.

Basically health funding appears to be an economic issue, not simply a fiscal issue, and rising costs can be covered in a vigorous economy. The economy will continue to grow, even with an ageing population, just not quite as fast as we have been used to. Governments have a major role in encouraging a strong economy, including promoting new industries, promoting full employment (noting that unemployment costs the government twice, by reduced taxation revenue and increased expenditure on unemployment benefits) and ensuring good health so that people can remain active participants in the workforce for so long as they choose. Meeting health costs really requires the government taking more initiatives to promote economic activity, not tightening the purse strings which stifles economic activity.

In my view, increased health spending arising from an ageing population is not as big an issue as the government makes out, particularly when one remembers that we had a problem at the opposite end of the age spectrum in the 1950s and ‘60s — the need for more schools and teachers for the then young ‘baby boomers’ — and we managed to get through that. I think that older people are being used as scapegoats for inaccurate forecasts, ideologically-driven fiscal policy and to justify subtle attempts to push a greater share of health services to private enterprise.

What do you think?
Ken admits that, as an older person, he may have a vested interest in presenting this piece. Whatever the reasons causing increased health costs, should they be met by increasing taxes or should governments better manage the economy and rely on normal revenue growth to cover costs? Are there other ways? Is this government even capable of making the right decisions? Or is it no more than another Liberal battle in its ongoing war to introduce a privatised health system into Australia?

Next Sunday 2353 returns with his look at ‘The challenge of renewables’.


Funding health: part 1


Earlier in the year, there was much talk by the government about the ‘unsustainable’ growth of health funding. In July, the premier of NSW, Mike Baird, joined the party suggesting that the GST should be raised to 15% to help cover rising health costs. But how bad is the situation?

In 2012‒13, the most recent year for which full details are available from the Australian Institute of Health and Welfare (AIHW), total expenditure on health in Australia was $147.4 billion, about 9.7% of GDP — commonwealth government spending on health was about $61 billion. Overall spending had grown from $68.8 billion in 2002‒03 — or $90 billion in 2002‒03 in constant (2012‒13) prices. The average annual real growth of health spending over the decade was 5%.

Australia’s health expenditure as a proportion of GDP is very near the average for the OECD and most countries also saw their health spending rise over that decade (Iceland, Turkey and Israel were the exceptions).

There are a number of players in Australia that contribute to meeting those health costs, not just the commonwealth and state governments — and even in considering the commonwealth government we need to include the Department of Veterans’ Affairs which contributes over $3 billion a year. Private health funds obviously contribute a small amount, as do insurance companies through injury compensation payments. And, of course, so do each of us as individuals, through out-of-pocket expenses and co-payments (at present, the latter is mostly for pharmaceuticals).

The proportion contributed by each group at the start and end of the period was as follows:

Agency 2002‒03 2012‒13
Commonwealth government 43.6% 41.4%
State and territory governments 24.4% 27.0%
Health insurance funds 7.9% 8.0%
Individuals 16.6% 17.8%
Other (largely insurance companies) 7.3% 5.7%

Those figures show that state governments and individuals have seen their contribution increase since 2002‒03, and that was in 2012‒13 before the Abbott government was elected and proposed measures to further increase state government and individual contributions. Despite abandoning the GP co-payment, the government has acted to achieve the same result by freezing Medicare rebates until 2018.

There are many different areas of health expenditure, including dental (three-quarters of which is paid by health funds and individuals), patient transport services and community health (largely met by the states) and aids and appliances (largely met by individuals). They each add a few billion dollars annually to overall health expenditure. The main areas, however, are:

  1. hospitals, public and private: In 2012‒13, about $56 billion was spent on hospital services, 78% in public hospitals and 22% in private hospitals. The commonwealth government provided $16.2 billion and the states $23.7 billion for public hospitals and individuals contributed $1.3 billion. For private hospitals the health funds provided $5.7 billion but the commonwealth government also paid $3.6 billion and individuals $1.5 billion. Insurance companies also spent $1.8 billion in public hospitals and $760 million in private hospitals.

  2. primary care (unreferred) services and referred medical services: ‘Unreferred medical services’, about 90% of which are visits to GPs, cost the commonwealth government $8.3 billion in 2012‒13 out of total expenditure of $10.2 billion (with insurance companies contributing $1.2 billion). The commonwealth government paid $11.4 billion for ‘referred’ medical services, health funds $1.3 billion and individuals $2.4 billion. (When individuals contribute almost twice as much as health funds for referred services, there is a basis to question the real value of health insurance.)

  3. pharmaceuticals: For subsidised pharmaceuticals there are only two groups who pay: the commonwealth government ($8.4 billion in 2012‒13) and individuals ($1.5 billion). We also spent, as individuals, another $8.7 billion on other medications. Those are the AIHW figures for 2012‒13. The payments made by the PBS are lower because the overall government figure includes immunisation programs and some direct payments to pharmaceutical wholesalers. In 2012‒13 PBS reported 197 million prescriptions of subsidised medicines for which it paid just over $7 billion and $1.5 billion was paid by patients (the same as the AIHW figure). For 2013‒14, there were 209 million prescriptions at a cost to the PBS of $7.3 billion and patients again paid a little over $1.5 billion. It is interesting that the average cost (including the patient contribution) actually fell from $43.49 in 2012‒13 to $42.19 in 2013‒14.
There have been slight changes, between 2002‒03 and 2012‒13, in the proportion of overall health expenditure that these main areas represent:

Area of expenditure 2002‒03 2012‒13
Public hospitals 30.4% 31.6%
Private hospitals 8.5% 8.7%
Unreferred medical services 7.9% 7.3%
Referred medical services 10.6% 10.9%
Pharmaceuticals 9.4% 7.2%

While a greater proportion of health funding is being spent in hospitals and on referred medical services, we are spending a lesser proportion on unreferred medical services and pharmaceuticals. One of the bigger areas of growth is our own expenditure on non-subsidised and non-prescription medications which rose from 5.1% to 6.7% of health spending in those years.

All of the expenditure I have referred to above is ‘recurrent’ costs, that is the price of services and consumables. There is also capital expenditure, mainly the building and refurbishing of hospitals, including the purchase of major equipment, but this tends to be only a few billion each year: $8.6 billion in 2012‒13 of which the commonwealth government provided only $72 million. Almost all of the capital expenditure comes from state governments ($5.1 billion) and private providers ($3.4 billion).

The AIHW report states that for seven out of the ten years up to 2012‒13 health prices actually increased by less than the rate of inflation and that much of the continuing rise in expenditure was a result of an increase in the volume of goods and services. The year 2012‒13 was a bit of a hiccup with the volume of services declining but the price increasing. Based on Medicare data, the volume of services did resume rising in 2013‒14.

The commonwealth government’s main areas of funding are ‘medical services and benefits’ (largely Medicare payments but the private health insurance rebate is also included under that heading), pharmaceutical benefits, payments to support state-run public hospitals, and for ‘other health services’ (which incorporates mental health, hearing services, blood and blood products, and research).

In the decade to 2012‒13 the commonwealth government’s health expenditure usually required around 17% of government revenue. [That figure and many of the following figures up to 2013‒14 (including in Part 2) are my own calculations using ‘final outcome’ figures for each budget.] It fell as low as 14.6% in 2007‒08 and reached a peak of 18.8% in 2011‒12: in 2014‒15 it was forecast to be 17.6% but was projected to fall back to 17.1% by 2016‒17. The increase in recent years was mainly a result of the slow rate of overall revenue growth for government.

In the last Wayne Swan budget the commonwealth government was projected to spend $280 billion on health between 2013‒14 and 2016‒17. The 2014‒15 Hockey budget reduced that to $271 billion, the largest reductions being for pharmaceuticals (‒$4.5 billion) and payments to the states for public hospitals (‒$2 billion). Treasury indicated that most of the reduction in pharmaceuticals was related to more accurate information about the cost of medicines, as the government now requires pharmaceutical manufacturers to provide the actual price at which they sell to wholesalers and pharmacies.

Under the Abbott government there will be further reductions in payments to the states for public hospitals because it will abandon a number of agreements, that were made under the Rudd and Gillard governments. Under the National Health Reform Agreement 2011 the Commonwealth was applying:
… an activity based funding approach to determine an ‘efficient price’ for hospital services. The Commonwealth pledged to meet 45 per cent of the growth in the efficient price initially, rising to 50 per cent after 2017. The states and territories will meet the balance.
When that agreement now ceases in July 2017, Commonwealth funding will revert to the old model linking CPI and population growth.

Abbott and Hockey also abrogated the National Partnership Agreement on Improving Public Hospital Services as from July this year. That agreement was meant to help improve access to elective surgery, emergency care and subacute care. It will save the commonwealth government $201 million over the forward estimates but the states may have to reconsider what they can fund.

A lot is said about the Medicare levy and whether there is a need to increase it. In 2012‒13 it raised $10.2 billion, $10.5 billion in 2013-14 and was forecast to increase to $14.1 billion in 2014‒15 but that includes the additional 0.5% for the NDIS. Although the Medicare levy is simply paid into consolidated revenue, we can estimate that about $10.6 billion should be available for health, as opposed to disability funding.

Medicare statistics show there were 356 million services provided in 2013‒14, an increase of about 12.5 million on 2012‒13 (about 38% of those services were non-referred, mainly GPs). Benefits paid increased from $18.6 billion to $19.1 billion. So the Medicare levy covered about 55% of benefits. It more than covers the cost of non-referred visits, which amounted to $5.9 billion in 2012‒13 and $6.4 billion in 2013‒14. It is the referred services, which include specialists, obstetrics, pathology and diagnostic imaging (amongst others) which cost the most: referred services increased by almost 6.7 million in 2013‒14 (about 54% of the total increase in services), and cost $146 million more but that was after a reduction of $594 million in payments for ‘allied health’, so the real increase was more in the order of $740 million; non-referred services increased by 5.8 million and the payments increased by $411 million. Doubling the Medicare levy would certainly cover all benefit payments: if the levy had been 3% in 2013‒14 it would have raised about $21 billion, almost $2 billion more than Medicare payments. But is that necessary? The original aim of the Medicare levy wasn’t to fully cover costs but to make the cost-sharing equitable. It is also notable that the average cost per service for Medicare fell slightly, from $54.03 in 2012‒13 to $53.69 in 2013‒14 (or a saving of $116 million if the number of services did not increase).

Health costs a lot but the above figures indicate that health prices aren’t rising all that fast, and have actually fallen recently. We could have cheaper health but at what cost to our health! Our health services are highly regulated for obvious reasons: we expect that the people who examine us and operate on us are properly qualified; we expect our medications to be safe and efficacious; we expect our health services to be available to us in a timely manner. That all adds to the final cost of health services.

The issue is who pays? The commonwealth government is trying to reduce its contribution but that doesn’t necessarily reduce overall health expenditure — it just moves costs elsewhere, to state governments and individuals. Under the Abbott government, it is easy to believe that it may actually be a way of achieving greater privatisation of medicine by putting pressure on public hospitals, shifting costs to individuals, and so encouraging greater use of private health funds and private hospitals.

Next week, Part 2 will look at the commonwealth government’s future health funding issues.

What do you think?
The Abbott government is insisting that it cannot continue to meet the rising cost of health services but, as Ken points out, someone still has to pay. The data presented by Ken suggest that there has already been a shift in health costs to state governments and individuals since 2002‒03 and now the Abbott government seems intent on accelerating that transfer.

Come back next week for Part 2 of ‘Funding health’.


Doin’ the GST-a-rosy rag


Got a PM, PM we can’t trust
Said a higher GST is a must
Doin’ the GST-a-rosy-rag
Told the voters you must pay
If you want to see a surgeon on another day
He was doin’ the GST-a-rosy-rag

Been around, and new is old
Catch your cold and blow your gold and spend
Doin’ the GST-a-rosy-rag
[Apologies to Arlo Guthrie]

We’ve been around and around and back again, doin’ the GST-a-rosy-rag. I am usually not one to say ‘I told you so’ but back in April, in my piece ‘Beware there is a plan’, I suggested that Abbott and Hockey were looking to reduce the commonwealth government’s involvement in health and education and leave those matters to the states. How could they do that? — by increasing the GST, all the revenue of which goes to the states. At the time they ruled out an increase in the GST because it did not have bipartisan support. I did predict, however, that they had managed to put it on the political agenda and that it would raise its head again — I did not expect that it would be so soon.

So in July, what happened? Leading into the ‘leaders’ retreat’ before the formal COAG meeting, NSW Premier Mike Baird raised the prospect of increasing the GST to 15%. His main argument was that it was necessary to meet rising health costs — and, of course, those costs for the states rose dramatically after Abbott and Hockey cut $80 billion from future funding to the states for health and education.

When asked about it at the WestConnex sod turning in Sydney on 20 July, Abbott supported —
… Mike Baird’s willingness to discuss revenue issues because obviously, if there is a problem with revenue, it can’t just be the Commonwealth’s responsibility to solve.
Right? Wrong! Why isn’t it the commonwealth’s responsibility when it is the commonwealth government that collects all income tax and company tax and the states have to come as mendicants to get back some of the tax their citizens have paid? Has Abbott forgotten that income tax was originally levied by the states and they gave it up in a time of war expecting a fair deal afterwards?

The full transcript of Abbott’s words is here but there are some interesting things to note:
  • not once does he admit that he has anything to do with it nor that he has ever suggested it;
  • three times he manages to insert his new mantra of ‘lower, simpler, fairer’ taxes;
  • he constantly refers to it only as a ‘discussion’.
When specifically asked if this was part of the plan, ‘Having turned off the tap of federal health and education funding and forcing the states to come up with their own solutions’, he simply avoided the question and said:
I’m just really pleased that Premier Mike Baird, along with Premier Jay Wetherill, are prepared to have a constructive, responsible discussion. It is a sign that this generation of leaders at both the State and national level are prepared to do what’s necessary to make our country strong …
Still nothing to do with him! It is all about having a ‘discussion’ and luckily for him someone else raised it. (Was there any prodding behind the scenes? We will probably never know but is it merely coincidence that Abbott’s federal electorate takes in Baird’s state electorate?)
I want to see the overall tax burden go down. I want to see lower, simpler, fairer taxes. But at the same time, I do want to see a more rational arrangement of finances and responsibilities between the Commonwealth and the States.
With that last statement, Abbott is certainly pursuing his line that many ‘responsibilities’ should be handed back to the states and the real issue then is how the states will fund them. ‘A more rational arrangement’ could include giving back the right to tax individual incomes and the commonwealth government could totally withdraw from funding schools and hospitals and many other services — but that would be a step too far! The commonwealth government is now reliant on income tax for about 48% of its total revenue or 56% of its revenue if we remove the GST from the calculation (based on the 2015-16 estimates).

Mike Baird claimed that it is primarily to do with rising health spending. He suggested that state and commonwealth deficits in 15 years (in 2030) will total $45 billion of which $35 billion will be health costs. Even at an annual rate of 2% growth, government revenue in 15 years will be 32% higher than currently. Yes, all government costs will also increase in that time but surely there must be room within that increase to absorb some, if not all, of the rising health costs? (Also watch for my pieces on ‘Funding health’ in the next two weeks where I suggest that a key issue is managing economic and wages growth to cover costs, not simply increasing taxes.)

A problem with raising the GST is that it hits everyone the same in dollar terms and eats into proportionally more of the income of those on lower incomes and government benefits — a regressive tax. That is why Baird suggested that families on incomes up to $100,000 should be compensated. Abbott is also talking about lower income and company tax. So are we only paying more GST but getting it back in compensation and lower income tax with no nett benefit to the government? —and the bulk of that compensation would be borne by the commonwealth government while the states get all the revenue, so that doesn’t appear to make sense in solving the commonwealth government’s fiscal problems. So if there is no, or little, nett gain, who benefits?

The states will benefit: they will get the dollars as all the GST revenue is passed on to them. Given that the total deficit in 15 years, as Mike Baird pointed out, is $45 billion across all governments, it seems they do not really need a large increase. Based on the 2015-16 estimate of GST revenue, even the 2% growth in annual revenue I suggested would provide $20 billion extra in 2030. If the GST is increased to 15% and that same 2% real growth is applied, it would actually double the 2015-16 estimate to almost $120 billion in 2030: the additional amount ($60 billion) would give the state governments $25 billion more than Baird says they need for the health part of the deficit and $15 billion more than the total deficit: but Baird included the commonwealth government in his $45 billion estimate of deficits, so does that mean the states pick up extra funding that otherwise could have met commonwealth costs? — perhaps it is a neat trick he is attempting! (Personally I think Baird is smart enough to know that.)

Look also at the benefit for the Abbott government. It is able to make significant reductions in the funding (other than the GST) it provides to the states for health and education. With expenditure thus reduced, it can offer some of the tax cuts it talks about. It leaves the commonwealth government able to argue that it didn’t increase taxes — that was due to the states — and it has kept its promise and lowered taxes.

But does that add up? I do not see how a cut in income tax and company tax is valid as a cut if GST has also been increased. That is just shifting the tax mix (and shifting it between levels of government), not reforming taxes. Does it really lead to a lower overall tax burden as Abbott promised? It may benefit the Abbott government (politically) but not necessarily anyone else. Will an increase of 5% in the GST be enough for the states? Will they abolish stamp duty and payroll tax as was promised when the GST was first introduced? That didn’t happen then and I don’t think the proposed increase will make it happen now: so, effectively when state and commonwealth taxes are put together people are likely to be no better off, possibly even worse off. And if the commonwealth government has reduced taxes to compensate for the increased GST, of which it gets nothing, what nett benefit to the budget bottom line has it achieved? It can only benefit if the tax cuts do not match its reduced expenditure on health and education — but it won’t explain that because people would realise they will lose out in the deal.

Premiers Andrews (Victoria) and Palaszczuk (Queensland) suggested, instead, an increase to the Medicare levy. It has the advantage that it is a progressive tax. In my health pieces I suggest that isn’t necessarily the way to go, but could it work?

All the money raised by the Medicare levy goes into the consolidated revenue of the commonwealth government. The commonwealth government pays out significant amounts in Medicare benefits and the current levy covers about 55% of those costs. The levy does not directly contribute to hospital funding. An increase, however, would mean that the commonwealth does not have to use as much of its other revenue to meet Medicare benefits, theoretically leaving that amount free to be added to hospital funding to the states. The main drawback with that approach is that it leaves the funding entirely in the hands of the commonwealth government which may be okay when Labor is in power but, as we are seeing, not when the Liberals are. Given what Abbott and Hockey have already done to health funding for the states, and their pursuit of less commonwealth involvement in health and education, how could they be trusted to hand the benefit of a higher Medicare levy to the states? While an increase in the levy may provide some benefit, and as a progressive tax is preferable to an increase in the GST, I certainly wouldn’t have any faith in this government to pass on the benefit.

I note, however, that the leaders’ meeting actually raised the idea of extending Medicare into public hospitals which would guarantee the funding rather than relying on commonwealth government beneficence. I doubt the commonwealth would be keen on that approach as it would have little control over the amounts paid as they would be dependent simply on the number of services performed and, with the number of medical services increasing each year, the cost could end up being higher.

As many commentators have pointed out Abbott and Hockey are consistently ignoring, even ruling out, other ways of raising revenue. Changes to negative gearing and superannuation have been ruled out even though they disproportionately benefit those on higher incomes. To use their own words, that approach fails the ‘pub test’ because it will be seen as unfair — but that no longer seems to concern them.

Tax concessions on superannuation will cost the government $170 billion over the forward estimates (to 2018-19). While the current concessions provide a benefit in encouraging retirement savings, there is certainly scope to trim that amount as Labor is proposing but which Abbott is ignoring. Also over the forward estimates, the government will spend $27 billion on the private health insurance rebate and forego just over $7 billion in tax by not taxing that benefit — a notional total of $34 billion which could otherwise go to support health funding (even allowing that there may be an increase in demand at public hospitals if the private insurance rebate is abolished). I mention these only as examples of places the government might look for revenue without raising the GST, if only it wanted to, and if only it was willing to pass on at least some of the increased revenue to the states.

There is little doubt that the debate about the GST has arisen from the Abbott government abrogating agreements the Rudd and Gillard governments had reached with the states regarding health and education funding. The obvious intention was to put pressure on the states to request an increase in the GST. The states have few other ways of getting money out of the commonwealth government, especially when it has made clear that it intends retreating from its involvement in health and education. The commonwealth control of the purse strings is, in that regard, a problem but via the GST the states, at least, have more control of the money. The Abbott government wants to redefine the federation and reduce its involvement in areas over which the states have direct responsibility but it won’t hand back the funding to allow them to take responsibility and it won’t hand back the income tax power, leaving the states with few options. It is clearly a political and ideological push by the Abbott government dressed up in fine phrases regarding federation and fiscal reform but it has little to do with either.

The GST is always going to be a political football and so here we go again ‘doin’ the GST-a-rosy-rag’.

What do you think?
In the piece above, Ken discusses the ‘opportunity’ given to the Prime Minister to ‘discuss’ taxation. Is increasing the GST a better idea than increasing the Medicare Levy or are there better options? We welcome your views below the line. Who knows, if a political staffer reads your suggestion, it may just become policy!

Next week Ken follows this up by presenting Part 1 of ‘Funding health’ which looks at the data and questions the real extent of the problem.


Winter winds, wind farms and hot air


About this time of the year the all-year-round residents of Canberra enjoy a reprieve from the hot air produced on Capital Hill. Pity is that this usually combines with winds that come from the Antarctic via the Snowy Mountains to make Canberra shiver through another winter of sub-zero mornings! The politicians usually leave town, return to their offices and try to remind their electors why they should be returned to parliament next time with a thumping majority. It seems to be a bit different this year — government front benchers are hardly to be found.

They could be busy searching for a ‘wind farm commissioner’ who has the similar beliefs to the LNP. You may have seen our esteemed treasurer complaining about the ‘visual pollution’ from wind farm towers last September. While Hockey is entitled to his opinion, did anyone ask him why open cut coal mines, telecommunications towers, or power stations are less visually obtrusive? Abbott is clearly of the same opinion but he claims they are noisy as well!

At least wind tower poles are designed to be aerodynamic — which also brings symmetry and aesthetics to the design. The approved-this-month Shenhua open cut coal mine near Gunnedah will have approval to flatten 771 hectares of endangered local ecology, most of it box gum woodland, and no doubt carve a scar in the ground some kilometres long — clearly a better look than a wind farm in the view of Abbott, Hockey and Environment Minister Hunt.

During December 2014, the government body (in Hockey’s department) that decides which groups are permitted to claim ‘charity’ status and receive tax deductible donations revoked the Waubra Foundation’s ability to process tax deductible donations. While the reasons are not made public, the Waubra Foundation exists to claim that wind farms have health implications. The results of a study of 4000 investigations into the noise from wind farms reported last February that there was no conclusive evidence to suggest that wind farms create any health concerns — despite evidence from a Dr (her speciality is not specified) Judy Ryan:
The slow corruption of science education so that people could be fooled by the oxymoron ‘scientific consensus’ is part of politically driven global agenda orchestrated by the United Nations. We should crawl out from under its thumb and treasure our nationhood and democracy.
And this sterling contribution from Alan Scott:
The time has come for Australian politicians from all warring camps to speak the truth to their electors, rather than mouthing the party lines handed down to them by their United Nations masters.
(The links to the actual submissions are contained in the SBS News article above.)

Perhaps instead of giving conspiracy theorists the time of day, Australia’s Wind Farm Commissioner, when appointed, should start an enquiry into how to harvest the hot air emanating from Capital Hill using a number of wind farm turbines and storing it in available battery technology. S/he could determine if Parliament House could be removed from the National Electricity Grid. Even better, if all the staff and politicians caught buses to work, the batteries could be installed in the car parks to retain the aesthetics of Capital Hill (as well as allowing the ACT government to reduce the subsidy to its bus operations).

Clearly the Wind Farm Commissioner is required urgently and cannot be delayed due to the winter hibernation in Canberra as this clip explains.

The cultural war against the ABC is clearly top of mind for our government. The Australian Broadcasting Corporation hasn’t comprehended it is supposed to be the government’s media mouthpiece in the same way that Pravda was to the old USSR.

It seems that the ABC is a thorn in the side of most sides of the political landscape at times — as Mark Scott (ABC Managing Director) has correctly pointed out in response to the ‘crime’ of allowing a person with a less than impeccable past to ask a live question of a government minister on the Q&A program late in June.

After the ABC followed their normal process and ran a repeat of the show in question during daylight hours a couple of days later on one of their digital channels, Abbott was very quick out of the blocks to demand that heads roll for the gross insult (do you suspect he wanted to use the word ‘insubordination’?). As Scott noted in the same speech to the Centre for Corporate Public Affairs:
"But even for the ABC, things seemed to have been taken to a new level when on Wednesday we scored four covers in one day in the News Limited tabloids, complete with photoshopped ABC flags being waved by jihadi protestors," he said.
Scott went on to question why ‘the question’ was such an outrage when the same person had featured in articles in The Australian and The Courier Mail (both News Corp products) in the past few years with no apparent controversy.

Nevertheless, the Abbott government wants (the presumably lefty pinko) metaphoric head of the ABC on a platter and announced there will be an inquiry. The ABC Board gets in first and appoints Ray Martin (former reporter, tabloid current affairs and chat show host) and Shawn Brown (former SBS managing director) to investigate if there is any bias in the Q&A program. Abbott bans ministers from appearing ‘for a while’ — probably until the inquiry is completed or the Q&A show is transferred into a different division of the ABC that has a different view of balance and equity.

Agriculture Minister Barnaby Joyce was the first ‘victim’ of the boycott on 6 July and Malcolm Turnbull also complied on 13 July — John Hewson was invited to take his place as he is not susceptible to Abbott decrees. The ALP has a history of boycotting media as well: in 2012 it boycotted the 2GB radio program hosted by Alan Jones after he made a particularly cruel and heartless attack on the then Prime Minister Julia Gillard. At the time, then Opposition Leader Abbott said the comments were offensive,
But when asked whether he would boycott Jones' show, he said he would not. It was all about the numbers.
"I am certainly not going to ignore an audience of half a million people in Sydney," Mr Abbott said.
Joe Hockey, then the shadow treasurer, agreed.
Ray Martin, in a guest hosting spot on Channel 7’s Sunrise program early in July called the Q&A ban ‘silly’ and almost immediately faced calls from two coalition senators to stand down from the inquiry:
Senator McGrath said: "I think he should step aside. His comments make him appear to be an apologist for Q&A rather than someone who will conduct an independent review."

Senator Macdonald said: "Ray Martin has respect in the community but these comments make you question whether he is the right person to conduct an independent review.”
News Corp joined in the baying for blood by publishing a piece from their well known balanced, considered and independent writer/broadcaster Andrew Bolt, as well as the front pages referred to by Mark Scott above.

Our frontbenchers would probably not be in Europe on a ‘study tour’. You also may have noticed in the news there are economic problems in Greece that may affect the European Community. The Greek public recently voted against further austerity so that the country could start to repay debt to a consortium of banks. The ‘anti-austerity’ Greek government then went into negotiations with the rest of the EU and agreed to harsher restrictions than the public rejected! Regardless of the final outcome of the ongoing story, elected Australian frontbenchers wouldn’t want to be stuck anywhere near the south of Europe while there is considerable instability. Apart from the lack of things to study in a country that apparently can’t pay its debts (remember the ‘debt and deficit’ disaster is ‘so last year’ in the view of Hockey and Abbott), who knows, they may not be able to get back to Australia in time for the resumption of hostilities on Capital Hill next week.

There is continual brouhaha regarding marriage equality? Senator Wong bluntly reminded Senator Abetz recently that the majority of Australians don’t think you need either a marriage certificate or a traditional mother and father role to successfully raise children.
The Labor senator said the debate in the Australian community about gay marriage was currently “much more charitable, much more respectful, much more tolerant and much kinder in many ways on this issue than the members of our parliament”.
Seeing the failure of that particular argument staring them in the face, the government retired Senator Abetz from the play and substituted Barnaby Joyce. Joyce’s argument held even less credibility:
Some parts of south-east Asia could view Australia embracing same-sex marriage as “decadence”.
While news may take a while to reach the north west of NSW, which Joyce now calls home, New Zealand, Canada, and the US, amongst other countries, have marriage equality — in some cases for periods of up to a decade — and South East Asian countries still trade and deal with these ‘decadent’ countries on a daily basis. Regardless, it does take time and resources for government frontbenchers to make such informed comment to the debate that the majority of Australians seem to regard with a ‘meh’.

Are the frontbenchers sitting on the sidelines waiting to make a valuable contribution towards justification of the new Border Force Act? The Act apparently contains ‘secrecy’ laws around the possibly legal offshore detention policy for asylum seekers — a concept supported to an extent by both sides of politics. Apparently if anyone in Australia reports (one assumes unfavourably) on the conditions or treatment of asylum seekers held by the Australian government in Nauru or Papua New Guinea, they can be imprisoned. The government, through the newly named Australian Border Force Agency, disputes this. George Newhouse, writing in The Guardian (based in the UK), however, answers the government’s claims here.

Bill Shorten (Opposition Leader) faced the Royal Commission into Trade Union Governance and Corruption during July. While Shorten didn’t come out unscathed — there is the matter of the $75,000 donation to his election campaign eight years ago that wasn’t declared until early in July 2015 — Katherine Murphy writing for The Guardian reported:
This is how politics works, Shorten told the commission with a resolute tone and nothing approximating a flinch or a flicker of self-doubt. He’s absolutely right. This is how politics works. This conduct, and other conduct like it, is widespread and endemic. If you lack the self-belief to hustle, if you lack the network to fundraise, and if you lack the stomach for inhabiting a universe crafted in a material called grey area and powered on compromise, you really aren’t party or government material.
You could suggest that the strategy to discredit Shorten worked ... until someone looked at Speaker Bronwyn Bishop’s travelling allowance claims.

Bishop the elder should have known better than to charter a chopper at taxpayer expense for an 80km flight above the freeway from Melbourne to Geelong to attend a party fundraiser. The helicopter memes that have appeared everywhere from Facebook to News Corp papers in the last week or so are clever but starting to get a bit obvious.

Now the discussion is turning to who else has their ‘snouts in the trough’. A prime candidate seems to be Treasurer ‘it doesn’t pass the sniff test’ Hockey who is accused of paying rent on a Canberra house where the landlord is his wife and making a number of trips to Cairns while shadow treasurer with time allowed to inspect his (now on the market) property near Malanda on the Atherton Tableland, west of Cairns. Here’s a hint to Hockey: when Andrew Bolt is ‘oh dearing’ a conservative MP such as yourself, you have a problem.

The Premiers and Chief Ministers joined Abbott for a COAG retreat to reinforce our commitment to act against the threats to our community from violent extremists, family violence and the drug ice. New South Wales’ Premier Baird (who doesn’t have to face an election for nearly four years) opened a discussion on increasing the GST rate to 15% — strangely enough you can probably guess the headlines after the press conference which was also notable for the display of nine flags to signify greater importance than other announcements with less flags in the background!

The ALP held its National Conference in Melbourne last weekend. Shorten announced before the conference that the ALP would aim for a mandated 50% renewable energy use by 2030 as well as supporting an asylum seeker boat turn back policy as if they were done deals. If the outcomes are known before the conference starts, why the display of discussion and debate unless the party wants to further the impression that they do not agree on everything. Their media friends also get the chance to use headlines such as ‘Bill Shorten wins freedom to use boat turnbacks, but leadership split on issue’ without having to chase ALP leaders all over Australia for comment.

Agriculture Minister Barnaby Joyce did come out of hiding to disagree with the approval of the Shenhua mine (which is inconveniently in his electorate). Abbott claimed that Joyce was speaking as the local member — Joyce disagreed. Maybe Joyce doesn’t really see the difference between the aesthetics of wind farm towers so hated by Abbott or Hockey and open cut mining scars in the ground.

If you’ve got this far, you may wonder why anyone would be concerned what our elected officials do while there are long recesses in Canberra. There is a really simple answer. Towards the end of June, I sent an email to a ‘frontbench’ senator in my state as well as my local ALP MP. At the time of writing this I don’t have a reply from the senator, which I believe I deserve, as effectively I am one of the two million or thereabouts electors in Queensland who employ this senator. The MP has rung me to discuss the email I sent.

Frontbench senators could not be rude enough to ignore an elector’s genuine question, could they? Is the senator so caught up in waiting for instruction from LNP HQ on when he can leave the imposed seclusion to fire the next salvo in the political war, he hasn’t had the time to develop a factual and honest answer to a simple question regarding funding for an enquiry into the ABC? Although he could also just be dusting his bookshelves.

What do you think?
As 2353 suggests there are many issues to talk about but few heads appearing above the parapets, and yet they are so busy they don’t have time to answer his email. Well, next week they will be back in Canberra and will have to show their faces and be accountable.

Next week Ken takes a look at the latest craze, ‘Doin’ the GST-a-rosy-rag’ in which politicians seem to take turns to place changes to the GST back on the agenda.


How did we get a multi-party Westminster system? Part 2

[The opening of Australia’s first parliament by Tom Roberts]

Last week I gave a brief outline of how the Westminster parliamentary system evolved in England. Then came Australia which largely adopted the British parliamentary system and recognised the British monarch as head of state.

I won’t bother with the colonial era, although it doubtless had some influence, but will focus on Australia’s federation in 1901 and the foundation of our system, The Constitution, as passed by the British parliament and assented to by Queen Victoria. It drew on both the British and American systems: the Senate in particular is based on the US Senate. It seemed to be a given, following the British model, that we should have two houses of parliament but, without ‘lords’ to make an upper house, the American model was adopted to create a ‘states’ house. In reality, it was not essential to have an upper house — New Zealand is governed without one. The difference was that we were federating six separate colonies whereas New Zealand was a single colony. (Our constitution allows for New Zealand to become a state of Australia.) The smaller states supported the American concept of an upper house in which they could not be outvoted by the more populous states of NSW and Victoria. That is also reflected in the provisions for the passing of referenda to alter the constitution: that they must be supported not only by an overall majority of votes, but by a majority of votes in a majority of states — which meant the constitution could not, and cannot, be changed just by the sheer weight of numbers in NSW and Victoria.

Despite the fact that the Westminster system fuses the legislature and the executive, by selecting the ministers from the legislature, our constitution does set out the three arms of government: the parliament (legislature), the executive and the judiciary. It is important that they appear in that order: you may think that the executive should come first, being at the top of the tree, but that obviously wasn’t they way the framers of our constitution saw it — parliament is supreme, not the executive. On the other hand, the part referring to the Senate does precede that of the House of Representatives, reflecting the traditional style that the upper house is more important. It may no longer be so in practice but it does retain that final right of turning a Bill into an Act before it is presented for royal assent. And the monarch, or the Governor-General, still appears in the Senate, not the House of Representatives, when he/she attends parliament (just as the Queen attends the Lords, not the Commons, in the UK).

I won’t dwell on the chapter regarding the judiciary as that basically establishes the High Court to adjudicate on the constitution (and a few other matters), and the capacity to establish other federal courts. Like the parliament, many of the practices we attach to the judicial system are also a result of hundreds of years of evolution. Thus, although it is not spelled out in the constitution, we expect that only a court can impose punishment because only a court can rule whether or not a law has actually been breached. The constitution, however, does specify trial by jury when a commonwealth law is broken — and the case can be tried in a state court in the state in which the offence occurred.

Legally, the parliament comprises the monarch (or the Governor-General as the monarch’s appointed representative), the House of Representatives and the Senate and it is given the legislative power of the commonwealth.

The Governor-General has the power to:
… appoint such times for holding the sessions of the Parliament as he thinks fit, and may, also from time to time, by Proclamation or otherwise, prorogue the Parliament, and may in like manner dissolve the House of Representatives.
It provides that parliament must meet at least once per year: there cannot be a twelve month gap between parliamentary sessions (the 1689 requirement for ‘frequent’ meetings of parliament). Many of the provisions are the details of numbers (but also allowing for later changes by the parliament), election of the Speaker, the conduct of elections and so on but it also spells out the functions for which the commonwealth parliament is responsible and these provide the basis on which the High Court decides whether or not commonwealth legislation is valid.

In our modern economy the commonwealth’s powers have actually increased as a number of its powers are only operative when an issue goes beyond a single state’s borders: for example, banking, insurance, arbitration of industrial disputes, commerce. Now it is more often normal for those matters to operate beyond the bounds of any single state. The commonwealth can also take on or share additional powers with the agreement of the states and that has happened in regard to, for example, income tax and universities.

Our constitution sets in law that proposed laws for appropriations or taxes cannot originate in the Senate — matching Henry IV’s grant of such power to the Commons in 1407. We do not have a Standing Order 66 limiting money matters to motions of a minister (at least not that I could find) but we do have Section 56 of the constitution that states that votes on appropriation Bills can only be taken after the purpose of the appropriation has been recommended in a message from the Governor-General.

Importantly the constitution establishes the right of the people to elect the members of parliament: the phrase ‘directly chosen by the people’ is used in regard to both the Senate and House of Representatives. That gave rise to the High Court’s decision that there is an implied right of freedom of speech, at least regarding political communication, because it follows that people should make an informed vote and therefore require free expression of political ideas to inform them.

Given the people’s right to elect the members of parliament, the constitution sets out that Senators will be elected by each state voting as one electorate ‘until the Parliament otherwise provides’. So although the parliament has the power to change how the Senate is elected (perhaps by creating ‘divisions’ within a state), we have kept that system of a single electorate and used proportional representation since 1948. The States do retain many powers relating to the Senate including the right to issue the writs for Senate elections and to select replacements in the event of vacancies.

While the constitution nominated the number of members for each state in the House of Representatives for the first election, it provided that in future the number of members in each state would be determined by:

  • dividing the total population of the six states of the commonwealth by twice the number of Senators to obtain a ‘quota’ (the territories are not included in the population count, nor are their Senators included, as they did not exist at the time) and note that this is the ‘total population’ not just the number of voters
  • then dividing the population of each state by the ‘quota’ and rounding to the nearest whole number — provided that none of the original states can have fewer than five members.
That is still the way the Australian Electoral Commission calculates the number of seats to which each state is entitled and is now also applied to the NT and ACT although they are not counted in determining the ‘quota’. The proviso regarding the original states allows Tasmania to retain five seats even though by the ‘quota’ method it is currently entitled to three.

It was allowed that the members of the House of Representatives could also be elected in that first election by the state voting as one electorate if a state had not yet created ‘divisions’: the commonwealth parliament, however, had the power to determine how this would be done in the future. We basically adopted a modern system of ‘boroughs’, or ‘divisions’, or what we commonly call ‘electorates’ (the Australian Electoral Commission still calls them ‘divisions’). Although only the number of seats is specified by the constitution, the Electoral Act requires that within each State each electorate should contain approximately the same number of voters.

The most interesting part of the constitution concerns the executive: it is clearly a constitutional monarchy and legally sets that out, relying on the the conventions inherited from England to underpin it.
The Executive power of the Commonwealth is vested in the Queen and is exercisable by the Governor-General as the Queen’s representative, and extends to the execution and maintenance of this Constitution, and the laws of the Commonwealth.
There it is — full stop! The monarch, through his or her representative, is the executive.

Now the finer detail of how that works.
There shall be a Federal Executive Council to advise the Governor-General in the government of the Commonwealth and the members of the Council shall be chosen and summoned by the Governor-General and sworn as Executive Councillors, and shall hold office during his pleasure.
That follows the ancient structure of a monarch and a group of advisers and is like an Australian version of the Privy Council: legally, there appears nothing to stop the Governor-General acting on the advice of such a council irrespective of the parliament. It is mainly the conventions (or England’s unwritten constitutional rules) that give it a modern appearance.

Then come ministers:
The Governor-General may appoint officers to administer such departments of State of the Commonwealth as the Governor-General in Council may establish.
(Although the word ‘officers’ is used, it appears under the heading ‘Ministers’ and, just so there is no confusion, I point out that there is a separate section on the appointment of civil servants to those departments of State.)

And there is a provision that ministers must be members of the parliament which, unlike the UK, actually makes that former convention law.

There is no mention of a cabinet or a prime minister, nor is it law that the Federal Executive Council must be made up of ministers, let alone members of parliament. That is where Westminster conventions come in and the history that gave rise to them. In Australia the Federal Executive Council actually comprises all ministers past and present — that allows former ministers to retain the title ‘The Honourable’ as that title relates not to their role as a minister but as a member of the Federal Executive Council. It appears that no one has ever been removed from the Federal Executive Council, although the Governor-General has that power. As in England since the 1700s, however, it is the current cabinet, as a ‘committee’ of the Federal Executive Council, that exercises the role as advisers to the Governor-General.

What helps make the system work is the provision that:
The provisions of this Constitution referring to the Governor-General in Council shall be construed as referring to the Governor-General acting with the advice of the Federal Executive Council. [emphasis added]
That effectively prevents the Governor-General acting alone except for certain residual powers left over from the days of the governors of the colonies. Apparently there was discussion during the framing of the constitution about codifying those ‘reserve’ powers but it was decided that it was too difficult and best left flexible (and the British government had also advised against it which meant the constitution may not have passed the British parliament if we had persisted).

When the constitution and the Westminster conventions are put together, the Governor-General is, in most matters, effectively tied to following the advice of ‘the government of the day’ which brings us back to ‘cabinet government’ and places effective executive power with the cabinet. But that is not the law, only convention. It would theoretically be possible, and seemingly legal, to appoint non-parliamentarians to the Federal Executive Council but that would require that they are also able to have the executive decisions legislated by parliament — hence we are back to the need, first identified over 300 years ago, to have members of parliament, particularly those who can command a majority in (or have the confidence of) the parliament, as advisers (members of the council). For even longer, those advisers have been ministers responsible for the different aspects of government — the departments of State which under our constitution must be created by the Governor-General with the advice of the Federal Executive Council. Our constitution states that all ministers must be members of parliament and all those members of parliament must be ‘directly chosen by the people’. In those ways the system links the council, cabinet, ministers, the elected members and the voters by a combination of law and convention:

  • the Governor-General acts with the advice of the Federal Executive Council — law
  • the role of the Federal Executive Council is fulfilled by the cabinet — convention
  • the cabinet comprises ministers — convention
  • ministers are members of parliament — law
  • members of parliament are directly chosen by the people — law
By the time Australia federated, we already had parties in place but not as we know them today. As we were just taking the first step to become a nation, the parties generally were organised within each state. At the first federal election in 1901 the two major parties were the ‘free-traders’ (officially the Australian Free Trade and Liberal Association) centred in New South Wales and the Protectionist Party centred in Victoria. Although not nationally organised, most candidates across the country did declare themselves as either free-traders or protectionists. And each state, other than Tasmania, had its own labour party. At that first election, 31 protectionists were elected to the House of Representatives, 28 free traders, 14 state labour members, and two independents who later joined the labour party (King O’Malley had been elected in Tasmania as ‘independent labour’ and the other was, in any case, a former member of state labour). A national parliamentary labour party (Labour — it became Labor in 1912) was formed when those elected state labour members first met at the parliament in Melbourne and Chris Watson was elected as the first national leader. The first government, headed by Barton, was a protectionist minority government with Labour support and had to meet a number of Labour demands.

At the next election in 1903, 26 protectionists, 25 free traders and 23 Labour members were elected, which led in 1904 to Labour splitting from the Deakin government and forming the first Labour government. It was short-lived (only four months) but helped lead to the realignment of Australian politics.

Tariffs were the major source of revenue for the early commonwealth governments and even some free-traders supported a limited range of tariffs for that reason. With Labour and protectionists supporting tariffs, by 1906 the free-traders had basically lost the argument and renamed themselves The Anti-socialist Party.

In 1909, Andrew Fisher was leading a Labour government and pursuing a labour program of legislation:
Far more provocative was the Labor proposal for a land tax to break up large estates and promote closer settlement, and the proposal to strengthen the Conciliation and Arbitration Act 1904. Perhaps the most contentious Labor project was the planned ‘new protection’ referendum to amend the Constitution and give the Commonwealth government the power to tie labour protection to industry protection.

This Labor program was precisely the bonding agent needed to bring all three non-Labor groups in federal parliament — Deakin’s Liberals [formerly protectionists], the Anti–Socialists … and John Forrest’s ‘Corner’ [a WA party] — into coalition.
Those groups merged to form the “Commonwealth Liberal Party’. And that is how it has been for most of the time since, a basic division between Labor and anti-Labor forces.

Rather than finishing this with the traditional TPS ‘What do you think?’, it seems more appropriate, as an information piece, to ask:
Do you have any questions?
We hope you enjoyed Ken’s two-part explanation of the complicated 800 year story that led to the parliamentary system we have (he does apologise for it being so long but suggests that it amounts to only about six words per year!). As Ken invited, we also urge you to express your thoughts on our system and ask questions. Based on the research he undertook, Ken will do his best to answer your questions.

Next week we resume normal transmission with a piece to get us in the mood for the resumption of parliament: ‘Winter winds, wind farms and hot air’ by 2353.


How did we get a multi-party Westminster system? Part 1

[Charles I in parliament: ‘Attempted arrest of the five members’ by Charles West Cope]

Earlier this year we had a couple of pieces that raised issues about the parliamentary and party system in Australia (‘President Abbott’ and ‘Instant Experts’) and in June we had the 800th anniversary of Magna Carta. Our system is known as a Westminster parliamentary system and incorporates a multi-party system (or sometimes a ‘dominant party’ system, as when the Coalition governed from 1949 to 1972). Some comments on those earlier articles raised questions about how effective our system really is and mentioned some of the quirks that seem contained in it. I thought that deserved some research as to how the system arose and how our constitution expresses it.

Of course the basis of our system is the English parliamentary system which operates in what is now a constitutional monarchy. England does not have a written constitution: instead, it has taken hundreds of years to develop some written and many unwritten rules (conventions) that determine how Britain is governed.
Parliament developed in the 13th and 14th centuries largely through the desire of Edward I and his successors to wage war. This needed more money than they had from their own wealth [personal royal estates] and they had to levy "extraordinary" taxes, with Parliament's assent, to raise the funds. But each time the King requested assent to a tax from Parliament, it could ask a favour back … and often used the King's desperation for money to get what it wanted.
While the ‘lords spiritual’ (abbots and bishops) and the ‘lords temporal’ (originally earls and barons and later including dukes, marquesses and viscounts) had been called together before to grant taxes to the king, during the reign of Edward I (1272 –1309) it became more common to also call in the ‘knights of the shire’ (two from each county) and ‘burgesses’ (two from each city and town, or ‘boroughs’ as they were known). Those knights and burgesses were usually ‘elected’ but both the franchise and the election procedure varied from place to place. From 1327, under Edward III, that became the norm and from 1341 the Commons (or representatives of the ‘communes’) met separately from the Lords — although most government business still belonged to the Lords. The Commons exercised its power in 1376 when it impeached some of the monarch’s ‘corrupt’ ministers and did so again in 1388 in what became known as ‘The Merciless Parliament’. The Commons complained about being ignored in the king’s discussions with the Lords about taxes and in 1407 Henry IV formally affirmed the right of the Commons to initiate all grants of money — a power jealously guarded ever since.

Petitions to the monarch and the parliament was the common way to present grievances and they would be remedied by a statute (an Act) of the parliament.
… petitioners began to submit their grievances first to the Commons and, based on these petitions, the Commons wrote draft statutes, known as Bills, to be presented to the Upper House.

In 1414, the Commons successfully insisted to Henry V that the King and Lords should not change the wording of any of the Bills submitted by the Commons without its agreement and that no Bill should become … a statute without their assent.
So by the early 1400s the presence of two houses in parliament, the Commons and the Lords, was firmly established and the Commons had gained clear and important roles.

The modern parliamentary system really starts with the Bill of Rights in 1689 which was presented to William of Orange and Queen Mary when they jointly assumed the throne. After listing the crimes of the previous king, James II, the Bill stated, among other matters:
That the pretended power of suspending the laws or the execution of laws by regal authority without the consent of Parliament is illegal.

That levying money for or to the use of the Crown by pretence of prerogative, without grant of Parliament, for longer time, or in other manner than the same is or shall be granted is illegal.

That the raising or keeping of a standing army within the kingdom in a time of peace, unless it shall be with the consent of the Parliament, is against the law.

That election of members of Parliament ought to be free.

That the freedom of speech and debates or proceedings in Parliament ought not to be impeached or questioned in any court or place out of Parliament.

And that for the redress of all grievances, and for the amending, strengthening and preserving of the laws, Parliaments ought to meet frequently.
(A brief aside here: in England, it was tradition that the monarch was not above ‘the law of the land’ and that had been set in writing in Magna Carta in 1215. So it was possible for an English parliament to assert that a monarch should not act illegally — something that could not be done in some other kingdoms.)

I think you will recognise the basis of our current parliamentary system:
  • laws are made by parliament
  • money can only be raised by, and spent with the consent of parliament
  • free elections
  • freedom of debate (the monarch cannot interfere and nowadays rules of slander and defamation do not apply, which is why we sometimes see politicians challenged to repeat a statement outside the parliament)
  • frequent meetings of parliament
There were other matters relating to ‘cruel and unusual punishments’, no fines or forfeitures before conviction, and the right of Protestants to keep arms, which were also to influence the American Bill of Rights a hundred years later.

About 60 years later (in 1748), the concept of the ‘separation of powers’ was spelled out by Baron de Montesquieu when he explained the difference between the executive, the legislature and the judiciary: his ideas drew on ancient Rome but also the system that was emerging in England. In those days it was highly relevant because the monarch (advised by his ministers, who were selected and appointed by the monarch) was still the ‘executive’. We need to keep that in mind because as the Westminster system evolved it actually fused, in practice if not in law, the legislature and the executive.

It was also in the 1600s that nascent political parties emerged although not yet formally organised as parties — more like-minded people grouping together, or factions. In England, they were the Whigs and the Tories and the grouping started over the Exclusion Bill in 1678: there was one parliamentary group (the Whigs) trying to stop James succeeding to the throne after his brother Charles II and another (the Tories) wishing to continue the Stuart line of succession. By 1689, however, they actually agreed that a limited constitutional monarchy was preferable to the absolutism of ‘divine right’ that had been displayed by James II — although some Tories did support later attempts by the Stuarts to reclaim the throne. Over time, the Whigs evolved into the English Liberal party and the Tories into the Conservatives (still commonly referred to as the ‘Tories’).

The rise of parliament also gave rise to the role of a prime minister because monarchs realised that to achieve their aims they would need someone who could command a majority in (or had the ‘confidence’ of) the parliament — but that was to take a little longer to be formalised.

William III (William of Orange) had tried selecting ministries comprising people from different factions (both Whigs and Tories) but soon realised he was better off appointing a unified group. Thus by 1710 Queen Anne could dismiss a Whig ministry and appoint a Tory ministry.

The ministers were still selected by the monarch (most often from the Lords but could include members of the royal household or royal family) but found that to convince parliament of the financial requirements, the power for which had rested with the Commons since 1407, they needed to attend the Commons frequently and were given a reserved seat at the front which became known as the ‘Treasury Bench’ as they were led by the Lord Treasurer (a title the British prime minister still theoretically holds).

A development in those early years (in 1713) was what in Britain was ‘Standing Order 66’ which states that the Commons will only vote regarding money on the motion of a Minister of the Crown. That was intended to prevent ‘ill-conceived’ money bills being introduced by any member of the parliament and continues to this day (now Standing Order 48 in the British parliament).

Robert Walpole is often recognised as the first prime minister in England (1721 – 1742) but he was still selected by the monarch — although ‘elected’ to parliament from a ‘family parliamentary seat’. He was able to manage the parliament in a way that set the example for the future. At first, the term ‘prime minister’ was an insult implying that the person was placing himself above the monarch as ‘head of government’ — even Walpole denied he was a prime minister. It was Walpole, however, who began conducting most of the business of government in the Commons rather than the House of Lords.

Cabinet government came to the fore during the reigns of George I, II and III largely due to historical accident. (The ‘cabinet’ was an informal name given to the group of ministers that met with and advised the monarch — technically it was a committee of the Privy Council.) George I Duke of Hanover was German, could speak little English and took little interest in English political affairs:
After 1717, George rarely attended Cabinet meetings. This allowed the Cabinet to act collectively and formulate policies, which, provided they were backed by a majority in the Commons, the king was usually powerless to resist.
George II, although initially active in politics (he was the last British monarch to lead his forces in battle), largely withdrew in the last ten years of his reign (1750‒60) and Pitt the Elder effectively ran the government. George III tried to govern as a monarch, being his own ‘prime minister’, and appointing and sacking ministers but then suffered mental debility for the last ten years of his reign (1810‒20) which again left effective governance in the hands of the cabinet. The American War of Independence (during George III’s reign) also contributed. When England lost that war there was a parliamentary vote of no confidence in the then ministry which led to the Marquess of Rockingham reasserting the prime minister’s control over cabinet:
Rockingham assumed the Premiership “on the distinct understanding that measures were to be changed as well as men; and that the measures for which the new ministry required the royal assent were the measures which they, while in opposition, had advocated.” He and his Cabinet were united in their policies and would stand or fall together; they also refused to accept anyone in the Cabinet who did not agree. King George threatened to abdicate but in the end reluctantly agreed out of necessity: he had to have a government.
Although Rockingham was not prime minister for very long, his stance set a basic principle for cabinet government — ‘cabinet solidarity’, which included the prime minister having the cabinet he wanted, not one selected by the monarch. And also the concept that a ‘party’ was entitled to bring to government the ideas it had pursued while in opposition.

Opposition had been a dangerous business during the 1600s as it was seen as traitorous, as opposing the monarch and his government. That idea had waned during the 1700s and in 1826 the term ‘His Majesty’s Opposition’ was first used. Although originally used partly in jest, it became part of the system, recognising a two-party system in which it was constitutionally possible to oppose the government without being a traitor: reflecting this, in the UK the phrase ‘Her Majesty’s Loyal Opposition’ is now common.

Although it seems to have been the practice for some time, the convention that ministers should be drawn only from the members of parliament, including the Commons, and not just be selected by the monarch became entrenched from the broadening of the electoral franchise early in the 1800s and particularly the Reform Act of 1832. That Act eliminated the ‘rotten boroughs’ which had allowed people to buy their seat in parliament and monarchs to place ‘their’ people in such seats. Among the problems with ‘boroughs’ was that the right to return members to parliament was traditionally granted by the monarch, so by 1832 their distribution had not kept up with the distribution of the English population — new industrial centres like Manchester and Birmingham had no parliamentary representation. With representation spread more evenly across the country after the Reform Act, public opinion, particularly as expressed at the polls, mattered.
It is significant that Lord Melbourne suggested that it would be impossible to carry on government without the rotten boroughs which the Act of 1832 swept away, so little could he realise the essential character of the new system which was being created. It is significant also that he never fully appreciated the new position; when he resigned in 1841 after an unsuccessful dissolution, regarded by him and the Queen as an appeal by the latter to the people to return her ministry to authority, he advised the Queen to state that she had only parted with her ministers in deference to the opinion of Parliament, though she still had confidence in them. Naturally she did not realise any more than her retiring Premier that in the nature of things the verdict of the electors deprived her of the right to feel confidence in ministers of whom the voters had disapproved, that it was no longer a question of personal integrity or sagacity in a minister, but of his right to represent the will of the people, as expressed by the suffrages of the electorate. [emphasis added]
So after six hundred years of evolution, by the 1840s the essential elements of the Westminster parliamentary system were in place, including a parliamentary party structure. Later broadening of the franchise, during the later 1800s and early 1900s, reinforced those changes and also led to more organised political parties as it became necessary to engage more and more of the population for elections.

Then came Australia …

Any thoughts or questions so far?
Come back next Sunday as Ken continues the story of how we ended up with the system we have and focuses on the federation of Australia and the form of government we inherited from England which relies not just on our Constitution but many of the conventions described above.


Where will we be in 50 years?


In the next few months, most Australians will be considering their financial affairs and the preparation of their annual tax return. It is usually a time for some questioning around how you did manage to spend all that money in the past year and what changes you can make to become thriftier in the upcoming year.

Most of us get so involved in the day to day activities that govern our lives, we have little inclination or time to think about the long term. It is also a truism that those who forget their history are bound to repeat it. Those who look at the long term can see patterns and trends that escape us mere mortals. Those long term thinkers — usually called Futurists — can give a valuable insight into our future based upon reflection and observation of what has occurred in the past. The results can be fascinating and worth thinking about.

Taking the reflection theme to heart, let’s look at where Australia has come from and where we as a society are heading. So go and prepare a beverage of your choice, click on this link for one of the better ‘80s Australian pop songs and read on while we discuss ‘where will we be in 50 years’.

Apart from the convenient segue to a song, there is a good practical reason to choose to look 50 years into the future. There seems to be a 50 year (more or less) cycle in Australian economic and immigration history going back to the days when Australia was comprised of six (sometimes friendly) colonies. It is a cycle of boom and bust — boom when we are using the land to produce riches beyond compare and bust when the rest of the world has moved on from our particular riches, and Australia has not adapted. There is a moral overtone here as well: it appears that we as a society welcome new immigrants during the ‘lean’ years, and throw up barriers to their entry when we are booming.

In the 1880s, the city with the highest per capita income in the world was Melbourne. While the streets were not literally paved with gold, they might as well have been. Next time you are in Melbourne have a look at the expansive and quality buildings built towards the end of the 19th century (which fortunately still exist), as well as the good quality housing stock in the inner suburbs originally from the same era. The impressive thing is that the ‘working class’ could afford to live in an expensive place.

The wealth of Melbourne was based on the mining of gold in the (then) colony of Victoria that commenced in the 1850s. Ballarat and Bendigo were the centres of the gold industry and also have a rich history of 19th century buildings to admire. Gold was the method of exchange in the day and extracting it from the ground increased the wealth of everybody in the colony. In 1852, it was estimated that mining comprised around 35% of the Victorian colony GDP and wages in Victoria rose by 250% between 1850 and 1853. Not that Victoria was alone. Gympie, in Queensland’s south east, boomed after the discovery of gold in the late 1850s and with some justification claims to be the ‘town that saved Queensland’ during the early years of the new colony — as Queensland was technically bankrupt.

By the mid 1860s, the initial boom was over. Immigrants to the gold fields were not only from the same or other colonies, there was a significant immigration from overseas. While the English, Scottish and Americans that immigrated to the gold fields could blend into the cities and towns to find work, the Asians that immigrated (predominantly Chinese) could not and, once the money stopped flowing, their different appearance, customs and language made it easy for those that were suffering unemployment to single out and victimise.

By the early 1890s, the six colonies that were to form the Commonwealth of Australia within a decade were feeling the effects of a long drought that caused a recession and industrial disruption (as well as the formation of the Australian Labour Party at Barcaldine in 1891 during an ongoing shearers’ strike). The South Australian premier at the time said:
I regard as second only to the necessity of protecting our shores against actual invasion, the necessity of protecting Australia against the influx of aliens, Asiatics, criminals, paupers, and other undesirable classes
By the 1890s, the gold rushes were back, due in some part to the availability of capital (from the UK) that could not be used elsewhere due to an ongoing economic conditions in Europe and the Americas. As a result, Charters Towers in northern Queensland was a town of over 20,000 at the turn of the century and had its own stock exchange. It was also considered necessary and economically viable to build a water pipeline from near Perth to Kalgoorlie in the last few years of the 1800s so that the extraction of minerals — again primarily gold — could continue apace. While the Charters Towers Stock Exchange is a shopping arcade today, the water pipeline in WA is still in daily use.

In 1901, the Australian colonies federated and became Australia. In the then population, 98% of Australians were of British heritage (70% born in Australia) and one of the first pieces of legislation through the Australian Parliament was the Immigration Restriction Act — later known as the White Australia Policy.

Even though 98% of Australians had some British ancestry, it didn’t stop the Australian government interning those with ‘enemy’ bloodlines during World War 1. As various trade agreements and imports from Germany and Austria-Hungary were seen as ‘unpatriotic’ and the Australian economy benefitted from product substitution, higher output and the associated profiteering, Australia encouraged immigration (from the ‘winning side’) post World War 1 and like most of the world was caught up in the Great Depression at the end of the 1920s. People again began to feel threatened by immigration and joined local versions of the New Guard (remember Francis de Groot who ‘unofficially’ opened the Sydney Harbour Bridge) and the Communist Party. While both groups were ideological chalk and cheese, they both wanted ‘strong’ government who would keep Australia for Australians.

The economic pattern continues through World War 2, the 1950s and the Snowy Mountains Scheme, the 1960s’ ‘Credit Squeeze’; the largesse of the Whitlam years and subsequent contraction under Fraser and so on to the current day where Australia has not had a recession for over 24 years.

The immigration pattern continued from the propaganda fuelled racism in World War 2, through the ‘new Australians’ that largely supplied the labour for the Snowy Mountains scheme as Australia was rebuilding after the war — until there was a return to restrictions in the 1960s when we were booming after overcoming the ‘credit squeeze’ early in the 1960s. Malcolm Fraser to his eternal credit (with support from politicians in general) assisted a large number of South East Asian asylum seekers to come to Australia in the late 1970s (we had contributed to bombing their country almost to oblivion after all), when we were still suffering the after-effects of the oil crises and stagflation. Over the past 10 years, as our prosperity increased, the rhetoric from politicians to restrict immigration increased again to the ludicrous situation where the government of this country apparently implicated all of us as people smugglers by paying cash to those that profit from the miserable conditions endured by asylum seekers coming to Australia by fishing boat.

So we as Australians have a choice. Are we going to perpetuate a pattern of history that is, if nothing else, racist and economically irrational or are we going to break the mould? There does seem to be a correlation between economic activity and immigration. At the time of writing, the official cash rate is 2%; the government is allowing immediate tax write offs of $20,000 to kick some life into the economy; and, while the US seems to be coming out of a prolonged economic downturn, there are some real and structural economic problems in the Eurozone.

Australia seems to have an economic choice. As a nation we can continue to believe that our current export markets will again expand which is highly unlikely —

  • China is buying less coal than previously and plans to decrease consumption of fossil fuels by at least 20% between now and 2030.
  • India plans to reduce significantly (or even eliminate) the importation of thermal coal within two to three years.
  • NASDAQ reports falling demand and prices for iron ore exports

  • Or Australia could look at the new economy — such as renewable energy or even computer games:

  • The Queensland Government and US Navy are discussing using biofuel grown and produced in Queensland.
  • Australian computer games producers are asking for government assistance to expand

  • Instead our current prime minister is more intent on appointing a wind farm commissioner because they look ugly. In the words of President Obama:
    But we also inherit the beauty and the joy and goodness of our forebears. And we’re on this planet a pretty short time, so that we cannot remake the world entirely during this little stretch that we have. … But I think our decisions matter. And I think America was very lucky that Abraham Lincoln was President when he was President. If he hadn’t been, the course of history would be very different. But I also think that, despite being the greatest President, in my mind, in our history, it took another hundred and fifty years before African-Americans had anything approaching formal equality, much less real equality. I think that doesn’t diminish Lincoln’s achievements, but it acknowledges that, at the end of the day, we’re part of a long-running story. We just try to get our paragraph right.
    It seems that the first sign of a coming decline in our lifestyle is the imposition of barriers against 'unsuitable' immigrants, be they boat people now or Chinese in the 1860s.

    This government (with support from the ALP) has been attempting to remove the legal rights of people to claim refuge in Australia. The previous ALP government wasn't much better.

    At the same time, it seems that our major exports, minerals and other primary produce are finding greater difficulty in attracting and retaining overseas markets. The government’s tax concessions to small business as well as official interest rates indicate that Australia's economic conditions are flat at best. There is even an iron ore price war occurring in Western Australia between BHP and Rio Tinto to move product. All of this would suggest that economic times will get worse rather than better in the next few years.

    When it comes time for others to judge our paragraph in Australia’s history, wouldn’t it be nice for those in 50 years time to recognise our generation as the one that observed there was a pattern and chose the sustainable alternative of assisting people in fear of their lives, value adding exports of high technology devices and supporting those in our society that need help?

    What do you think?
    2353 suggests that we actually first act to identify and restrict ‘unsuitable’ migrants while times are still good. Is that greed? Do we just not want to share our success? And does that blind us to changes? Do we not see our future economic opportunities because we are so caught up in our success that we inevitably slide down into the ‘lean’ years again? — and realise we need migrants to help rebuild. A cycle that 2353 hopes we can escape — once we recognise it.

    For the next two weeks we will be presenting something a little different — an historical approach rather than opinion. We are taking advantage of the parliamentary winter recess to present a two-part piece by Ken on “How did we get a multi-party Westminster system?” In the first week Ken looks at how parliament developed in England and the historical creation of some written but many unwritten rules about how it operates. In week two, he will look at the Australian Constitution and how that reflects the English system by a mixture of law and the accepted unwritten rules (conventions).