So why not hold a Federal Royal Commission?

The question of whether the Federal Government should call a Royal Commission following the terrorist incident at Bondi has been dominating the news for many days. It is hard to fathom why this is so, but I have a very simple thesis. The first part is that the Government is correct in its assessment that there is little to be gained from a Royal Commission other than lining the pockets of a phalanx of lawyers. The second is that there is a concerted campaign being mounted that is entirely political, and is focussed on division. 

The latest piece in the Sydney Morning Herald (paywalled) has described the Prime Minister as having 'shrunk' and quotes a former adviser as saying:

I think he's probably distraught [at the animosity towards him] and not thinking straight. And he is genuinely so stubborn I think he is just trying to ride it out.

I was very briefly an adviser to Albanese after the Rudd coup against Gillard in 2013, but I didn't work for him long enough to know whether this is an apt description. I can report on what I have seen of him on our TV screens since the attack and note that he has found he attack devastating. As difficult as it might seem, I think he has made the right decision to limit his appearances at commemorative events, notably funerals. The sense that the Federal Government should have been doing more about antisemitism is visceral in the Jewish community, even if there are few suggestions about exactly what the Government should be doing. 

A confusing part about the calls for a Federal Royal Commission is exactly what the terms of reference for such a Commission might be. Josh Frydenberg on X said that people are asking for:

A comprehensive, transparent, independent and powerful inquiry, into how Australia’s deadliest terrorist attack could occur despite all the warning signs against the backdrop of an unprecedented escalation of antisemitism and radicalisation in our country.

Framed like this, the focus of a Federal Royal Commission would be limited to the intelligence failure that saw the perpetrators plans go undiscovered and the question of whether adequate police protection was provided for the Bondi event on 14 December. The latter of these is clearly a question that is relevant only to New South Wales because only that Government and Police Force could decide the level of presence required.

The intelligence failure is another matter. We can conclude that there was an intelligence failure because the attack occurred. It is a separate question of what resourcing and surveillance powers may have been necessary to identify the plot before it occurred. A related question has been raised in the The Australian today under the heading 'Intel fail: police forces split' (paywalled). This is an assertion that:

Serious rifts between NSW and Australian Federal Police over joint operations run in the months before the Bondi massacre led to a request to change intelligence procedures and protocols of the nation's high-powered Joint Counter Terrorism Team and ongoing 'bad blood' between security agencies. 

The Royal Commission announced by NSW Premier Chris Minns has the ability to investigate both the decision about resourcing protection and the intelligence failure, including the relationship with the Commonwealth. It is appropriate that this is a state Commission because the core issues are state based. To the extent that the State Commission might want to compel Federal Agencies to present documents or personnel to front as witnesses, a State Commission can do so with the cooperation of the Federal Government. Anthony Albanese has already announced that this cooperation will be provided.

A further important investigation remains the criminal prosecution of the surviving alleged perpetrator. It is likely that much of the evidence about the sequence of events leading up to the attack will be disclosed in that hearing. It would, however, be a travesty if the ongoing commentary about the events resulted in any impediment to the trial. 

Matters that perhaps should be left to evidence are being reported in the media, such as the story in today's Daily Telegraph (paywalled) that the alleged perpetrators spent 28 days in their hotel room in the Phillipines but never received any training from ISIS. If true, it means that the security agencies didn't miss any communication between the father and son and ISIS. It makes the intelligence failure seem less. 

Beyond the issue of how the attack could have occurred against a backdrop of rising antisemitism is a separate question of whether the rsing antisemitism itself was causal. Were the perpetrators radicalised by rising communty antisemitism or was it something more specific and direct - such as a single preacher? This may have already been revealed by the younger alleged perpetrator in police interviews that will be provided as evidence in the criminal prosecution. 

My personal view is that it is highly unlikely that a general increase in community antisemitism was causal. Far more likely is the radicalisation of the perpetrators was a response to the manner in which Israel responded to the 7 October attacks. Under the Internatonal Holocaust Rememberance Alliance definition of antisemitism 'Holding Jews collectively responsible for actions of the state of Israel' is listed as an example of antisemitism.This merely makes the attack itself, if motivated by Israel's response to the Hamas attack, antisemitic. It does not mean that the community level of antisemitism was a trigger.

Whether the rising level of antisemitism was causal or not, this is the other aspect that proponents of the Royal Commission are promoting. In a clip from SkyNews on 30 December 2025 Chris Minns outlined how he thought the NSW Royal Commission would address this. He said:

But I do believe [a Royal Commission] is an important opportunity to be looking at the circumstances and sequence that led up to this horrifying attack at Bondi on the 14th of December. And that includes 

anti-semitism in our community. You can't we can't have an investigation without an examination of the creeping rise of anti-semitism. I've said in the past that it begins with a chant, then migrates onto online, then malicious damage, then arson, then horrible acts of violence. And we need to examine that sequence.

A charitable interpretation of this part of the call is that the the Federal Government could have done more to restrain the apparent increase in antisemitism. Note that while it is undeniable that the manifestations of antisemitism have increased, whether the actual level of 'hatred towards Jews' has changed is disputable. After all, as has been noted often, antisemitism is a hatred with a very long history.

More recently the Australian business community have joined the call for a Federal Royal Commission, first through an open letter by 130 business leaders and then by a statement by large business groups. Another Frydenberg tweet  provides us with the text of he former:

We call on the Australian Government to immediately establish a Commonwealth Royal Commission as a first step towards taking Australia forward with a meaningful, practical plan of action.

As business leaders and proud Australians committed to upholding our values of tolerance and mutual respect, we recognise the need for clear answers as to how the Bondi massacre could occur, and for practical solutions to restore social cohesion and protect the safety of all Australians. We must end the unprecedented harassment, intimidation and violence directed at the Australian Jewish community since October 7, 2023.

This is a national crisis, which requires a national response. This goes beyond politics, it’s about the future of our country.

The Australian Industry Group website provides the full text of their call. Their focus somewhat bizarrely was the need for the inquiry to enhance prosperity, saying:

As we return to work after the new year break, we must ensure that shock and grief do not turn into ongoing anger and division, particularly in our workplaces.

Workplaces are perhaps the greatest melting pots we have as a country, where people from truly diverse backgrounds come together to work for their common success. Our workplaces are therefore deeply representative of the communities found across our nation, and it follows that we must strive for them to be inclusive.

Without sustainably safe and cohesive workplaces and communities, we cannot deliver prosperity for all Australians, which is the ultimate objective underpinning the advocacy and efforts of our organisations.

A federal Royal Commission can help us learn and understand what happened, what needs to be done differently and bring us together in the shared goal of preventing future tragedy.

A federal approach to a Royal Commission would avoid some of the limitations of a state-based approach and help ensure we bring a whole-of-nation focus to tackling antisemitism.

Importantly, the findings and recommendations of such a commission could build on the useful steps already taken by Federal, state and territory Governments around the country.

These contributions advance the thesis that the function of the Royal Commission into antisemitism is to promote 'tolerance and mutual respect' and to promote 'sustainably safe and cohesive workplaces'. Yet the voices that promote the Royal Commission loudest are also those that seek to divide us. Pauline Hanson on X stated:

We must have a Royal Commission into Australia’s deadliest terror attack at Bondi. The terms of reference have to include an investigation into the character of people being let into this country. It has to look at citizenship, immigration and compatibility with Australian culture. 

This is just part of the slew of comments that have used the terror attack to target the whole Muslim community in the same kind of 'collective responsibility' approach that is used in the definition of antisemitism. These attacks on more recent arrivals seem only the more bizarre when it is realised that the older alleged perpetrator has been in Australia since the 1990s while the youngr one was born here. 

But before we get to the Royal Commission let's just remember two things - antisemitism is hate directed at Jews, and the only political party that has ever done anything about hate speech is the ALP. This began in 1975 with the Whitlam Government introducing the Racial Discrimination Act 1975. It was amended during the Keating Government by the Racial Hatred Act 1995. This legislation introduced section 18C into the earlier Act. This section reads:

18C Offensive behaviour because of race, colour or national or ethnic origin

 (1)  It is unlawful for a person to do an act, otherwise than in private, if:

 (a)  the act is reasonably likely, in all the circumstances, to offend, insult, humiliate or intimidate another person or a group of people; and

 (b)  the act is done because of the race, colour or national or ethnic origin of the other person or of some or all of the people in the group.

At the urging of the Institute of Public Affairs Tony Abbott in 2013 promised reform to section 18C. It didn't matter to the right wing libertarian crowd that these changes, as noted by the Australian Human Rights Commission, were introduced in response to the National Inquiry into Racist Violence , the Royal Commission into Aboriginal Deaths in Custody , and the Australian Law Reform Commission's Multiculturalism and the Law report.

It was in support of Abbott's plan for reform that George Brandis famously declared:

People do have a right to be bigots. In a free country people do have rights to say things that other people find offensive or insulting or bigoted.

The proposed amendments were reportedly opposed by Indigenous Liberal MP Ken Wyatt who threatened to cross the floor to oppose the change. The same article stated 'Jewish MP Josh Frydenberg is also understood to have expressed reservations about weakening the protections.' Months of lobbying by 'representatives from the Aboriginal, Greek, Jewish, Chinese, Arab, Armenian and Korean communities' proved to be effective with the amendments failing to pass in the Senate.

In contrast to Frydenberg who was happy to be part of a Government attempt to water down section 18C, in response to the rise in antisemitism the Albanese Government acted on the fact that 18C of the RDA did not impose criminal penalties. In introducing what is now the Criminal Code Amendment (Hate Crimes) Act 2025, the Explanatory Memorandum for the Bill stated:

The measures in the Bill would seek to combat the increasing prevalence of hate speech involving calls to force or violence. Public discourse has increasingly been weaponised, with hateful rhetoric aimed at attacking groups in the Australian community. Urging and threatening force or violence against targeted groups, or members of targeted groups, undermines and erodes Australia’s shared values. The harm caused by this conduct can be profound – it is an attack on the dignity of targeted groups, and members of targeted groups, which affects the physical and psychological wellbeing not only of those targeted, but of the whole community. It can also lay the foundation for violence and extremism. The offences are not intended to capture mere expressions of opinion or belief, however hateful or reprehensible. This conduct would be criminalised only where it involves threats of force or violence.

So after all this history, it is a bit rich having the LNP mounting a campaign that the ALP hasn't done enough to respond to rising hate of Jews, i.e. antisemitism. Our old friend Tony Abbott apparently has no recollection that he ever promoted the abolition of section 18C of the RDA. Today his complaint is:

There’s been a double standard enforcing hate speech laws.  So there’s nothing wrong with the laws as they stand; they just need to be enforced equally, as opposed to partially.

So Abbott's stance is 'there is nothing wrong with the laws' while the Albanese Government has already identified the need for further reform. 

Where the double standard exists is in the manner of arguing against antisemitism, particularly Jewish collective responsibility for the actions of the State of Israel, while simultaneously reviling Islam and holding Muslims collectively responsible for Islamis extremeism. Hate is hate. That antisemitism has the longer and ugliest history is not a reason for giving it priority in dealing with hate.

It is hard to fathom exactly what people expect to achieve from the powers of a Royal Commission into hate speech and acts. Royal Commission's are more notorious for the extent to which recommendations are only partially implemented. At best it can be an inquiry into what actions the Government should have taken or could now take. 

Yet the same voices calling for the Royal Commission claim that Albanese should have responded earlier to the 'recommendations' of Australia's Special Envoy to Combat Antisemitism. It was hard for the Government to respond to the Envoy's plan, as it was framed entirely as actions the Envoy proposed to take. The Government in its response reframed these as recommendations. 

In hindsight the Government erred in deciding to have Special Envoys on combatting Antisemitism and Islamophobia. The issue is racially or religiously motivated hate speech and hate crimes which have no place in Australia. The aspirations of the business leaders, business groups and now sports stars for sustainably safe and cohesive comminities requires an assault on all hate, not just hate directed at one group. To have demonstrate our values of tolerance and mutual respect we have to apply that to all elements of our community. 

The righful place for this function isn't special positions in Home Affairs. The correct place is in the Human Rights Commission - the entiy already charged with dealing with section 18C of the RDA. It is simply absurd that the Human Rights Commissioner has aligned herself with those calling for the Royal Commission. It was particularly disappointing when only a few days earlier she seemed to be suggesting that the armoury for dealing with race and religious hat has already been built. 

Finally we should address the question of what interogation the security agencies should be subject to. The answer is relatively simple. There is already established an inquiry mechanism in legislation with the power to subpoena winesses and to compel the provision of documents. That is the Parliamentary Joint Committee on Intelligence and Security. The beauty of this is that the necessary guiderails for dealing with security and intelligence related information is already in place in Part 4 of the Intelligence Services Act 2001. Furthermore the committee can be tasked to review any matter referred by the Minister for Home Affairs and the Attorney-General. There is no need to wait for Parliament to sit to commence an inquiry.

I was never an influential enough adviser to be able to provide guidance to Anthony Albanese on matters as significant as these, but my suggestions are as follows:

1. The PM needs to stop being defensive and start attacking the campaign for a Royal Commission as being clearly well orchestrated and divisive. Daily drops of new open letters are not an accident. 

2. The PM to highlight the importance of not doing anything that might jeopardise the ability of the surviving alleged perpetrator to face trial.

3. Move the Government focus clearly to the question of racial and religious hate speech and hate acts. The focus on antisemitism is by itself divisive, not unifying. Make 'the war on hate' the theme for 2026. Avoid referring to antisemitism or islamophobia separately.

4. Have one of the Ministers provide a reference to the PJCIS on the operation of the security and intelligence agencies on the response to hate speech and acts with specific reference to (a) the adequacy of resources (financial, human resource and technology) (b) the adequacy of powers for prosecutions and (c) the coordination with State and Territory agencies.

4. Provide a commitment in writing to Chris Minns that the Australian Government will instruct agencies to fully cooperate with the NSW Royal Commission unless the agency is given a written direction from the Minister for Home Affairs in relation to specific requests to appear, provide answers or produce documents.

5. Call out the hypocricy of those in the LNP who were party to introducing legislation to amend s18C of the RDA who now criticise the Government of not doing enough on racial or religious hate. 

Separately and for completely different reasons the Federal Government does need to take further action to reduce impact of temporary migration on Net Overseas Migration (NOM). The Permanent Migration Program has been declining since 2022-23. The first part of this would be to talk more frequently about addressing NOM through the Migration Strategy. 

A bigger piece of work remains to regulate religion, hopefully I will write on that soon. 

Tranformational Bulldust

Today's (5 November) issue of the email newsletter Future Campus begins:

“Transformational change is the new normal, we just have to accept that,” ANU Interim VC Rebekah Brown told staff Tuesday. 

The word' transformation' has been all the go in Australia's public universities. At UTS it is 'curriculum transformation' , at UOW 'transformation' is the title of their change program. 

But are these really transformations? Its meaning is more than just 'change'. The OED gives the main definition as 'The action of changing in form, shape, or appearance; metamorphosis.' 

Of course, 'transformation' has been a management buzz word for about two decades and is much loved by management consultants. When they are borrowing your watch to tell you the time, these charlatans need you to think that what you are buying is really worthwhile. What better way than to call a cost-cutting program a transformation? 

Just how deeply entrenched these firms are in our universities was detailed by Professor Corinne Cortese in a submission (No. 75)  to the first Senate Committee inquiry into University governance. Australia's public universities are spending somewhere between a quarter and three quarters of a billion dollars with consulting firms.

To the extent that anything is being transformed, it is the relentless growth of the administrators at Universities and the decline in the significance of Faculties. As a simple example, the University of Wollongong has contracted the number of faculties from four to three and placed a layer of a Provost between the Executive Deans and the Vice-Chancellor. The organisation chart describing the change placed the VC at the top with four direct reports and almost as an afterthought the three Faculties appeared at the bottom left below the Provost.

The transformation includes a 'new' Growth Portfolio to ' to combine domestic and international student recruitment, marketing, brand, and communications, with the goal of driving revenue growth.' 

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Life is what happens while you are busy making other plans JWL

The Chimera of the Triple Zero Custodian

The Minister for Communications today introduced the Telecommunications Legislation Amendment (Triple Zero Custodian and Emergency Calling Powers) Bill 2025 into the Parliament. That this Bill has been introduced some 15 months after the Government response to the Bean report agreed to the recommendation to establish a Triple Zero Custodian noting it was "subject to further investigation and consultation".

The Government has been criticised for this being a slow response. The realities are that the Communications Minister struggles to get any space on the legislative agenda, which includes the time of Parliamentary Counsel. As an example, the Bill to legislate a service provider registration scheme was introduced in August this year, it was included in the legislative priorities list (low priority) when Conroy was Minister. So this response is about ten times faster.

But what do we get for our buck here? Well clearly we get a Triple Zero Custodian. But that is mere smoke and mirrors because in the Bill we find that the Triple Zero Custodian will be the Secretary! 

So there is no new function here. What we do get is a whole lot of extra powers given to the ACMA and a power for the Secretary to direct the ACMA in the exercise of those powers. Progressively the ACMA isn't an independent regulator charge to deliver outcomes, it is just an extension of the Department. Added to that is that since the Turnbull Government the old Department of Communications (under various names dating back to the Post-Master General in 1901) got merged into the Department of Infrastructure etc.

I worked with Richard Bean at Unwired. He is a sound lawyer. He was apponted to be Deputy Chair at the ACMA, but primarily on the strength of his background in television not communications. I admit I have not read his report on the 2023 Optus issue. I assumed, perhaps cuynically, that calling for the report was a classic case of the Minister needing to be seen to be doing something.

Now let's ask one simple question. How would any of the legislation have affected the latest issue?  

If Optus is to be believed, and I have no reason not to, the short answer is 'probably not much'? The Triple Zero call failure came about because of a botched network upgrade in which the Optus employees did not follow the company's own procedures, which included testing Triple Zero.

No amount of extra reporting requirements, investigation powers, or other powers given to a group of people who do not and have not actually run a telecommunications carrier can change the simple fact of an employee not doing what they are supposed to. Well, actually more than one, because call centre staff failed to escalate complaint calls.

Enhanced monitoring at the 000 answering point to monitor traffic could, arguably, have identified a statistically anomolous drop-off in call volumes and further identified this as being from Optus mobiles. But this doesn't avoid the problem occurring and like all regulation winds up generating a false sense of security. Why should Optus bother making their test calls if the Triple Zero service will do it for them.

And what of the Minister's actions of calling in the CEOs of the three mobile carriers? What does this do other than blur in the public's minds exactly who is responsible. The Minister has, unwittingly, reduced the comparative reputational damage that Optus will suffer. The public hears 'all telcos suck' rather than 'Optus sucks.'

The Bill does nothing at all to increase the consequences for a carrier (or its employees) being negligent with respect to their Triple Zero obligations. A serious response would be to start introducing something like the points system for a driver's licence with the same potential consequences. 

It doesn't help that well-meaning journalists pontificate on the idea that the Triple Zero service was built for 1960s phones and question whether it can cope with reality in 2025. The number was chosen in conjunction with the Community Telephone Plan in 1960 (see section 8). This plan introduced the dialling plan for direct dialling of national trunk (long distance) calls. '0' was the first digit dialled to get you out of the local exchange, and the ranges starting '00' and '01' were for service calls - other than '002' to '004' for Tasmania. The idea that the 000 number was chosen because it was easier to find the zero on the rotary dial is mentioned as only the third of the considerations in the choice of number in the ACMA's own history of the service.

So far we only know that there were deaths associated with failed calls, not whether the inability to reach Triple Zero contributed to that outcome. This was not the case back in 2002 in what was known as the Boulding case. That case revolved around a fixed line outage that meant the family could not call anyone when their child suffered a severe asthma attack. 

The review found Telstra had not breached any of its universal service obligations, so the outcome was a whole new layer of regulation to create a categoty of priority customers for fault restoration. Policy makers and advocates need to remember that the entire cost of any new regulation falls on consumers, not telcos or their shareholders. If Government thinks they need to control the minutiae of telco operations, then renationalise the industry. If they are concerned about the operation of  Triple Zero, take responsibility for the service rather than contracting it out.

Meanwhile all the blather about Triple Zero has been framed as preparation for summer and trying to guarantee that Australians can rely on the service through natural disasters. The reality, however, is that the greatest risk to connecting to anything from a mobile phone remains loss of power to base stations. The policy of encouraging tower sharing, especially in regional areas, means there isn't as much routing diversity as might at first seem.

The Triple Zero Custodian legislation seems to be the antithesis of the Government priority on growth through cutting red tape. It is a layer of new powers that would have made little to no difference in the Optus case and will make little or no difference in natural disasters. It is the epitome of a Minister needing to be seen to do something (in response to a feview commissioned by a Minister needing to be seen to do something). 

Note: The emergency calling number designed into mobile network operations is 112. The ability to make calls to 112 over other carriers networks is a core part of the design standards. When the first digital mobile phones (GSM or 2G) were launched in Australia regulators made the decision to require the same functionality apply to 000 instead of educating Australians of the 112 code from mobiles. I suspect, but do not know, that calls to 112 from Optus mobiles would have successfully connected during the outage. Further note that the Telephone Numbering Plan 2025 shows the 112 code as being unused, in other words we could fully enable 112 as an alternate calling number on all networks. 

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Life is what happens while you are busy making other plans JWL

It is time for real eform of retail electricity markets

In his opening address to Energy Week today, Chris Bowen has announced planned changes o the Default Market Offer to make it a price cap on all offers. Today, he argies, it usually only works as a benchmark. He observed 'The vast majority of billpayers, some 80%, could be getting a better deal. It’s difficult to defend the DMO, when the customer is required to do the deal hunting.'

Fiddling with the DMO is not the solution. The fundamental flaws in the design of retail markets needs to be addressed.

The biggest myth of energy reform in Australia is that 'retail competition' was introduced in Australia. In a system with retail competition purchase decisions made by consumers have an influence over the price and quantity of electricity dispatched. 

The choices consumers make of their retailer has no impact on wholesale prices. These are entirely determined by the amount of energy that AEMO decides it needs to purchase in any five-minute interval. This price is virtually independent of any willingness to pay by consumers.

Residential, and most business, consumers can be divided into two groups. The first and smaller group is those consumers who have some capacity to adjust their consumption based on wholesale market prices. These consumers, working individually or through aggregators, have the ability to influence wholesale prices.

The remaining consumers have no impact on wholesale prices. Allowing these consumers to have a choice of retailer achieves absolutely no positive economic benefit. Indeed, the impact is entirely negative as it generates retailer costs in competition. Increases in these costs are a major contributor to the most recent increase in the DMO. That this aspect of retail competition has no benefit is reflected in the Minister's plan for 'stripping out the DMO’s competition allowance.'

There is a better way that utlises the concept of competition for the market rather than competition in the market. I outlined this in more detail in my NEM Review submission under the heading 'Making retail markets work for consumers'. The position is simply that rather than requiring all retailers to offer a standing offer for when they are the default provider for a connection point there should be only one default retailer. Anyone who chooses not to choose a market offer from a retailer is placed on the standing offer of the default retailer.

The default retailer is chosen by competitive auction every three or five years where the bid price is the retail margin the bidder requires to be the default provider. Rather than a regulator deciding what is an appropriate retail margin, the market bids for this to be the lowest margin. As this margin applies to the default operator only, there is no competition cost included in the margin.

This not only reduces prices for the consumers who 'choose not to choose', it also focuses retailers who compete for customers to compete on the basis of how they help those customers to use the tools available to them to reduce the wholesale cost of energy they consume.

An additional reform can and should occur in the way distribution network costs are recovered. The distribution networks were initially constructed to provide public lighting. The use of the networks to provide residential services is a marginal use and households should only face this marginal cost.

This means that the cost of operating a distribution network to only deliver public use services (street lights, traffic lights, powering NBN cabinets) should be estimated and billed as a lump sum to the relevant Local Council. The Council should recover these costs in land rates. The idea of recovering the fixed costs of utilities through taxation goes back to a paper by Hotelling in an article that suggests utility rates should be set equal to marginal costs which are always less than average costs, and so the residual cost should be recovered from taxation. 

This concept sparked what is known as the Marginal Cost Controversy. Ronald Coase argued that the 'correct' solution to the problem was two part tariffs, which is what we see in electricity today. However, in doing so Coase ignored some important issues of equity. Recovering fixed costs through land taxes levies the cost dispropprtionately on the well off, it is a progressive tax. More importantly, if one property is worth more than another it is possibly because of a wider steet frontage which reflects more network cost being incurred. 

Recovering fixed costs through rates has the other desirable effect of eliminating bad debt, as all unpaid rates are recovered when a property is transferred. From the perspective of retail electricity prices it simplifies the approach to only charging for the marginal cost due to consumption. 

I have elsewhere written that the idea of an essential link between networks charging a 'cost-reflective' tariff (time of use or demand based) and retailers pricing should be broken. The retailer should always face a 'cost reflective' tariff, even when there is only an accumulation meter. The retailer should be charged the cost-reflective price on the profile of the residual demand at the zone sub-station (i.e. the demand less the aggregate profiles of the connections woith interval meters). But the retailer should not be allowed to charge a cost reflective price unless (a) there is an interval meter and (b) the consumer has chosen to be charged a cost reflective price.

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Life is what happens while you are busy making other plans JWL

What is economics?

A post on LinkedIn drew my atention to an ABC story about economics which has various economists talking about how economics must change. It focuses particularly on the views of one, Nobel laureate Angus Deaton. 

The thrust of the argument is that standard economics has made the rich richer and consigned millions in advance economies back into poverty. It cites Amartya Sen as suggesting that Lionel Robbins definition (the allocation of scarce resources among competing ends) was a wrong turn. 

While it is easy to agree with that proposition, that wasn't where the evil really entered. The first thing to remember is that economics is a science, it seeks to describe what will happen when certain economic relations are put in place. The first essential economic question as framed by Adam Smith is simply "How much is there?" Under the title The Wealth of Nations this is what Smith set out to describe. His conclusion is that open trading nations with functioning domestic markets would be wealthier nations. Robbins is not unaware of this definition of economics - in An Essay on the Nature and Significance of Economic Science he refers to it as the "material definition".

That is accurate so far as it goes, and certainly was more accurate than the mercantilist approach of maximising exports while minimising imports. But Smith didn't address the second essential question of "Who gets what and why?" This is where Robbins work comes in. 

Now it transpires that the concept of "efficiency", which ordinarily means that the most output possible is generated given the amount of inputs available, has a different meaning in (some) economics. A market is said to be efficient if no one can be made better off without making someone else worse off. More accurately this could be described as "allocative efficiency". We can see how it relates to the other definition because it adds the important caveat - there is no point in making more output if it is output nobody wants.

But there is a slight of hand used in this definition of efficiency. It is subject to the Kaldor-Hicks criterion that an outcome is more efficient if someone who is made better off could compensate a person who is made worse off. This then comes down to simple benefit-cost analysis. 

This seems perfectly reasonable - if the compensation actually occurs. But it almost never does. What is worse is that some economists argue against any such transfer because of what it does to incentives. If those who are made better off have to compensate those who are made worse off, those being made better off won't try as hard and so we won't get improved efficiency. 

How this works into policy is NOT the fault of economists. A physicist can describe the pathway of a projectile, but someone else decides to fire it. A chemist can describe a reaction that results in an explosion, but someone else decides to mix the chemicals.

Economics describes how certain decisions about the relations between people (let's call them institutions) determine how much "stuff" there is and how it is distributed. Economists have accurately described how a highly artificial market that represents no real world market would allocate resources to meet their definition of efficiency. In doing so they make no statement about how these markets give greaterr weight to the preferences of individuals based on their initial endowment. They make no claim that the allocation does anything more than provide to each person as much of what they prefer that rhey can afford.

There are, unfortunately, economists who have gone beyond being scientists to being pundits. These are the economists who try to impose policy positions based on the assumption that the outcome of their theory is what policy makers want. Unfortunately policy makers are easily seduced by words like "efficiency", using it as they do as an ordinary English word not the economists definition.

Similarly we ecounter real problems with the word "productivity", especially labour productivity. This is defined by the ABS as total GDP divided by the number of hours worked. Immediately we see an issue. If we assume that not all workers are equally productive - i.e. deliver the same amount of output per hour - and that employers will first employ those who are more productive, then increased workforce participation rates and decreased unemployment would each REDUCE labour productivity. What is a perfectly reasonable way to measure productivity of an individual is a very poor way of measuring the productivity of a nation. 

One of the greatest evils to befall economics was Milton Friedman's The Methodology of Positive Economics. His starting point was a delineation by John Neville Keynes in The scope and method of political economy betweeen:

• a positive science - a body of systemetized knowledge concerning what is;
• a normative or regulative science - a body of systemetized knowledge relating to criteria of what ought to be, and concerned therefore with the ideal as distinguished from the actual; and
• an art - a system of rules for the attanment of a given end. 

Friedman argued that normative economics involved taking an ethical stand (deciding on what ought to happen) and that the economist should only be concerned with "what is". However, he took a markedly different view to the positivists in not being concerned with whether what was being described in economics was real; he favoured an instrumentalist view that the only value of theory was that it made accurate predictions, not that it described reality. 

More recently micro-economists realise they are studying a normative science in the sense that Keynes used it - they are describing idealised markets, not real markets. Yet introductory textbooks still refer to Friedman's model of a positive science. 

That economists predominately still use the neo-classical model and its three axioms of methodological individualism, methodological instrumentalism and methodological equilibration is, however a problem. Each of these axioms cannot be accepted. Individual preferences are shaped by their society and are ever changing, this is the insight of institutional economics. Individuals are not perfect calculating machines that can therefore be expected to act on their preferences, this is the insight of behavioural economic. Finally the economic system is never in equilibrium and studying based on the idea that it can ever do so is pointless, this is the insight of Austrian economics.

But even where economists do a better job of describing "what is" it is still only information for decision makers, just as climate science is just information for decision makers. 

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Life is what happens while you are busy making other plans JWL

What exactly is a mobile "blackspot"

The MP for Flynn, Colin Boyce, has launched a petition calling for a Senate inquiry into "big telcos", calling on telcos to "put people before profits". Radio news coverage said the following with the highlighted comment by the MP:

A petition has been launched in a bid to improve regional telecommunications Flynn MP Colin Boyce, whose electorate stretches to Moore Park, is calling for a Senate inquiry into the issue and why big telco companies aren't meeting their obligations. He says these black spots are even making it hard for people to call emergency services between Mount Perry and Eidsvold. 

A resident came across an accident they found a couple on the side of the road. A man was bleeding profusely. The lady could not get through to emergency services due to this black spot, and it took over an hour to get a communication connection to get the ambulance out there to assist these people. 

This is an area on the Western side of the Great Dividing Range inland from Bundaberg. It is mostly National Park and State Forest. We aren't given enough detail to pinpoint the accident location exactly.

It is hard to get a good image from Telstra's coverage map, but the image below is from their 4G coverage and the green blob in the middle is Mount Perry (you can see the road that comes in from the North and then the road out to the West. 

That great expanse of grey isn't a black spot, it is a chasm! Note also the patchy nature of coverage around Mount Perry - these infill spaces could be called black spots, but they would take a lot more infrastructure to fill than some of the expanses, though each new coverage addition would have its own patchy coverage at its edge. 

Here is what Telstra's website says about its coverage:

Putting the first figure into perspective, the only time the telcos had a coverage "obligation" (to use Boyce's word) was when the licences to operate the GSM (2G) networks were issued. They were required to cover 80% of the population. To put the second figure into perspective, that is just 35% of the total land area. 

Geosciences Australia estimates the area of desert in Australia as 1.37 million kilometres. Therefore Telstra's coverage is still only 43% of the non-desert land area. 

Referring to areas without coverage as "blackspots" is misleading. They are often large areas - larger than the footprint of just one base station. It is wilfully inaccurate to call this failure to meet obligations. The only obligation telcos have with mobiles is to pay to buy spectrum. It is also wrong to suggest that the large increase in coverage that would be required to, say, ensure no one was more than five minutes drive away from coverage, would be putting people before profits. That massive capital expenditure would still be paid for by consumers all across Australia requiring higher fees for everybody.

Apart from wanting a Senate inquiry, Boyce has acknowledged there is yet another Regional Telecommunications Independent Review underway. He probably doesn't realise that these reviews were included in the legislation by the Howard Government (Helen Coonan as Minister) to secure the Nationals support for the third stage of Telstra privatisation. Having seen the millions of dollars commited after the Besley and Estens inquiries the Nationals thought these regular reviews would unleash similar funding rounds. But without any sale proceeds, there is no cash to splash. (All the previous inquiry reports can be found here).

Of course, one way to increase coverage would be to stop having inefficient duplication of mobile networks in the thinly populated areas. The easiest way to do that is to create a mobile carrier that has a monopoly on regional areas and is owned by Government (so Government determines coverage) onto which all three of the mobile networks customers roam. (I made this suggestion in my own submission to the last RTIRC).

However, no matter what strategy is employed, there will still be large parts of Australia without mobile coverage. Calling them blackspots or claiming that telcos are uncaring is just misleading. For people planning visits to these areas or living in these areas satellite based alternatives are available. 

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Life is what happens while you are busy making other plans JWL

Howard, Price and Forgetting

It was always going to be the case that an unsuccessful outcome from the proposal to give indigenous Australians recognition in the constitution in the way they requested, the Voice, would be interpreted as if the question was more than just that.

The Guardian tells us that John Howard is the latest. Speaking to a new right-wing group - the Alliance for Responsible Citizenship (Arc) - Howard described the no vote as "a stonking endorsement of how united we are". This is, of course, a nonsense...just as the claim that the proposal itself was "divisive". 

The Australian population is not uniform in any way. As libertarians would otherwise be at pains to establish we are all different. We will coalesce around issues or attitudes from time to time. 

But the most egregious of Howard's comments is his confession about his attitude to multiculturalism. He says:

Multiculturalism is a concept that I’ve always had trouble with. I take the view that if people want to emigrate to a country, then they adopt the values and practices of that country. And in return they’re entitled to have the host citizenry respect their culture without trying to create some kind of federation of tribes and culture – you get into terrible trouble with that.

This is unsurprising from Howard; but it is duplicitous on a number of fronts. 

The first, of course, is that the idea of the new arrivals assimilating to the "values and practices" of the country to which they emigrated only applies to people who emigrated some time well after 1788. That clearly delineates the "colonisers" as invaders and conquerors, which invalidates all the rest of the claptrap. 

The second is that Howard, whose credentials on immigration were first founded on opposing further Asian immigration, in government oversaw the greatest increase in Asian immigration in our history.

But the greatest opprobrium has to remain with Senator Nampijinpa Price. She told the conference:

The way forward from here is no more separatism, no more dividing us along the lines of race, no more political correctness, no more identity politics.

And yet, on 17 October she moved in the Senate:

That, in the opinion of the Senate, the following is a matter of urgency:

The need for Prime Minister Albanese to support the Opposition's call for a Royal Commission into child sexual abuse in Indigenous communities, audit spending on Indigenous programs, and support practical policy ideas to improve the lives of Indigenous Australians to help Close the Gap.

How on the one hand you can claim that there is to be no more dividing on race and on the other introduce a motion whose first limb is restricted to race has only one explanation: this is the moral code of the modern right. At its core is the conundrum of wanting less government involvement in our lives and at the same time strong policing presence. The right is horrified about legislation regulating misinformation, but insists on dictating the curriculum in schools exclude issues of genuine concern to youth.

At its extreme the right preaches libertarianism but rails against the "politics of identity". What the right preaches most is forgetting. Forget the inconsistency between the need for migrants to assimilate and the opposite approach taken by the colonisers who set out to extinguish the pre-existing culture. Forget that we just campaigned that the Voice was about division when we ask for practical policy to close the gap. Forget that conservatives are mostly defending the rights and institutions that previous generations of progrssives procured. 

Footnote: I dislike in general the use of the terms "left" and "right" to describe a near homogonous body of political action. I make an exception at times for the right when the messages are being organised through part of the great network of new right "mouthpiece" structures. That includes the conservative congference in Australia and now Arc.

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Life is what happens while you are busy making other plans JWL

Financability and network infrastructure

The energy transition requires new electricity generation to replace the fossil fuel fleet (mostly coal in Australia) and meet growing demand arising from the electrification of the transportation and heating sectors. AEMO's modelling calls for significant new transmission assets to connect this generation, though some (including me) think AEMO is underestimating the potential for distribution connected generation to meet more of the needs.

The plans to build massive new transmission assets raises questions of financeability; will anyone be prepared to invest in or lend to the operators the funds required to make these investments. The AEMC is currently considering one rule change request from the Australian Energy Minister on financeability, and another from the same source on how to accountfor concessional finance (the Rewiring the Nation funds) in the regulatory framework. Energy Networks Australia has submitted an alternative rule change on financeability. 

These concerns raise important questions beyond the simple issues inherent in their substance. The Australian Government's proposals for market reform in electricity focussed on the creation of a single national grid under government ownership that would enable the operation of competition in generation (see my chapter A History of Electricity Reform in Guillaume Roger's On the Grid).  The reforms did not follow this path with separate state based transmission networks being separated from generation and the NEM actually operating as a set of five inter-connected markets. 

Privatisation was not a high priority of the Australian Government in this reform. It was aggressively pursued by South Australia and Victoria in the face of fiscal pressure arising from the boom and bust of the late 1980s and early 90s. Privatisation was only recently pursued in NSW (byway of 99 year lease). Part of the promise of privatisation was to avoid the issues of the need to call on government to finance growth; and yet now that growth finally arrives we question the ability of private capital to fund it.

Ultimately the financeability questions really should have us examining the wisdom of privatisation, especially of the structurally separated market platform - transmission. 

A more challenging threat to the the record of privatisation has emerged in the UK in the water sector. The challenge there is led by Thames Water. The current headline is their ability (or inability) to raise the capital (10 billion pounds) necessary to meet operating standards. How they have got themselves into the mess is a combination of regulatory failure, investor greed and new investor stupidity.

Starting with regulatory failure, the UK water sector was initially regulated under the RPI-X model, before its mofification to the RAB model in the face of concerns that pure RPI-X might erode financability. The RAB model guarantees the operator an NPV>0 outcome - they will get investment fully repaid with a return on capital. It also includes incentive components allowing the operator to retain some of the benefits of cost saving as (economic) profit. However it has clearly done so without prohibitting cost reduction to occur at the expense of service quality. 

The beneficiary of this weak regulation was the owner of Thames Water from 2006 to 2017 - Australia's Macquarie Bank. As well as extracting profit from reducing cost at the expense of service quality, Macquarie loaded the businesses with debt (they changed the gearing ratio). If I load a business with extra debt I can return shareholder equity as special dividends. These were the greedy investors.

The stupid investors are those who bought the business from Macquarie. They haven't been able to generate any returns and inherit the problems of running down service quality. A challenge for regulators is that the service quality impact of underinvestment are only apparent some years after the investment falls away. 

One of the reasons for the failure of privatisation was that Governments didn't sufficiently understand the difference between privatising as listed entities and privatising through private investment. A lot of the theory of the efficiency of private investment hinges on the shareholder capital model. The benefit is three fold. The first is the requisite public reporting required of listed businesses and the resulting scrutiny applied by financial analystys. The second is the daily evaluation of company performance by the market. A focus on short term returns may be (is) destructive, but limitting market transactions to turnover measured in decades simply results in avoided scrutiny. And when these transactions do occur they are made by businesses accessing confidential data being advised by merchant bankers whose incentive is for the transaction to occur - it is a recipe for purchasers always over paying. The third is genuine competition, the framework of private ownership by big super funds or by big infrastructure players (thinking Ontario Teachers and Hutchisom Whompoa as examples of each) results in all the businesses globally having similar strategies and tacit collusion, especially in their regulatory engagement.

Having listed entities solves many problems. The financeability question can be resolved by simply creating a pricing outcome of how much new equity investors require to support the new project. The performance question is resolved by the greater transparency applied through market listing.

It is probably too late to reverse the privatisations, but we should cettainly do no more (e.g. the NBN). It isn't too late to institute licence conditions that require a proportion of the equity capital of these businesses to be listed, limits on the shareholding by related parties of the listed stock, and boundaries on gearing. The businesses will all no doubt cry blue murder about government interference in areas that should be decisions of investors and management. The simple counter is that the buisinesses only exist courtesy of a goverment licence for monopoly. 

I hold no hope that any policy maker will have the courage to pursue this essential reform. But that is a different problem.

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Life is what happens while you are busy making other plans JWL

That Hawke quote

As the public consideration of how to vote in the forthcoming referendum on the Voice, the No campaign has latched onto a quote from Bob Hawke that reads:

We are, and essentially we remain, a nation of immigrants a nation drawn from 130 nationalities in Australia there is no hierarchy of descent: there must be no privilege of origin. The commitment is all. The commitment to Australia is the only thing needful to be a true Australian.

This quote is drawn from Hawke's speech to the Federation of Ethnic Communities Councils in November 1988. Hawke refers to it as a quote from his launch of Australia Day celebrations that year, however, I have not been able to find that speech.

The reason Hawke referred to the quote in the latter speech wasn't just that he was addressing the Ethnic Communities Council, but, as he says, because of the development of the "One Australia" policy by John Howard. Hawke introduces his reference to that policy by saying that his one regret from the Bicentenniel year had been "the collapse of bipartisan support for the principles of multiculturalism and of a truly non-discriminatory immigration policy." 

He made the context of his remarks clear by referring to a resolution proposed by Hawke and  the House of Representatives gave "its unambiguous and unqualified commitment to the principle that, whatever criteria are applied by Australian Governments in exercising their sovereign right to determine the composition of the immigration intake, race or ethnic origin shall never, explicitly or implicitly, be among them."

The policy Howard espoused had been kicked off in August of that year in a radio interview which Hawke reports as:

Back in August, he was explicit. Asked about the rate of Asian immigration, he said: "I wouldn't like to see it greater... I do believe that in the eyes of some in the community, it's too great, it would be in our immediate term interest and supportive of social cohesion if it were slowed down a little, so that the capacity of the community to absorb was greater."

So there is no doubt at all that the context of Hawke's remarks was about the equality of all the migrants to the country, starting with those who arrived on the First Fleet. It was not a reference to the descendents of the original inhabitants.

Hawke's distinction with respect to Aboriginal Affairs was made clear in an earlier speech to the "Terra Australis to Australia" conference in August of that year. Early in his remarks Hawke noted:

As a nation we have come to accept that all Australians whether Aboriginal Australians, descendants of the First Fleeters, or new arrivals have a right, within the law, to develop their cultures and to contribute them to the wider Australian society. 

It is regrettable, but broadly true, that each group of new arrivals in Australia has been greeted by predictions that they will never be successfully integrated into the Australian community. 

But the reality of the Australian experience is that each group of new arrivals has successfully defied those predictions. 

Their success is an essentially Australian one.

Of course, Hawke overlooked the fact that uniquely one group of arrivals was never expected to assimilate, that being the British colonisers and the convists they forced here. 

Later in his speech he turned his attention to the then very recent fracturing of bipartisanship on immigration. He noted:

The Opposition leader has explicitly called for a slow down in the rate of Asian immigration. He refused to associate himself with the Bicentennial Multicultural Foundation because of the word "multicultural". 

He patronised ethnic communities and effectively encouraged the creation of ethnic enclaves by allowing as he put it "the right of people of say, Greek descent to preserve Greek customs and Greek language within their own family." I emphasise "within their own family" as though to speak a language other than English on the streets, to dance something more exotic than the quick step, was unacceptable. 

The National Party leader has said explicitly: "Asian immigration has to be slowed," because there are "too many Asians coming into Australia." 

The Nationals' Senate leader has called euphemistically for bringing the immigration stream "back into better balance" which means reducing the "excessively high proportion of immigrants from Asia".

In describing Howard's "One Australia" policy Hawke further noted:

It is based upon the belief that all Australians have to conform to one set of unchanging attitudes; it doubts the commitment of immigrants to this country; and it implies that certain Australians, by reason of race or ethnic origin, are less able to integrate into Australian society. In a recent speech, Mr Howard extended his "one Australia" slogan to cover other issues issues of industrial relations, equality of opportunity and Aboriginal Affairs.

Unfortunately I don't know what speech Hawke is referring to. However, it is very clear from the context that Hawke was explicitrly rejecting the Howard notion that Australia needed to be inherently mono-cultural and that this included aboriginal Australians.

In contrast to the misinterpretation of Hawke's comments about immigration, we should examine in more detail his policies in Aboriginal Affairs. First and foremost was his expressed intention to enter into a treaty by the end of 1990. This intention was built on the back of the Barunga Statement. One of the requests (demands) of the statement was for "A national elected Aboriginal and Islander organisation to oversee Aboriginal and Islander affairs." Hawke gave effect to his commitment to this part of the statement by passing the Aboriginal and Torres Strait Islander Commission Act 1989 (the ATSIC Act), which was the basis for ATSIC formed in 1990.

Hawke's commitment to treaty floundered on entrenched opposition from the LNP and for some in his own party. 

ATSIC was abolished in 2005 by John Howard. This followed controversy around the particular person chairing ATSIC, though a formal review of ATSIC recommended reforms not abolition. The path to abolition was opened when Mark Latham became leader of the ALP. As we have subsequently discovered, Latham was a throwback to the racist ALP at the start of the twentieth century.

Had Bob Hawke had the foresight to realise that subsequent LNP governments would dismantle ATSIC, or had he been requested to establish a First Nations Voice in the Constitution, what does his conduct suggest he would do?

Very simple - Bob Hawke would have backed constitutional change. 

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Vote YES

Dutton and the Voice

Peter Dutton's first response to the proposed Voice was to ask how it would make the children subject to sexual violence safer.

His argument for supporting the No case is that a national voice will achieve nothing, instead proposing regional and local voices and a mere symbolic constitutional recognition.  

Today he visited Alice Springs and met with his own Senator Price and one shopkeeper. He didn't meet with local indigenous groups saying "I'll let those organisations speak for themselves". In other words, they can be voices, but he won't listen to them.

Price is a bundle of contradictions, being a Liberal because she opposes government involvement in people's lives but being a proponent of extreme involvement (cashless debit cards alcohol bans) for her own people.

Let' just put this all in context. The Uluru statelent from the heart was the endpoint of a proposal for constitutional recognition that dates back to John Howard. That proposal was the same kind of smbolic recognition Dutts favours.

But when First Nations got asked what they wanted, a long process, including what was technically a Constitutional Convention at Uluru, said recognitioon without understanding was pointless. First Nations wanted a Voice to be followed by truth-telling and treaty.

For anyone still confused about "truth" just read the sections of the UK Parliament "Parliamentary Select Committee on Aboriginal Tribes" report of 1837 that address Australia and the Pacific Islands. 

A whole lot of guff gets talked about under "sovereignty" - and the sovereign citizens show you how much is rubbish. That Australia was and always will be aboriginal land is anexpression of the cultural connection, not about a claim to governance. Inddeed, placing so much importance on the Voice being included in the Constitution is an embrace of oiur democratic forms.

The only people who have anything to fear from the Voice are people like Dutton who don't want to hear from First Nations people as organised representative bodies. They may pick and choose and find a few individiuals - a Price or a Mundine - but will be rejected by those who were formally their own like Ken Wyatt.

Dutton isn't just playing politics and seeking to differentiate himself from Labor. He isn't just trying to hold what's left of the Liberal Party together. He is simply opposed to the idea of listening to First Nations people because they don't deserve to be listened to. There is a label for that!

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Life is what happens while you are busy making other plans JWL

A comment on teacher shortages

This post will get me into trouble with so many people who will tell me that I don't understand teaching and the dynamics of school education. So I am going to try to write it more as a series of questions or 'alternative propositions', rather than as dogmatic statements of fact. 

But knowing me, I will forget to do that. So as you read this please read anything I say as a proposition not a conclusion. I am a fan of Socratic dialogue where thesis and antithesis produce synthesis. 

So let's start where I am on the safest ground. Simple economic theory of the labour market would suggest that if you have a shortage of labour to do a specified task you need to pay them more. That is the simple explanation in the context of  neoclassical market theory of value. We could be more general and say "reward them more" recognising non-monetary preferences of people such as respect. 

One could even add a wrinkle of the labour theory of value and note that it is no longer possible to convert a non-education degree into a teaching qualification through a one year Dip Ed, a two year Masters degree is now the requirement. So for someone who studies, say, science because that is what they like but at the end of the degree is trying to figure out what to do with it, the idea of getting the extra qualification to teach is seriously unattractive. You would expect a greater life time income to make up for the extra year of unearned input labour.

Both views of value, however, don't mean you necessarily have to increase pay rates over the teaching lifetime, an alternative is to bring forward the remuneration. That is simply more and larger payments to study - what we know better as scholarships. And these scholarships need to potentially be attractive to people already in the workforce. 

This last point is, of course, the reason why some people propose programs that allow peple skilled in a field to come to teaching by a pathway other than a two year Masters degree. Correctly they identify the challenging construct of putting these people to work as teachers before they have learnt how to teach. This, of course, is the challenge of all disciplines that require a skill rather than just knowledge. When do you first put the scalpel in the hand of a person training in medicine? When do you first allow a lawyer to argue a case before a judge? 

This is where the concept of "apprenticeship" comes in, and the expectation that student teachers will go to classrooms and try out their learning. There are serious questions to be asked about how this aspect of teacher education is carried out, and indeed, of how teachers are observed in the practice of teaching throughout their career. 

A recent contribution by some academics who teach teachers has reacted against proposals to fill shortages by getting trainee teachers to do more teaching. They have argued that the teacher training problem won't be sorted until we treat teaching as a profession not a trade. I want to say something as strong as "this is a thoroughly misguided notion", but will attempt to restrain myself and simply apply some analysis.

Firstly, the distinction between a profession and a trade isn't that in the latter you do an "apprenticeship", the major differences are in the depth of knowledge required to apply the skills and, largely as a consequence, the need for ongoing professional development. A related issue then becomes who should teach the discipline. The old dividing line between universities and the colleges (of advanced education or just teachers colleges) is that the teaching staff in Universities are also expected to be active researchers, the teaching is linked to new knowledge. 

There isn't really a clear dividing line between trades and professions, while we can easily identify plasterer as a trade close to one end of the scale and neurosurgeon as close to the other end, a whole host of skilled jobs sit in the middle. Accountants are a good example where the knowledge doesn't change much and it can be argued that changes to accounting standards are as much driven by the need to keep employing accountants as they are by the greater clarity provided to anybody by the resultant different financial statements. 

The article provided a very misleading view in its discussion of law and medicine, saying:

 In professions such as medicine, you develop specialist knowledge and expertise. Or you specialise as a generalist. But in teaching, teachers are largely required to develop expertise in all teaching methods, assessments and all aspects of student health and wellbeing.

And: 

We would not assume a high-school legal studies teacher, for example, would be able to become a lawyer without undertaking the appropriate tertiary study. So why do we imagine a lawyer can short-cut the education required to become a legal studies teacher?

Firstly we need to draw distinctions between specialist teachers and general teachers. All high school teachers are expected to be specialist teachers, while most primary school teachers are general teachers - though there may be specialists in language, music or other subjects.  And a review of any secondary teacher education curriculum shows that not all teachers develop expertise in "all teaching methods." 

I care most about the single biggest crisis area which is the teaching of mathematics. 1 in 4 year 8 students are being taught by a teacher whose major qualification was in a field other than maths, and 1 in 10 will never be taught by a qualified maths teacher and 75% will be taught at least once by such a teacher. This is a crisis that will snowball as less and less students finish secondary school with a sufficient level of mathematics to be able to progress to teaching the subject. 

So let's look at the lawyer analogy. Would I assume that a mathematician could walk into a classroom and successfully teach? No. But would I expect a maths teacher to be able to do mathematics? Absolutely. And the so-called short cut really means putting the trained mathematician in a classroom as part of (not instead of) their teacher education.

My suspicion is the problem lies elsewhere - it lies in the success of the teaching profession, and especially their educators, in trying to turn teaching into a profession. Certainly it isn't a "trade", but it may well be better described as a "craft". The word "calling" possibly comes closer. Good teachers try to become better teachers every day.

I had a quick look at the curriculum for the Bachelor of Mathematics Education and the Masters of Education (Secondary) at the University of Wollongong. I struggled to understand the principles of the education subjects in the undergraduate degree, such as the statement in the subject Education Foundations: Introduction to Teacher Education that "You will examine the nature of learning and how using research can improve your teaching practice". Does knowledge in education really advance as quickly as, say, the treatment of cancers? Or do we have a self-serving community of education academics that all got brought into the University system from the college system and to justify their existence are churning out volumes of poor quality research? 

I also struggled with how much education subjects crowded out mathematics or other disciplines in the Bachelor's degree but also the absence of a strand aimed at teaching mathematics in the Masters degree. 

In the comments on the original article people have mentioned that in medicine the education is conducted by practicing doctors. Indeed all the qualifications for specialisation are undertaken by the learned colleges, with instruction by both working doctors and academics. The core of the experience is being a registrar supervised by consultants in a hospital setting (or for GPs by a GP in their practice). Law schools do rely on practicing lawyers who also lecture as a way of providing some instruction, and your average lawyer is expected to start in a law firm closely supervised by a partner. Senior barristers (SCs) are required to be accompanied by a junior barrister on every brief as part of developing the barristers.

That isn't the way teacher education works. Teacher education is taking place in Universities, where teachers are trained by academics who theorise on teaching. As part of the course they are "exposed" to the classroom. The quality of the supervision they receive in those classrooms vary - but one would possibly understand "over worked" teachers using this as a form of relief from face-to-face teaching. They could satisfy their consciences on doing so by saying the student teacher needed to establish their own authority in the classroom, or not have the pressure of the master teacher being in the room. 

But does the surgeon let the student make their first incission while the surgeon is making a cup of tea? Does the silk leave the junior barrister to run the case while they prepare for the next case? Does the partner let the new solicitor provide an advice to a client without reviewing it?

So here is my alternative view. The way to both train better teachers and to improve teacher retention is to get teachers more involved in training teachers, and academics less so. For those Ministers who are scratching around for ways to better remunerate good teachers my suggestion is that you pay teachers who take on students and mentoring more. 

While we are at it, also reduce the workload of teachers being required to develop lesson plans and teaching resources. This is the definition of poor productivity having multiple people producing almost exactly the same goods that could have been produced by one and used by many. Proper textbooks provided by the state would be so much more efficient than the model of resources bought and photocopied. 

I know that teachers were horrified when NSW Minister Mitchell suggested this as developing lesson plans was the part of the job they liked. What we need is teachers who like being in the classroom facilitating learning.

But here is the challenge. The only people the Ministers can turn to for advice are the education academics whose answer will be based on the need for more research and more teacher education (not training). Unions have long promoted the greater professionalisation of the trade they represent, on the basis that higher skills entailed higher pay. 

But this is where reality hits. With an economy where 80% of activity happens in the service industry to get the productivity increase across the economy that will help us lift wages we need to lift productivity in the service industries. For decades education, especially school education, contributed to growing productivity by growing the skill levels of our workforce, largely just by greater retention rates. Productivity needs to come by geting better educational outcomes for less resources. 

A focus on teachers getting better at teaching, not lesson planning or administration, is the key to that. Teachers getting better at teaching has to happen at the workplace, not the University. A related proposition is that teacher education should be returned to the college model, and not be conducted by academics who are also researchers. 

Which would I prefer teaching mathematics, a qualified teacher who hasn't studied mathematics beyond school, or a mathematician who is using quality pre-prepared resources and being mentored and supervised by a teacher? The answer is the latter.  

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Life is what happens while you are busy making other plans JWL

Stage 3 Tax Cuts

The so-called Stage 3 Tax Cuts are a conundrum for the Albanese Government. As a reminder the cuts were legislated as part of a package in 2018 (hence Stage 3) and will cut the rate applying to incomes over $45,000 from 32.5 cents in the dollar to 30 cents and will extend that low rate all the way up to $200,000, abolishing an entire rung of the tax ladder paid by the highest earners. For those very high earners, the part of their income that was taxed at 37 cents will be taxed at 30, as will part of the rest that was taxed at 45 cents.

It was politically necessary for Labor to promise to honour the Stage 3 cuts going to the election, and it is a mantra after the election that they will keep their election commitments. However, circumstances change. While we knew about the break-out of inflation just before the election (but well after Labor made the commitment), it has been even more severe than expected at that time.

The RBA has consequently been raising the cash rate aggressively. It has been doing tis earlier than its original timetable of 2024 because the economic conditions changed. As stated in the famous dictum "when the facts change I change my mind, what do you do sir?"*

It is reasonable to wonder why a government would legislate for a tax cut so far in advance. One possible reason is to obtain the stimulatory effect of a tax cut while not facing the immediate fiscal consequence. Recall that growth in Australia in (calendar) 2018 was sluggish at best. With interest rates already low and inflation below the target band, the RBA was urging government to stimulate the economy. 

So much changed with the pandemic's arrival in 2020. Interest rates further cut, stimulatory spending by government on an unprecedented scale and massive change to the structure of economic activity, including the now familiar "supply chain pressures". To this already explosive cocktail President Putin added a war that has sent energy prices soaring. 

From the perspective of the economy the facts have changed, so it would be reasonable to change one's mind on the tax cuts. But is it politically feasible.

The Essential Report today shows that 44% of rspondents are very concerned about inflation, while another 44% are somewhat concerned. In the same survey 42% supported "delaying" the stage 3 tax cuts, and only 25% opposed such a move. It is unclear what "delaying" the tax cuts would mean to voters.** 

What seems to be both essential for the economy and politically feasible is some fine tuning of the stage 3 measure. The first needs to be about more effectively addressing the effects of bracket creep at the bottom of the scale. The second needs to be about not excessively reducing tax for households that will spend extra on discretionary expenditure. 

That would entail a shift upward of the taxfree threshold of $18,200 and the top of the 19% rate from $45,000. The mathematics needs to work backward to calculate the point at which the revised tax free threshold would give a tax payer the same total saving from the reduction of the 32.5% rate to 30% as currently legislated. The most critical change is to not abolish the 37% rate, but its range should be expanded, possibly cutting in at $130,000 and cut out at $200,000. 

These need to be sold as temporary measures to address the immediate needs of targeting the benefits of tax cuts to the households most experiencing 'cost of living pressure.' The longer term tax policy needs to be grounded in yet another review, but this one should be premised on no changes to the tax system until after the next election. 

I wouldn't like to be Jim Chalmers, but no change to Stage 3 seems to be an untenable position. 

* Sometimes attributed to Winston Churchill or John Maynard Keynes, quoteinvestigator attributes it to Paul Samuelson. In doing so they note another case in which Samuelson referred to it as having been said by Keynes, but no other evidence has been found. It is notable that Samuelson's use was on the topic of inflation.

** The results of the Essential Report survey need to be handled with caution. 65% of respondents said that they had heard hardly anything or nothing at all about the proposed Voice to parliament in the last month, so they are possibly not a group most across contemporary political reporting, though this may be generally representative of the population. . Regardless of what they heard 65% supported the proposed voice.  

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Life is what happens while you are busy making other plans JWL