Thursday, November 02, 2023

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.

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

Thursday, June 29, 2023

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.

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

Sunday, June 25, 2023

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. 

Vote YES

Wednesday, April 12, 2023

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!

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

Friday, August 12, 2022

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.


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.  

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

Tuesday, August 09, 2022

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.  

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

Sunday, July 31, 2022

The Voice

I cannot match Prime Minister Albanese's eloquence in his speech at the Garma Festival that released his initial view of the constitutional question and provisions to give effect to the Voice requested by the Uluru Statement from the Heart. But I can respond to his invocation:

All Australians have the chance to own this change, to be proud of it, to be counted and heard on the right side of history.

I want to be counted and heard as being on the right side of history on this matter. However, to be successful the Prime Minister needs to do more than invoke a sense of justice in calling for support for his proposal. For evidence he need look no further than indigenous voices in the Senate that do not yet support the creation of the Voice. They come from two sides; one argues the voice is mere symbolism, while the other argues that treaty is more important than voice.

The first view comes from Senator Jacinta Nampijinpa Price, who in her first speech this week said:

It is the same attitude we hear with platitudes of motherhood statements from our now Prime Minister, who suggests, without any evidence whatsoever, that a voice to parliament bestowed upon us through the virtuous act of symbolic gesture by this government is what is going to empower us. This government has yet to demonstrate how this proposed voice will deliver practical outcomes and unite, rather than drive a wedge further between, Indigenous and non-Indigenous Australia.

This is a reasonable position, how can we believe the Voice will make any tangible difference. However, the Senator's views at times seem confused. 

On the one hand she says "I am an empowered Warlpiri Celtic Australian woman who did not need and has never needed a paternalistic government to bestow my own empowerment upon me" and "I believe in small government, which equates to small bureaucracy, so that Australians may get on with their lives more effectively." 

On the other hand she bemoans two acts this week - the end of the grog bans from the intervention and the end of the cashless welfare card. Both of these are examples of interfering big government telling communities the solutions appropriate to them. Hopefully the opportunity for community based alcohol bans and for optional cashless welfare cards will not be lost. 

Senator Lidia Thorpe has explained her opposition to the Voice because she believes we need to start with truthtelling (that there is an unfinished war) and a treaty (to end that war) -- in this she also explains how she thought the statement was prepared by an insufficiently representative group. She also believes the referendum will fail because of opposition from indigenous people.  

When we get to the wider community there are equally confusing arguments, including:
  1. It is a racially discriminatory law.
  2. It is just symbolism, it doesn't change anything. We need to focus on the domestic violence and sexual acts on children first. 
  3. It is more than symbolism and damages our democracy.
  4. There isn't enough detail on what we are voting for.
In this I am reminded far more of the politics of climate change than I am the referendum on the republic. The former was serious stuff, while the latter was mostly symbolic. (Indeed, we should stop talking about the republic referendum in the same breath as the referendum on the Voice).

In his book Power Failure Philip Chubb argues that a reason why the Rudd government failed in implementing climate policy was that it failed to keep reminding the public why it was important. Similarly, it is not enough for Albanese to rely on existing levels of support, he needs to ensure support continues. 

To do that I think he needs to embrace Noel Pearson's "three epic strands in the grand narrative" which Peter Hartcher reminds us Peter Dutton quoted this week. Pearson's succinct statement, made at the conclusion of his speech to the 50th annversary dinner for The Australian newspaper on 15 July 2014 were:

Our nation is in three parts. There is our ancient heritage, written in the continent and the original culture painted on its land and seascapes. There is its British inheritance, the structures of government and society transported from the United Kingdom fixing its foundations in the ancient soil. There is its multicultural achievement: a triumph of immigration that brought together the gifts of peoples and cultures from all over the globe — forming one indissoluble commonwealth.

Hartcher doesn't record whether Dutton also quoted the final sentence Person uttuered:

We stand on the cusp of bringing these three parts of our national story together — our ancient heritage, our British inheritance and our multicultural triumph — with constitutional recognition of indigenous Australians. This reconciliation will make a more complete commonwealth.

The story is, of course, that the Uluru Statement arose out of that process. 

And this statement gives us the important response to the first objection. The proposed Voice isn't based on race but sovereignty. The Aboriginal and Torres Strait Islander peoples are being given this recognition because this country belonged to their ancestors. Then the British came, uninvited, as soldiers, convicts and then free settlers. They brought with them diseases that devastated populations, they took the land and resources, and, yes, they killed those who resisted.

Inca Clendinnen's excellent Dancing with Strangers attempts to understand the coming together of the inhabitants of the area around Sydney Harbour and the new arrivals in January 1788. Though she only has the recollections of the British to work from, she describes two distinct cultural shocks. 

The first was the communalism of the locals confronting the British concept of property. The aboriginal people let the British fish in their harbour and rest on their land, but were surprised when the British stopped them acedssing the food in the stores. 

The second was the astonishment of the locals at the barbarity of the invaders; where the locals used ritual spearing the British flailed men's backs with whips. (This should be contrasted with Senator Nampijinpa Price's description "We have a foundation of a sophisticated but brutal culture, where it was kill or be killed over resources such as water, women and later livestock—food for survival—or from doing the wrong thing like marrying the wrong way or sharing knowledge that's not yours to share". Whether Clendinnen misrepresents the first nation people around Sydney, or the Senator is misinterpretting her own nation's experience, or whether this is an example of cultural difference across first nations I don't know.)

I don't want to reignite the debate over aboriginal history and the extent of "frontier wars", but to deny there were killings is naive. To do so on the basis that the only truth is the records of the colonisers is deceitful. I offer as evidence only a passng reference in the preface to A Tale of South Australia During the Gold Fever. The authorship of this book is credited to Clara Morrison, but its real author was Catherine Helen Spence whose main claim to fame was as a leader of the campaign for female suffrage in the 1890s. The book itself is the story of how a South Australian town survived when all the men went off to the Victorian goldfields. The preface, describing how the men made the journey to the goldfields, said:

Others, again, pursued the shorter but more adventurous roue, across the inhospitable region which separates the two colonies, startling the wild tribes of the interior by their apparition, and leaving occassionally behind them small mounds of earth to mark the place where the strong man had bit the dust. 

We do not need to belabour the extent of this killing, we don't need to debate the technicalities of whether this is self-defence or what degree of force a land owner (the indigenous) are entitled to use against a tresspasser. But it happened. 

As the PM said "we have cast aside the discriminatory fiction of terra nullius" (the High Court did that). What we haven't done is engaged with the consequence of the action taken by those acting in the name of the British Monarch. We can't undo history, but we can acknowledge past wrongs and seek to put it right.

A common response is to argue that past wrongs are over-compensated for by current benefits. This is framed as the benefits brought to the country by Western civilisation, its institutions and its science. This defence, unfortunately, ignores the distribution of those benefits which flow mostly to the colonisers not the dispossessed.  

It is acknowledgement of this entrenched indigenous disadvantage that lies at the heart of  the second objection; the Voice as mere symbolism that it won't change anything. 

There are two parts here. The first is to call out the focus of some on one aspect of indigenous disadvantage, alleged high rates of domestic violence and sex crimes against children. Focussing on this aspect of disadvantage rather than the whole context of health, education, housing has the consequence of placing the focus on first nations people as somehow inherently evil. 

The second part is to recognise that this misses the point of "for what" the Voice is being created. This, perhaps willfully, misrepresents what the Uluru Statement said about the Voice:

We seek constitutional reforms to empower our people and take a rightful place in our own country. When we have power over our destiny our children will flourish. They will walk in two worlds and their culture will be a gift to their country.

We call for the establishment of a First Nations Voice enshrined in the Constitution.

First Nations want things to be better, they want to be empowered to make them better, and they want the constitutional protection that this voice cannot be taken away. Here it is appropriate to talk of ATSIC.

Wikipedia tells us:

The Aboriginal and Torres Strait Islander Commission (ATSIC) (1990–2005) was the Australian Government body through which Aboriginal Australians and Torres Strait Islanders were formally involved in the processes of government affecting their lives, established under the Hawke government in 1990. A number of Indigenous programs and organisations fell under the overall umbrella of ATSIC.

The agency was dismantled in 2004 in the aftermath of corruption allegations and litigation involving its chairperson.

The reason why First Nations don't want just a new body is so that it can't just be taken away. The reason we need to not put too much detail in the Constitution is the body may need reform in the future to keep it contemporary and effective. 

The interesting part is that the Uluru Statement itself wasn't very specific about the nature of the Voice. The Indigenous Voice Co-design Process: Final Report to the Australian Government of July 2021 makes interesting reading on this point. It envisions a voice that is composed of local and regional voices building up to the national voice. The intention of these different geographic voices isn't just to be part of a representation structure getting to the national voice, it is for those voices to engage directly with appropriate government and other bodies on matters of local and regional significance. 

This is an important part of the aspiration for the Voice. That said, the three propositions that the PM has proposed to be included in the Constitution are not, to my mind, enough. He has proposed:

  1. There shall be a body, to be called the Aboriginal and Torres Strait Islander Voice.
  2. The Aboriginal and Torres Strait Islander Voice may make representations to Parliament and the Executive Government on matters relating to Aboriginal and Torres Strait Islander Peoples.
  3. The Parliament shall, subject to this Constitution, have power to make laws with respect to the composition, functions, powers and procedures of the Aboriginal and Torres Strait Islander Voice.
My first difficulty is the name - the Uluru Statement called it the "First Nations Voice". This has a benefit over the ATSI version in two ways. The first is the breaking of a connection to ATSIC, and the inevitable reference to it as ATSIV. The second is that it reminds us of the great diversity of cultures and experiences that exists in the First Nations. 

The big difficulty I have though  is that anybody in the nation may "make representations to Parliament and the Executive Government". My preference is that the second clause come third and that it be strengthened to say that the Parliament must make laws providing for the right of the Voice to table a document in the Parliament and for a representative of the Voice to address the Parliament on any matter relating to the well-being of Aboriginal and Torres Straight Islander Peoples. 

This provision provides meaning to the concept of "may make representations" and guarantees that representations will be heard. It also tightens the language to focus very specifically on the concept of the well-being of first nations people, because quite frankly everything government does relates (potentially) to any person. 

The third and fourth points can only be addressed by providing more than just the warm inner glow of their being a Voice. If the Co-Design Process had clearly landed on a design then the simplest process would have been for the Government to enact, along with the Act to change the constitution, a Voice Establishment Act that would commence on the constitution amendment being ratified. 

However the Co-Design Process didn't do that and instead called for more work to build the local and regional elements first. This can be the first tasked assigned to a body that could be legislated to come into existence with the passing of the amendment. The body should be designated the Interim First Nations Voice and should be composed of appointed members. It should otherwise look a bit like the proposals for the national voice and be composed initially of two representatives from each State and Territory and be supported by its own Office of the National Voice. 

The principle task of the Interim First Nations Voice would be to work with State and Territory governments to implement the model of local and regional voices, and, once they are established, work with the local and regional voices to finalise the model for the national voice to be provided as a recommendation for enactment by the Parliament. 

To put it simply, the Government could legislate for the process to establish the voice as the element of providing greater clarity.  There needs to be more concrete planned action at the time of the constitutional amendment. 

If not now, when?

Saturday, May 28, 2022

The United States and Guns

The rest of the world looks on in horror every time there is another mass shooting in the United States. Unfortunately, mass shooting is only one aspect of this carnage.

Pew Research reports that in 2020, the most recent year for which complete data is available, 45,222 people died from gun-related injuries in the U.S., according to the CDC. Suicides account for more than half of these deaths (54%). 

"Mass shootings" are not consistently defined but only account for about 2.5% of murder by gun shot. The Gun Violence Archive, an online database of gun violence incidents in the U.S., defines mass shootings as incidents in which four or more people are shot, even if no one was killed (again excluding the shooters). Using this definition, 513 people died in these incidents in 2020.

Given that the massive gun death toll doesn't move the dial, it is unsurprising that another mass shooting in unlikely to lead to gun control reform. Indeed, the theory that the best way to stop a bad guy with a gun is a good guy with a gun probably explains why Republican states ease gun laws after mass shootings.

The issue from where I sit is that no one seems prepared to take on the core issue, which is the 2nd Amenment itself, which reads:

A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.

Unfortunately for the US, the Supreme Court has not seen fit to limit the right to bear arms to the intent of the amendment - that is to limit the right to the Militia. Effective gun control may be possible by leaving the 2nd Amendment largely untouched but change it around to the right of members of the Militia to bear arms shall not e infringed. An amendment could add to the the powers of the Congress the ability to make laws about how the Militia is identified, trained and armed. 

The amendment process itself is laid out in Article V.

The Congress, whenever two thirds of both Houses shall deem it necessary, shall propose Amendments to this Constitution, or, on the Application of the Legislatures of two thirds of the several States, shall call a Convention for proposing Amendments, which, in either Case, shall be valid to all Intents and Purposes, as Part of this Constitution, when ratified by the Legislatures of three fourths of the several States, or by Conventions in three fourths thereof, as the one or the other Mode of Ratification may be proposed by the Congress;...

Interestingly this means there are four ways to make amendments:

    1. A proposal by Congress with ratification by state legislatures.
    2. A proposal by a convention of states with ratification by state conventions.
    3. A proposal by a convention of states with ratification by state legislatures.
    4. A proposal by Congress with ratification by state conventions.
The first is the method that has been used for all but one of the amendments. The fourth method was used for the 21st Amendment (which repealed the 18th Amendment, ending Prohibition).

The fourth method would be a challenge given the Republican position, but if there ever was a time to introduce a Bill and have it debated that time is between now and the mid-terms. The gun lobby is not as big as people think, and a well structured debate about not disarming militia's nor deny individuals the right to self-defence but the elimination of assault rifles would have to stand a chance.

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

Monday, May 23, 2022

The 2022 Election

As we sit in the idle time between the excitement created by Saturday night and the accompanying electoral hangover of Sunday and the eventual return of the Writs and a return to the business of governing, every pundit has been out giving their explanation of the significance of the vote. Why should I be any different?

My first observation is that the ALP's 2022 campaign only looked like a small target campaign compared to the insanity of the 2019 campaign. A strong narrow focus on issues that mattered -- climate, Uluru, childcare, aged care, medicare, wages -- meanbt that the press gallery and the coalition couldn't find loose ideas  to distract Labor with. Even with the so-called 'stumbles' Labor never missed a beat on its narrative, nothing distracted from it.

This resulted in the rambling Morrison, the Morrison who tried to bully Albanese in debates one and two. The joy was watching Albanese get stronger by the day when dealing with the gallery. Letting a journalist who wants to keep interuptting the answer to their own question keep talking till they have revealed they had no question, only an answer they wanted to give. Today he went one further just telling a journalist that shouting wouldn't get them the call any earlier.

The second is the over-reach of the Teal independents and the Greens who have both started demanding that Labor increase its target for emissions reduction by 2030 to 60% not 43%. Both talk vaguely about the PMs need to reach an agreement with trhem on confidence and supply. But Albanese not only expects to have a majority in the House of Representatives, he announced today that he already has the agreement of the contiuing cross bench for support on confidence and supply.

And while Labor plans to legislate its target, they don't have to. So attempts to insist on 60% in legislation simply will result in Bills being withdrawn. And Albanes has already turned his focus to the great alliances - the bringing people together - that matters. That is internationally with the Quad meeting inconveniently organised by Morrison already, the jobs summit and the face to face meeting with Premiers and Chief Ministers.

I have suggestion on all four of these topics later. But in the midst of this triumphalism, it is important to realise that politics is changing in this country. Both major poltical parties (or groupings) have experienced a steady decline in their primary vote since the Second World War. 

This is not the place to discuss that trend - just to acknowledge it. I have heard some trying to suggest Labor's continuing decline was strategic votng by Labor voters to ensure that Labor finished behin the Teals and thus ensured Liberal defeat. It is a grand theory, and there is potentially evidence in large swings from Labor in Wentworth and Mackellar and poosibly Hughes and Hume. But swings in Fowler were two to three times bigger. Werriwa, Cunningham, Whitlam and Parramatta sizeable. And those swings to the Teals may just have been genuine swings - the progressive middle class finding something even better than Labor as a vehicle for their causes. 

But just as Labor needs to take stok, so must the Greens whose achievement of three new HoR seats (possibly) and Senators from each State leader Adam Bandt described as a 'mandate' for their agenda. We'll see your four seats Adam, and raise it by 72. 

Now to strategies and tactics. 


Albanese can and should immediately notify the UNFCCC that Australia has a new NDC of a target of  43% by 2030, and an ambition for 60%. That is we guarantee we will get to 43% and are in the process of wotrking on how to over achieve that. He then needs to recreate the machinery necessary for this by either refunding the Climate Change Authority or more radically embrace Stegall's Climate Change Authority. He needs to get the Premiers and Chief Ministers to agree to the inclusion of emissions reduction as an objective of the Australian Energy Market Agreement (it already partially is) and to change energy market governance. Submitting as the Network of Illawarra Consumers of Energy I made a case for new governance arrangements. 

Federation Reform

The biggest compliance cost to business of any size is the need to comply with different State laws and regulations where there is no need for these variations. Decades of faffing around with things like mutual recognition has had no effect, only clear simplification of the ability of the Commonwealth to take over responsility for activities will resolve anything.

National Security

What happened to China since the days when Tony Abbott invited President Xi to address the Parliament is Donald Trump. His aggressive anti-China stance, leading with tariffs but also concerted attempts to block their tech companies' growth, created a reaction in China. We need to restart the conversations tha Keating created with APEC. We need to acknowledge that the well-being of the citizens in South East Asia and the Pacific Island nations is a shared responsibility of the leading economies in the region. After all, the island nations will be facing serious threats under climate change. China can be welcomed as a strategic partner. 

At the same time someone needs to get each of the Government's in Beijing and Taipei to relinquish their idiotic claims that they are the Government of all of China. The partition has existed for over seventy years now. Eliminating wars based on disputed territory should be the UNs number one goal globally. 


We have a ridiculous situation of an official unemployment rate of 4% (3.9%) but an underutilisation rate of 10%. 6% of the Australian workforce is in receipt of JobSeeker payments. Yet the business community moans about a lack of 'skilled workers.' But when people want to tell me that cooks and waitstaff are skilled staff we need to bring in from overseas (because we traditionally have) my response is that we need to pay the workers more, and we need to train more. So in every sector where there is a demonstrated shortage of skilled staff provide a training subsidy to employers. 

To the extent that temporary immigrants are a solution the visa processing delays need to be alleviated immediately by adding more staff. But at the same time the visa system needs massive review to simplify it. 

But Labor's biggest idea here is Jobs and Skills Australia. Clearly Albanese is keen to get this and the summit underway, it is one of the reasons he swore in Richard Marles as employment minister today. (Yes I know the entire press gallery believes he wants to be Minister for Defence. Reality is almost no one ever progresses to greatness from that portfolio - if he wants a crack at being Albo's successor he needs to do employment well. It will cretainly have far more profile than Defence. 


Inflation can be a good thing for an economy. It provides an environment in which relative prices can change more rapidly. The trick is to ensure inflationary pressures are eased on the goods and services that are genuinely essential and have little discretionary aspect. Inflation can also erode the size of the ational debt in real terms.

Equally the idea of targeting 2-3% was never based in any science. So the Government can afford to set a revised target for the RBA to keep inflation within a 2-5% band. 


By all means continue with existing programs, but what is really required is old fashioned public housing and it needs to be available in every LGA. This is one of those things he needs to deal with the Premiers on. 


Apart from cutting the consulting budget and hiring more public servants, Albanese also needs to tell the public service that he expects them to provide advice to his Ministers about risks or vulnerabilities in a policy even though Ministers may not like to hear it. 

That is enough of a list to get on with. 

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

Tuesday, March 15, 2022

What excites Scott Morrison about a university

PM Scott Morrison went to the Central Coast yesterday to open a new facility of the University of Newcastle. After talking about the dream catcher that one of his daughters hung over their bed, he gave us, in one inspired moment of Prime Ministerial sludge, a commentary on his idea of a university.

But for that to work, you've got to have a community base of infrastructure and services. And what makes all of that work, is an economy that can support that. And what excited me about this as Treasurer, I wasn't the Minister for Health, I was the Treasurer, and a university sits at the heart of pretty much every successful economic regional plan you care to nominate anywhere in the world, let alone in Australia. But not any university that, you know, keeps itself separate from the rest of the community and walks around in gowns and looks down on everybody. And, you know, only looks at things that are remotely interesting to anyone. It's a university that's very practical and understands the opportunities, whether it's in science or medicine or in any other areas or fields of enquiry and research, and is raising up a workforce and a generation of people that can actually transform the region in which they're living. Now that's what the University of Newcastle’s been doing.

The campus has been here for many years. But what captivated me in that original meeting - I don’t know if ever I’ve told you this - was that vision of the University of Newcastle to be really a, a university for the whole Central Coast Hunter region, and to be firing up the enterprises that are across the Central Coast and the Hunter to bring the best possible researchers into these universities in regional areas that make them world leaders.

And I I agree with you, and Christopher would be over the moon that you mentioned him today, but as for the Members of Parliament they’ll all know Christopher Pyne well, he loves a mention. But Christopher was right. And when I look at our regional universities, I get really excited. I get excited about the University of Newcastle. I get excited about the other universities like University of Western Sydney or the University of Wollongong or or Griffith or all of these, Deakin and so on, because what I find in those universities, and forgive me, Lucy, if this is a bit off topic, is I see a dynamism, I see an innovation, I see an engagement with industry and the community, and I see a connection to the services. And this is what I want for universities in Australia. I don't want them to be remote. I want them to be part of the community in which they sit. And not just, and I mean, the the economy of that community.

To break this down, he claims:

A university sits at the heart of pretty much every successful economic regional plan you care to nominate anywhere in the world. Not a university that keeps itself separate from the rest of the community and walks around in gowns and looks down on everybody. Not a university that only looks at things that are [only] remotely interesting to anyone.

It's a university that's very practical and understands the opportunities, and is raising up a workforce and a generation of people that can transform the region in which they're living.

And when I look at our regional universities, I get really excited. I get excited about the University of Newcastle, the University of Western Sydney, the University of Wollongong, Griffith ,Deakin and so on, because what I find in those universities, I see a dynamism, I see an innovation, I see an engagement with industry and the community, and I see a connection to the services. 

And this is what I want for universities in Australia. I don't want them to be remote. I want them to be part of the community in which they sit. And not just, and I mean, the the economy of that community.

That the PM seems to have decided to have no prepared remarks, and has thus delivered tortured and barely meaningful language, might be his way of trying to be 'authentic' on this occassion. Instead it comes across as someone not really caring at all about the event. The thrust of the overall remarks is that the new facility exists because the people of the Central Coast had the wisdom to elect a Liberal member.

But the comments about universities are quite telling. Firstly the PM draws this distinction between practical, locally connected universities and some other kind of university which keeps itself separate from the rest of the community. In the context, he is pretty much describing the G8 universities - Australia's equivalent to the UK's sandstone universities (mostly). The PM himself is a graduate of one of these (UNSW). I wonder at his University experience - I seriously doubt any academics walked around in gowns in his days as a student, let alone today. 

And it is this overreach on the question of gowns that makes the rest of the blather about these universities (looking down on everybody and only looking at things that are only remotely interesting) just appear incongruous.

We are left asking the question of whether the PM really believes these 'other' universities really exist, or whether it is a rhetorical device used to ensure that those who dislike all universities don't dislike this particular funding opportunity. 

And there are people who seem to 'dislike all universities.' These are the people wo talk of 'the march of the left through our institutions' and see universities as breading grounds of left-wing ideologies and socialist activists.  

I am personally a great fan of regional universities, for a host of reasons. I would prefer to see a shift in the undergraduate population away from the G8 to the regional. But my reasoning is demographic, it is one way of taking some population out of the capital cities, and maybe encouraging more people to live permanently outside these cities.  Or, in the case of city fringe universities like Western Sydney University, to create economic activity away from the historic city centre.

TIf the PM is genuine in the last part of his remarks, that he has some kind of genuine aspiration for universities to be part of the community in which they sit, what policy framework can he point to that is trying to develop this connection? A grant made to a University that sits in a Labor held electorate to open a facility in a nearby marginal coalition held electorate looks more like pork than policy. 

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

Sunday, March 13, 2022

Climate Change, National Security and the ADF

One way to view the role of government is that it delivers four fundamental securities; national, personal, economic and social. National security is the foremost protection, defending the citizenry from interference with their rights by another nation. Personal security is the analogue of this and includes defending citizens from infringement by other citizens. Economic security aims to provide a continual increase in material wellbeing of the citizenry, while social security aims to provide for citizens unable to provide for themselves. 

In many ways politics is defined by the different views on how each of these should be viewed.

Events over recent weeks provide a platform for examining some of these issues. The Russian invasion of Ukraine commencing on 24 Fenruary raises important questions about national and economic security. The flood events in South East Queensland and Eastern NSW starting on 28 February raise important issues about personal and social security. This post is going to focus on the inter-relationships between the four securities.

The far away events in Eastern Europe are already having a dramatic impact on Australia. As outlined in an excellent article by my friend Claire Connelly in The Saturday Paper today, the application of economic sanctions against Russia, including on oil and gas exports, is driving up global prices. Claire makes the point that the impact would be less if we had already transitioned to more renewable fuel resources. 

Others have questioned the wisdom of Western Europe of becoming so reliant on Russian energy exports. This line of thinking misses the point that beyond the traditional fields of military force and diplomacy as means of providing national security, the world since 1945 has grown increasingly reliant on economic integration as a means of preserving peace. The West's response to Russia of imposing economic sanctions is slower acting, but ultimately far more effective than military intervention. The cost to Western Europe of some necessary economic adjustment is far less than the cost if a military conflict escalated to cover more territory than Ukraine.

Ultimately Putin's strategy is based on the belief that once he has secured Ukraine, the West will move on. But that won't be the case. Even Chamberlain only agreed to the German accession of the Sudetenland because he wanted to delay the ultimate war, not because he thought he could avoid it. Putin has been too clear that his ambition doesn't end with Ukraine.

The second lesson from this is that traditional defence forces are less important than they once were. A related lesson has been the demonstration of how unmanned weapons make some manned weapons obselete. Ever since John Monash first developed a battle plan that made tanks effective for the battle of Hamel, the tank has been the essential core of land warfare. The Ukrainians have thus far demonstrated how exposed they are to drone strike. It won't be long before the reverse will be shown - that drone cover will be more effective for supporting advancing infactry than tanks or armed personnel carriers.

The floods have again exposed the fragility of any nation in the face of extreme weather events. These events are expected to become more frequent and more severe as the climate continues to change as a result of greenhouse gasses. The floods first impact has been on personal security - with 22 deaths and much loss of property already resulting. And it throws many of these citizens back onto relying on the social security system, especially the need for housing.

A core part of commentary has been about how quickly the Australian Defence Force can be delpoyed in these circumstances, and on how much support it is reasonable to expect from them. Former General Peter Cosgrave today weighed into the debate and suggested that we shouldn't rely on the ADF, but should create a paid part-time civil defence force based on the model of the defence force reserve. 

There are two fundamental flaws in the Cosgrave solution. The first is the simple labour economics question of what group of people are going to be making a time re-allocation to engage in this paid part-time civil defence force. The two primary groups would be volunteer effort shifting to paid work - SES volunteers becoming part-time civl defence employees. That would add cost but not resources. The second group would be ADF part-timers moving to the relatively more safe occupation of civil-defence part-timers. 

The second and more significant flaw is to not understand the nature of national security. For Australia, there is already a 'war' of kinds being played out in the Pacific and South East Asia between China and the West on who provides support and assistance to these countries, including the security challenges they face. The first is the ongoing challenge of economic security, or development, in building a strong and sustainable economy to deliver material wellbeing. The second is the growing challende of adapting to climate change. 

One of the ways Australia has historically helped these nations is the use of our defence forces in various 'relief' efforts. Apart from being conducted remotely from our nation, these tasks are little different to the tasks we need in the face of such emergencies. These include clean-up operations, temporary housing, essential supplies including clean water, and potentially temporary health faclities. Added to these are simple engineering works of fabricating temporary roads, wharfs and bridges, and reestablishing communications.

These tasks are, however, also tasks that need to be performed in support of military defence activities. Unfortunately, the focus of military planners has been excessively on weapons platforms and special forces. The perception has been that tasks for which infantry manpower are required can be rapidly fabricated and added to force strength on an as needed basis.

The Ukranian war and our own natural disasters reflect the error in that thinking. Infantry supported by 'light' intelligent weapons are essential in a ground war; they can combat the weapons and tactics of the 20th century. Natural disasters increasing in intensity and frequency require greater manpower support that utilises skills we need to deploy in assistance through our region.

Personally I have long argued that being an open trading economy has been Australia's best defence strategy. None of the countries with whom we trade would be prepared to sit back and watch another country attempt to secure these resources by force. Central to that has been our sale of energy resources, that is coal and gas.

The importance of energy resources dictated the conduct of World War II. When Germany eventually declared war on Russia, the German's primary objective was Russian oil fields in the south. That dictated the structure of the campaign, but also laid the groundwork for is failure as the German advance was spread over two great a front. In the Pacific the Japanese attack on Pearl Harbour was designed to knock out the US fleet so that it couldn't slow the rapid advance the Japanes needed to make on Indonesian oil wells. 

The focus on energy resources in Australia has moved to discussions about the security of our own oil requirements. While a more rapid move to electric or fuel-cell vehicles will make sense there are also many developments in biofuels, such as the microbial conversion of fatty acids into propane (which provides LPG for gas converted cars). 

But the more important element is what happens to our trading relationships as countries no longer want our coal and gas. This is why Australia, as part of its national and economic security, needs to focus on being able to export its abundant energy capabilities, both as energy and energy intensive products.

Nine years of the Abbott-Turnbull-Morrison government have been taking us in eaxactly the wrong direction. We have antagonised our Pacific neghbours over the response to climate change. We have failed to address our own energy security and the question of replacing our largest export industries. Our defence capability has focussed on ever bigger announcements about platforms (tanks, submarines) of limited usefulness, and failed to acknowledge the importance of a strong disaster response capability both for ourselves and our neighbours. 

Despite these failings, the LNP still believes its strengths are national security and economic management. If people need more convincing on the fallacy of that proposition, just remind them that it was Curtin who fought WWII and it was Whitlam, Hawke and Keating who created the strong open trading economy. 

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

Tuesday, February 22, 2022

The Sorry State of the NEM

The National Electricity Market, or NEM, is the name given to the interconnected electricity grids of Queensland, New South Wales, Victoria, South Australia, Tasmania and the ACT. It grew out of the micro-economic reform agenda of the Hawke government (though its initiation predated the Hilmer report). 

Progressively since the NEM began Energy Ministers meeting under a string of different names progressively added elements to the national framework. Economic regulation of distribution networks was added in 2006, and retail as the National Electricty Consumer Framework, or NECF, progressively from 2012-16. Victoria famously hasn't adopted the NECF and opinions differ among consumer advocates of whether this has really generated significant additional benefit to consumers.

Unfortunately, the disintegration of cooperation between the States and the Commonwealth over climate action has fractured other aspects of the collaborative approach. Not least of these are differential approaches to policy on Renewable Energy Zones. 

The latest difference is also climate related. Recent increases in damage caused by weather events - bushfires and storms - has resulted in a great deal of interest in how distribution networks (DNSPs) should respond to the expected increase in Major Event Days. In NSW the three DNSPs have joined with the single DNSPs that cover the ACT, Tasmania and Northern Territory to engage with consumers on how they should adapt their operations

The risk with this approach is that the networks will utilise the 'fear factor' to obtain consumer support for massive investment in making the network more resitant to damage, but do little to help communities if power is interrupted.

In Victoria the Government, grandstanding as the Victorian Energy Minister is want to do, has announced a review by 'an expert panel.' That the panel is composed of an experienced consumer advocate, a consultant in regulatory reform, and a further consultant whose main claim to fame was author for Energy Networks Australia of the Electricity Network Transformation Roadmap that has almost never been referred to after its completion. Missing from the panel is anyone actually expert in the design and operation of distribution networks. 

My primary regulatory experience comes from the Australian telco sector where 'self regulation' is at least a goal, and has progressively been achieved. In electricity, as Fiona Simon observed in her book Metaregulation in Practice, one of the failures of self-regulation in electricity was the constant need of Ministers to be seen doing something.

Developing distribution networks to manage the increased likelihood of extreme weather events causing mass disruption needs to be an agreement between consumers and networks. That agreement, or negotiation, needs to be about more than just making networks more robust. It needs to consider how distributed resources could enable islanded networks to continue to provide power for essential services. It needs to consider what changes could be made that would facilitate restoration works.* Indeed it needs to consider every alternative so that the right balance can be struck between price and service quality (a catch all term that includes voltage maintenance, reliability and safety).

The NSW network process is far from ideal, but it is at least starting in the right place. Bespoke processes driven by State Governments are the antithesis of the system we are trying to establish. 
Life is what happens while you are busy making other plans JWL

Wednesday, April 28, 2021

A new era for NBN Co pricing

Australia's National Broadband Network is not currently what it was planned to be. I was for many years up to my eyeballs in the policy issues. I was part of the discussions that initiated Labor thinking that structural reform of the industry should be achieved when a new access network was built (a proposition advanced at a Competitive Carriers Coalition and AAPT seminar in 2004). I was part of the group devising an alternative to Telstra's proposition for an access holiday for a new network. I was bizarrely part of attempts by a wireless operator to pitch fixed wireless as an alternative technology in parts f metropolitan areas (proof that as an employee I can pitch thgings I don't believe employer at the time stuffed it up royally by trying to go to Rudd directly bypassing Conroy under the mistaken belief that Rudd was a leader and a decision maker).

I watched in horror as NBN Co started negotiating on its acceess terms with retailers in a private consultation in which only the retailers participated.  I watched in horror as NBN Co would not include quality of service in those discussions.

Later I was recruited into Stephen Conroy's office as special adviser and speech writer. I again watched in horror as NBN Co struggled to develop its access undertaking in a consultative manner, and equally in horror as  telco regulatory managers expressed the view that they wanted the ACCC to be in the centre as a price setter rather than price approver (I am looking at you Optus). I wound up in a shouting match with Bill Shorten's office and John McTiernan in (Gillard's) PMO over the response to the Penrith asbestos incident and Shorten's repeat of a demand that Telstra remediate its entire network to remove all copper. The roll-out timetable could not recover from the six months of suspension of operations that this approach resulted in. 

I then watched as NBN Co management released a deeply flawed strategic review that pleased its new shareholding ministers but ignored the documented improvements already made to the fibre roll-out. I think I cried when the coalition adopted the Multi-Technology Mix (or Malcolm Turnbull's Mess) and thereby trashed the revenue model (see footnote 1).

We are where we are. NBN Co's pricing model has largely been shelved as repeated special offers have applied discounts - mostly to the CVC component. NBN Co is apparently looking at 'soft caps' on  excess usage charges and the ACCC has jumped on this saying it welcomes NBN Co's announcement that a 'new approach' to the regulation of its access pricing is needed (see footnote 2). In a most extraordinary statement the ACCC Chair makes a play to be at the centre of the pricing arrangements, saying: 

Until now, access pricing has largely been developed by NBN Co, so the prospect of bringing this work squarely within the remit of a special access undertaking with effective ACCC oversight is a very significant change. This is the start of a long reform process that would effectively put NBN pricing under the ACCC’s regulatory umbrella, and would improve access pricing for NBN Co customers.

It is extraordinary because NBN Co pricing already is under the ACCC's regulatory umbrella - it is just that the umbrella specifies a maximum price, not the exact price. 

The more frustrating part is the telcos complaining about a margin squeeze. They make the point that consumers are used to declining telco costs and that an increasing NBN Co ARPU is inconsistent with that. However, the pricing behaviour is such that telcos have been reducing retail prices at a faster rate since the NBN came into being than they did in the period of competition with an integrated Telstra after 1991. The chart below shows the real telecommunications price index from CPI data and trend lines for three separate periods (see footnote 3). 

NBN Co needs to change its approach entirely. They need to be working with retailers to identify how they can design premium products that retailers can command premium prices for. This is hard given the MTM but not impossible. Now that almost every copper pair is actually being used for an NBN service a service qualification can be performed, and strategies to provide improvements developed so that retailers can confidently offer guaranteed higher speeds. Getting on with remediating the network to at least fibre to the kerb will also help.

NBN Co needs to consider all options for restructuring prices - including if need be the original 14 POI model - noting that recovering its costs at a WACC of the risk free rate plus 3% (or whatever the arbitrary amount chosen is) is a requirement. 

Multi-lateral price design isn't impossible - it is essential. 


Footnote 1: It is hilarious in hindsight to re-read one justification for reducing the revenue forecasts (i.e. appetite for higher speed tears and the planned multicast service) that the NBN Co plan had overestimated Australian interest in streaming services. 

Footnote 2: The ACCC Chair Rod Sims is normally quite adament that an 'access price' only relates to the price an integrated firm charges for access to a bottleneck facility that is provided to firms with which the regulated firm competes in downstream markets. Technically as a structurally separated entity NBN Co is just charging a price - it isn't an access price. I understand the difficulty that the law is still drafted referring to access undertakings etc.

Footnote 3: This data is for the aggregate of services and it might be thought that mobile services are bringing this down. But telcos made the same complaint before the introduction of 4G in mobiles - that the high capital cost of spectrum and equipment would be hard to recover from consumers. The simple reality is that CEO's and CFO's like bigger profit margins and will do anything to find them. The regulatory team has long been the go to group. 

Tangentially related footnote: In the context this week of the Health Minister announcing the continuation of the tele-health arrangements for another six months and that the Government and stakeholders would now work to make it a permanent model. Pathetically tele-health is mostly nothing more than telephone conversations. 

Tele-health was one of the applications identified for the NBN and featured prominently in the ALP's National Digital Economy Strategy. The Coalition Policy on the Digital Economy in 2013 said:

Many of the aspirations contained in the updated NDES are outside the scope of this policy because they fall under other portfolios (for example expanding the Medicare Benefits Schedule to include remotely delivered services or changing the taxation of employee shares), are largely the responsibility of the States and Territories (for example the National Plan to Fight Cybercrime), or are both (for example adding ICT to the National Curriculum in schools). 

The woefully inadequate state of tele-health is in dicative of the failure of the coalition under all of Abbott, Turnbull and Morrison to take both Broadband and the Digital Economy seriously. 
Life is what happens while you are busy making other plans JWL