EDITORIAL THURSDAY 24.12.09.
In the words of John Lennon: And so this is Christmas… and what have we done? It seems hard to believe that another year has somehow passed by so quickly, and yet here we are, looking forward to Christmas time with family and friends, and looking back at the year that was. So what have we done in the past year?
After the economic disaster of 2008, the New Year began with a bleak outlook. The share market was still see-sawing its way down to depths not seen for years. Dire warnings of recession and unemployment prompted a second wave of economic stimulus in the form of the $42 billion nation building and jobs plan. Now as the year draws to a close, the markets have regained much of their losses, unemployment seems to have leveled out and the recession was postponed indefinitely. Well at least technically anyway. Some will say that the outcome means the economic stimulus spending did its job and the plan worked. Others will always say that the spending was unnecessary and a waste.
Early in the year we were devastated by the Black Saturday fires in Victoria which destroyed lives and property on a terrifying scale. Temperatures and weather conditions conspired to create an unstoppable inferno, leading to claims that perhaps climate change had made the intensity of the fire worse than it might otherwise have been. Drought still grips large areas of the nation, and rivers are drying up. It was the year of the great Sydney dust storm, which originated in the deserts of South Australia, swept across New South Wales, and transformed the city into a scene from a science fiction movie that might have been set on Mars.
Kyle Sandilands and Jackie O couldn’t stay out of trouble. Every time vile Kyle opened his mouth he managed to offend somebody, but for some reason he is still permitted to drive a Rolls Royce, a privilege which should be reserved for more civilized people… like members of the Royal Family and African despots. John Della Bosca shocked the citizens by owning up to an extra marital affair with an attractive young woman half his age, secretly impressing a cavalcade of ordinary looking men who could only dream of achieving something similar. And then even John’s achievements were overshadowed by Tiger Woods.
But while John was keeping company with a younger woman, another young woman was about to make history as Kristina Keneally became the first woman premier of New South Wales. In the federal arena, boxing champion Tony Abbott orchestrated a classic one – two maneuver to KO Malcolm Turnbull and take over the Liberal Party leadership. Mr. Turnbull, accustomed to the Marquis de Queensberry’s rules, was caught with his guard down because he was naïve enough to expect a fair fight. While keeping a careful eye on Happy Joe Hockey, he was blindsided by the Mad Monk. Poor bloke never saw it coming.
In 2009, the world was stunned by the death of Michael Jackson, completely upstaging the final tragic performances of one time Charlie’s Angel Farrah Fawcett and Dirty Dancer Patrick Swayze. Kung Fu star David Carradine checked out without leaving his hotel room in Bangkok. Not to be outdone, Hollywood star Jeff Goldblum thought about dying too for a while, but then realized that it wouldn’t be any fun if he wasn’t around to enjoy all the attention.
The leaders of the world all gathered together in Copenhagen to talk about climate change, and it turns out that’s about all they did. After two weeks of generating enough hot air to raise the sea level a good 15 centimetres, they failed to reduce emissions by even enough to offset their own carbon footprint fro all the jet fuel they used getting there in the first place. So instead of an agreement there is an accord, and instead of a target there is a target to set a target next year. We should have known what to expect all along. After all, Denmark is the home of Hans Christian Anderson, the creator of the world’s favourite fairytales.
When you realize that it all kind of makes sense. Kind of.
Until next year, have a safe and happy Christmas and a prosperous New Year. Look after yourself, but more importantly let’s all remember to look after each other. In the end, each other is all we ever really have.
Thursday, December 24, 2009
Wednesday, December 23, 2009
Christmas List
EDITORIAL WEDNESDAY 23.12.09.
All I want for Christmas is, well let’s see…. Let’s draw up a wish list and see what we can come up with. Maybe first up we could all wish for our Christmas mail to be delivered on time. For some of us that may not happen due to the industrial action which has been taken by the CEPU against Australia Post. While it’s tempting to pin all the blame on the union for timing the action to cause maximum interruption, it also has to be realized that the dispute has been dragging on for three years. In that light, you have to wonder just how serious the management of Australia Post is about actually negotiating.
The union claims that the management agenda is to casualise the workforce, removing job security and eroding conditions, while at the same time reducing overall staff numbers resulting in a decline in customer service standards. They say that customer queues at the post office are getting longer, and anyone who has been to a post office lately would probably agree. It is a reflection of the broader business management philosophy endemic in the world today which dictates that efficiency means achieving more with less. By that reasoning the ultimate efficiency is a workplace with no staff and no products and customers who pay them for not doing anything at all. It is self evidently nonsense, but the entire business world has fallen for it. And Australia Post isn’t even a private company, although I have to wonder just how much longer that will last.
In fact, it is a contagion which has long since spread to government entities of every variety. That’s why we have governments telling their agencies that they must deliver so called efficiency dividends, despite the simple fact that nurses in hospitals, teachers in schools and police on the beat are not businesses at all. There is no such thing as productivity in the industrial sense when it comes to the provision of such community services. The idea that less is more just doesn’t work in that context. Instead all you get is less. Less employment in the public sector, less job security, less service to the community, less quality in the services that you do get, and less community satisfaction.
So, as we draw up our Christmas wish list, let’s add genuine reform to health and public hospitals which acknowledges the input of the doctors and the nurses and the communities that they serve, instead of just the empty promises which have so far delivered nothing more than platitudes. Let’s add sustainable, integrated public transport for our cities, but especially Sydney which has an increasingly splintered scattergun approach to public transport. Just because it costs the taxpayers money doesn’t mean that it’s inefficient. In fact, it’s an investment in a better community, especially in the light of the latest research showing the increasing greenhouse gas impact of having everybody driving private cars.
But most importantly, as we make our list of Christmas wishes, I think we might wish for a little more kindliness, a little more caring, a little more courtesy in what seems to be an increasingly belligerent society. That’s not something that we can expect our politicians to do for us, but it is something that we can at least contribute to achieving for ourselves. We can all do our part to make our community a better place by being a little more patient with each other, a little more tolerant, and a little more considerate. It is after all a part of the Christmas tradition to spare a thought, and maybe a little more, for those who are less fortunate, and to share peace and goodwill with all.
In fact, that’s probably the most important part of the Christmas spirit of all, and that should be at the top of any Christmas list.
All I want for Christmas is, well let’s see…. Let’s draw up a wish list and see what we can come up with. Maybe first up we could all wish for our Christmas mail to be delivered on time. For some of us that may not happen due to the industrial action which has been taken by the CEPU against Australia Post. While it’s tempting to pin all the blame on the union for timing the action to cause maximum interruption, it also has to be realized that the dispute has been dragging on for three years. In that light, you have to wonder just how serious the management of Australia Post is about actually negotiating.
The union claims that the management agenda is to casualise the workforce, removing job security and eroding conditions, while at the same time reducing overall staff numbers resulting in a decline in customer service standards. They say that customer queues at the post office are getting longer, and anyone who has been to a post office lately would probably agree. It is a reflection of the broader business management philosophy endemic in the world today which dictates that efficiency means achieving more with less. By that reasoning the ultimate efficiency is a workplace with no staff and no products and customers who pay them for not doing anything at all. It is self evidently nonsense, but the entire business world has fallen for it. And Australia Post isn’t even a private company, although I have to wonder just how much longer that will last.
In fact, it is a contagion which has long since spread to government entities of every variety. That’s why we have governments telling their agencies that they must deliver so called efficiency dividends, despite the simple fact that nurses in hospitals, teachers in schools and police on the beat are not businesses at all. There is no such thing as productivity in the industrial sense when it comes to the provision of such community services. The idea that less is more just doesn’t work in that context. Instead all you get is less. Less employment in the public sector, less job security, less service to the community, less quality in the services that you do get, and less community satisfaction.
So, as we draw up our Christmas wish list, let’s add genuine reform to health and public hospitals which acknowledges the input of the doctors and the nurses and the communities that they serve, instead of just the empty promises which have so far delivered nothing more than platitudes. Let’s add sustainable, integrated public transport for our cities, but especially Sydney which has an increasingly splintered scattergun approach to public transport. Just because it costs the taxpayers money doesn’t mean that it’s inefficient. In fact, it’s an investment in a better community, especially in the light of the latest research showing the increasing greenhouse gas impact of having everybody driving private cars.
But most importantly, as we make our list of Christmas wishes, I think we might wish for a little more kindliness, a little more caring, a little more courtesy in what seems to be an increasingly belligerent society. That’s not something that we can expect our politicians to do for us, but it is something that we can at least contribute to achieving for ourselves. We can all do our part to make our community a better place by being a little more patient with each other, a little more tolerant, and a little more considerate. It is after all a part of the Christmas tradition to spare a thought, and maybe a little more, for those who are less fortunate, and to share peace and goodwill with all.
In fact, that’s probably the most important part of the Christmas spirit of all, and that should be at the top of any Christmas list.
Tuesday, December 22, 2009
Abbott Hijacks Health Initiative From Rudd
EDITORIAL TUESDAY 22.12.09.
Opposition Leader Tony Abbott has launched a campaign to seize the agenda on health reform from the government. In effect, he is attempting to hijack the government’s position, adapt it to suit his own needs, and take it to the next election. And who can blame him? Health care and hospital reform was an issue which was front and centre at the last election, right up there alongside work choices, and the people of Australia are entitled to ask what happened to those promises. Two thirds of the way through the term of government there as been a lot of talk and very little action, so its easy to get the idea that Kevin Rudd has squibbed on his promise.
Whatever else you might think of Tony Abbott, he is an adept political player. Regardless of the lack of actual policy on pretty much anything, his energetic opposition to just about everything the government does has to some extent revitalised the Liberals, giving them a spark they had lost by making a clear distinction between themselves and the government. Where Mr. Rudd once had clear public support for his agenda, the truth is that the states are reluctant to give up control over anything to the Commonwealth, leaving Mr. Rudd’s timetable for reform sadly battered and bruised. And while Kevin Rudd is now seen as being slow to bring about meaningful health reform the door is open for a smart operator like Mr. Abbott to seize the initiative.
Of course, it is easy in opposition to tell everybody that you would do a better job than the incumbants without actually having to do anything. Tony Abbott knows that, and is taking maximum advantage of it, making himself a pro-active opposition leader prepared to attack the government at every opportunity. But he also knows that sooner or later he will have to come up with real answers and real policies if he is to have any real hope at the next election. His proposal today for the federal government to directly fund healthcare through local hospital boards and bypass the states is an echo of Kevin Rudd’s 2007 pledge to seize control of hospitals if the states could not lift their game. It sounds very appealing, but actually delivering on the promise if and when the crunch comes will be a whole lot more difficult unless the states come to the party.
Just ask Kevin Rudd.
Opposition Leader Tony Abbott has launched a campaign to seize the agenda on health reform from the government. In effect, he is attempting to hijack the government’s position, adapt it to suit his own needs, and take it to the next election. And who can blame him? Health care and hospital reform was an issue which was front and centre at the last election, right up there alongside work choices, and the people of Australia are entitled to ask what happened to those promises. Two thirds of the way through the term of government there as been a lot of talk and very little action, so its easy to get the idea that Kevin Rudd has squibbed on his promise.
Whatever else you might think of Tony Abbott, he is an adept political player. Regardless of the lack of actual policy on pretty much anything, his energetic opposition to just about everything the government does has to some extent revitalised the Liberals, giving them a spark they had lost by making a clear distinction between themselves and the government. Where Mr. Rudd once had clear public support for his agenda, the truth is that the states are reluctant to give up control over anything to the Commonwealth, leaving Mr. Rudd’s timetable for reform sadly battered and bruised. And while Kevin Rudd is now seen as being slow to bring about meaningful health reform the door is open for a smart operator like Mr. Abbott to seize the initiative.
Of course, it is easy in opposition to tell everybody that you would do a better job than the incumbants without actually having to do anything. Tony Abbott knows that, and is taking maximum advantage of it, making himself a pro-active opposition leader prepared to attack the government at every opportunity. But he also knows that sooner or later he will have to come up with real answers and real policies if he is to have any real hope at the next election. His proposal today for the federal government to directly fund healthcare through local hospital boards and bypass the states is an echo of Kevin Rudd’s 2007 pledge to seize control of hospitals if the states could not lift their game. It sounds very appealing, but actually delivering on the promise if and when the crunch comes will be a whole lot more difficult unless the states come to the party.
Just ask Kevin Rudd.
Monday, December 21, 2009
A Target To Set Targets
EDITORIAL MONDAY 21.12.09.
After all of the hot air expended at Copenhagen it seems that there is very little result to show for it. Despite widespread calls for urgent action on climate change, and a general consensus that global warming should be contained to within 2 degrees, the final result of the conference appears to be a vague agreement for everybody to go away and draw up a wish list. Each country can nominate its own voluntary target and the means by which it will be achieved, and the lists are all due to be handed in by February. After dire warnings that ambitious and binding targets of 25 to 40% must be set to avoid climate catastrophe, we have instead a target to set targets next year.
There was some discussion about finance to assist poorer countries in dealing with the cost of climate change policies, and agreement for a supposed $100 billion fund, but no real plan on just how the money will be raised or whence it will come. Even assuming that the money is found somewhere, it amounts to about half of what is said to be required for the task. This is such a vague compromise that it would have been impossible to draw up a treaty or even a formal agreement. Instead, the conference has resulted in a “statement” by a handful of countries which has been “noted” by the other nations, whatever that means. In fact, what it appears to mean is that nobody has committed to anything.
So, after two weeks of gasbagging in Denmark the final outcome is an underfunded plan with no clear source of finance to achieve targets which have not yet been set. It would seem to be just possible that the net result of the entire exercise has been to fail to achieve sufficient emissions reductions to even offset the carbon footprint of the delegates burning all that jet fuel to get there in the first place.
Here at home, opposition leader Tony Abbott has been claiming vindication for his position that the Carbon Pollution Reduction Scheme legislation should be delayed until after Copenhagen. He claimed that the scheme would be not only useless, but actually damaging, if it went ahead in the absence of a global agreement. Now that the outcome of the Copenhagen conference has turned out to be exactly that, it can be expected that the opposition will again reject the legislation when it returns to the Parliament in February. One way or the other, the next election will be dominated by climate change policy.
After all of the hot air expended at Copenhagen it seems that there is very little result to show for it. Despite widespread calls for urgent action on climate change, and a general consensus that global warming should be contained to within 2 degrees, the final result of the conference appears to be a vague agreement for everybody to go away and draw up a wish list. Each country can nominate its own voluntary target and the means by which it will be achieved, and the lists are all due to be handed in by February. After dire warnings that ambitious and binding targets of 25 to 40% must be set to avoid climate catastrophe, we have instead a target to set targets next year.
There was some discussion about finance to assist poorer countries in dealing with the cost of climate change policies, and agreement for a supposed $100 billion fund, but no real plan on just how the money will be raised or whence it will come. Even assuming that the money is found somewhere, it amounts to about half of what is said to be required for the task. This is such a vague compromise that it would have been impossible to draw up a treaty or even a formal agreement. Instead, the conference has resulted in a “statement” by a handful of countries which has been “noted” by the other nations, whatever that means. In fact, what it appears to mean is that nobody has committed to anything.
So, after two weeks of gasbagging in Denmark the final outcome is an underfunded plan with no clear source of finance to achieve targets which have not yet been set. It would seem to be just possible that the net result of the entire exercise has been to fail to achieve sufficient emissions reductions to even offset the carbon footprint of the delegates burning all that jet fuel to get there in the first place.
Here at home, opposition leader Tony Abbott has been claiming vindication for his position that the Carbon Pollution Reduction Scheme legislation should be delayed until after Copenhagen. He claimed that the scheme would be not only useless, but actually damaging, if it went ahead in the absence of a global agreement. Now that the outcome of the Copenhagen conference has turned out to be exactly that, it can be expected that the opposition will again reject the legislation when it returns to the Parliament in February. One way or the other, the next election will be dominated by climate change policy.
Friday, December 18, 2009
Why Tiger’s Troubles Are So Fascinating
EDITORIAL FRIDAY 18.12.09.
Despite the fact that right now history is potentially in the making with the majority of the world’s leaders gathered together in Denmark to try to determine the future of the world, the one story in the news for the past couple of weeks to really dominate world wide attention has been Tiger Woods. Climate change is not at the top of the most clicked list of stories on the internet, but Tiger Woods is still attracting more attention than just about any other story. Perhaps people are sick and tired of hearing about climate change, perhaps some people do not really believe that climate change is a genuine threat, and perhaps some people just don’t care. Most likely, I believe that many people feel that climate change is something which is beyond their own control, and while many people are happy to “do the right thing” with low energy light bulbs and recyclable bags, ultimately they might feel that there’s not really a lot they can do personally about climate change.
Instead, they leave that to the politicians and the world leaders to sort out, while the rest of us deal with matters that have a more immediate impact on out lives. Most of us are caught up in the day to day struggle to make ends meet, provide for our families, deal with mundane challenges like household maintenance and grocery shopping. There’s the challenge of what to get the kids for Christmas, and then the question of how to keep them from getting bored in the holidays. There’s a lot to deal with for most families without worrying about solving the problems of the world. And that’s one of the reasons why so many people are fascinated to read about the problems of one of the world’s most successful men, a man who had it all and if anyone could be happy in his life he should have been.
There is a certain fascination with the fall from grace of any public figure, but in Tiger’s case it has been so spectacular that it eclipses most Hollywood blockbusters for sheer entertainment value. Because of his high profile, and especially because of his squeaky clean image, the titillation factor has proven to be irresistible, no matter how many times we remind ourselves that one man’s marital difficulties are not really newsworthy and ultimately are nobody’s business but his and his family’s. None of us really know the true reality of his experience or that of his wife, but it can be easy to forget that behind all the headlines there is most likely a wife who is shattered and devastated, and a man once adored by millions who must surely now be feeling very small and quite possibly questioning the meaning of his own existence.
In this way it is a story that attracts our attention precisely because we can understand the nature of what is going on, and we can identify with the people involved. Never mind that they are richer than most of us can even comprehend, and live in a world of private jets and lavish estates, we still understand the pain of the jilted wife and the humiliation of the disgraced man. It is a very human story, and because so many of us have also had our own ups and downs in relationships we “get it”. More than that, we finally get to feel just a little bit superior because despite whatever failure we might have it turns out that Tiger has out done us all. That is why people generally are more interested in reading about Tiger Woods than climate change.
Despite the fact that right now history is potentially in the making with the majority of the world’s leaders gathered together in Denmark to try to determine the future of the world, the one story in the news for the past couple of weeks to really dominate world wide attention has been Tiger Woods. Climate change is not at the top of the most clicked list of stories on the internet, but Tiger Woods is still attracting more attention than just about any other story. Perhaps people are sick and tired of hearing about climate change, perhaps some people do not really believe that climate change is a genuine threat, and perhaps some people just don’t care. Most likely, I believe that many people feel that climate change is something which is beyond their own control, and while many people are happy to “do the right thing” with low energy light bulbs and recyclable bags, ultimately they might feel that there’s not really a lot they can do personally about climate change.
Instead, they leave that to the politicians and the world leaders to sort out, while the rest of us deal with matters that have a more immediate impact on out lives. Most of us are caught up in the day to day struggle to make ends meet, provide for our families, deal with mundane challenges like household maintenance and grocery shopping. There’s the challenge of what to get the kids for Christmas, and then the question of how to keep them from getting bored in the holidays. There’s a lot to deal with for most families without worrying about solving the problems of the world. And that’s one of the reasons why so many people are fascinated to read about the problems of one of the world’s most successful men, a man who had it all and if anyone could be happy in his life he should have been.
There is a certain fascination with the fall from grace of any public figure, but in Tiger’s case it has been so spectacular that it eclipses most Hollywood blockbusters for sheer entertainment value. Because of his high profile, and especially because of his squeaky clean image, the titillation factor has proven to be irresistible, no matter how many times we remind ourselves that one man’s marital difficulties are not really newsworthy and ultimately are nobody’s business but his and his family’s. None of us really know the true reality of his experience or that of his wife, but it can be easy to forget that behind all the headlines there is most likely a wife who is shattered and devastated, and a man once adored by millions who must surely now be feeling very small and quite possibly questioning the meaning of his own existence.
In this way it is a story that attracts our attention precisely because we can understand the nature of what is going on, and we can identify with the people involved. Never mind that they are richer than most of us can even comprehend, and live in a world of private jets and lavish estates, we still understand the pain of the jilted wife and the humiliation of the disgraced man. It is a very human story, and because so many of us have also had our own ups and downs in relationships we “get it”. More than that, we finally get to feel just a little bit superior because despite whatever failure we might have it turns out that Tiger has out done us all. That is why people generally are more interested in reading about Tiger Woods than climate change.
Thursday, December 17, 2009
Net Censorship Undermines Our Rights
EDITORIAL THURSDAY 17.12.09.
The federal government’s plan to introduce mandatory filtering of the internet to block access to undesirable material has attracted widespread criticism. The intention is to remove access to such things as child pornography, incest, bestiality, vilification, incitement to violence, instructions on how to commit crimes and so on. It seems like a worthy intention, especially in the context of protecting children from some of the extreme material which resides on the internet. But there are several problems with what the government is proposing to do.
First, it simply will not stop all objectionable material. The filtering system will rely on a black list of material which is categorized as “refused classification”. This list must be compiled and constantly updated from information received about new websites as they appear. Some material will escape the net, so to speak, and some material will simply move to a new website to replace one which has been blocked. It will be very difficult to keep up. Nevertheless, it will stop a lot of the objectionable material and supporters of the idea would no doubt feel that is a good start.
Secondly, it will also stop access to legitimate material. This has been demonstrated by the draft black list which was leaked some time ago. It included websites with otherwise legal content including completely innocent victims such as a tuckshop supply company and a dentist. This raises the question of liability for commercial damages should a legitimate business have its website inadvertently blocked by the filtering system. But both of these issues are practical matters, and with a little bit of common sense practical solutions may be found.
Of much greater concern is the methodology employed by the government, leading to fears of censorship and denial of basic legal and human rights. The most fundamental question is the one of who decides just what is and is not objectionable. Under the government’s plan a secret committee will be responsible for determining what should be refused classification and creating a secret list of websites to be blocked. Because it is secret, any business or individual who has a website blocked will not be notified, and will not be able to enquire if they are on the list. If someone is commercially disadvantaged they will have no recourse, and will have been denied the fundamental legal right to have allegations against them to be heard. They will be denied the vital legal right to confront their accusers and defend themselves.
The government’s proposal opens the door for completely arbitrary censorship where a government authority would have the power to declare anything off limits, without any appeal process, threatening whatever right we believe we have to freedom of expression. We might even trust today’s government to make good decisions and only ban truly unacceptable material, but there is no protection against future governments making bad decisions which interfere with our fundamental rights. Freedom of communication and expression, along with freedom of belief and freedom of movement, are the foundations of any free and democratic society, and this plan undermines those foundations.
The federal government’s plan to introduce mandatory filtering of the internet to block access to undesirable material has attracted widespread criticism. The intention is to remove access to such things as child pornography, incest, bestiality, vilification, incitement to violence, instructions on how to commit crimes and so on. It seems like a worthy intention, especially in the context of protecting children from some of the extreme material which resides on the internet. But there are several problems with what the government is proposing to do.
First, it simply will not stop all objectionable material. The filtering system will rely on a black list of material which is categorized as “refused classification”. This list must be compiled and constantly updated from information received about new websites as they appear. Some material will escape the net, so to speak, and some material will simply move to a new website to replace one which has been blocked. It will be very difficult to keep up. Nevertheless, it will stop a lot of the objectionable material and supporters of the idea would no doubt feel that is a good start.
Secondly, it will also stop access to legitimate material. This has been demonstrated by the draft black list which was leaked some time ago. It included websites with otherwise legal content including completely innocent victims such as a tuckshop supply company and a dentist. This raises the question of liability for commercial damages should a legitimate business have its website inadvertently blocked by the filtering system. But both of these issues are practical matters, and with a little bit of common sense practical solutions may be found.
Of much greater concern is the methodology employed by the government, leading to fears of censorship and denial of basic legal and human rights. The most fundamental question is the one of who decides just what is and is not objectionable. Under the government’s plan a secret committee will be responsible for determining what should be refused classification and creating a secret list of websites to be blocked. Because it is secret, any business or individual who has a website blocked will not be notified, and will not be able to enquire if they are on the list. If someone is commercially disadvantaged they will have no recourse, and will have been denied the fundamental legal right to have allegations against them to be heard. They will be denied the vital legal right to confront their accusers and defend themselves.
The government’s proposal opens the door for completely arbitrary censorship where a government authority would have the power to declare anything off limits, without any appeal process, threatening whatever right we believe we have to freedom of expression. We might even trust today’s government to make good decisions and only ban truly unacceptable material, but there is no protection against future governments making bad decisions which interfere with our fundamental rights. Freedom of communication and expression, along with freedom of belief and freedom of movement, are the foundations of any free and democratic society, and this plan undermines those foundations.
Wednesday, December 16, 2009
No Excuse For Excessive Interest Rate Rises
EDITORIAL WEDNESDAY 16.12.09.
After Three successive interest rate rises over the past three months, the widely held expectation has been for more of the same in the New Year. So far many of the economic indicators have been stronger than expected, leading to the conclusion that the recovery from the Global Financial Crisis is well underway and powering along. Unemployment appears to have peaked and is falling, consumer and business confidence are rising, and home loan approvals are increasing. But two things have emerged to suggest that interest rates might pause at current levels before any further increases.
One is the latest economic growth figures showing lower than expected growth for the September quarter at 0.2%, about half of what was forecast, and well down on the 0.6% in the previous quarter. With no risk that the economy might be in any way overheating, the pressure for interest rates to rise is significantly eased. In fact, the feeble growth figures should be seen as a reminder of just how fragile the recovery really is.
The other factor is a speech given by Reserve Bank Deputy Governor Ric Battellino which has provided some clues as to the future direction of Reserve Bank policy. While recognizing that the cost of borrowing has risen for banks, Mr. Battellino has shown that the margin between what banks pay for funds and what they charge their customers is now wider than it was before the Global Financial Crisis. Closer examination shows that the greatest margin increase is not in mortgage lending, but in business lending, further undermining the strength of economic recovery.
Mr. Battellino also explained that this increased margin represents a shift in what might be considered a normal setting for official cash interest rates. As the differential between bank lending rates and the Reserve Bank cash rate is now about 1% greater than it was, the effect of the current official rate at 3.75% is similar to the effect that 4.75% would have had before the increased margins came into play. In other words, he is saying that the Reserve Bank won’t have to increase official rates by as much because the banks have already increased their rates independently.
What this means is that the current official rate is now, in Mr. Battellino’s words, “back in the normal range”, even though it is still below historical norms. On that basis, there is no rush for the Reserve Bank to push rates up again when they meet again in February. It also means that not only are banks actually making more profit out of their loans now than they were before the Crisis, but most importantly they have no excuse to pass on any more increases above the rate set down by the Reserve. If they do it will only prove that they really are being greedy and profiteering at our expense.
After Three successive interest rate rises over the past three months, the widely held expectation has been for more of the same in the New Year. So far many of the economic indicators have been stronger than expected, leading to the conclusion that the recovery from the Global Financial Crisis is well underway and powering along. Unemployment appears to have peaked and is falling, consumer and business confidence are rising, and home loan approvals are increasing. But two things have emerged to suggest that interest rates might pause at current levels before any further increases.
One is the latest economic growth figures showing lower than expected growth for the September quarter at 0.2%, about half of what was forecast, and well down on the 0.6% in the previous quarter. With no risk that the economy might be in any way overheating, the pressure for interest rates to rise is significantly eased. In fact, the feeble growth figures should be seen as a reminder of just how fragile the recovery really is.
The other factor is a speech given by Reserve Bank Deputy Governor Ric Battellino which has provided some clues as to the future direction of Reserve Bank policy. While recognizing that the cost of borrowing has risen for banks, Mr. Battellino has shown that the margin between what banks pay for funds and what they charge their customers is now wider than it was before the Global Financial Crisis. Closer examination shows that the greatest margin increase is not in mortgage lending, but in business lending, further undermining the strength of economic recovery.
Mr. Battellino also explained that this increased margin represents a shift in what might be considered a normal setting for official cash interest rates. As the differential between bank lending rates and the Reserve Bank cash rate is now about 1% greater than it was, the effect of the current official rate at 3.75% is similar to the effect that 4.75% would have had before the increased margins came into play. In other words, he is saying that the Reserve Bank won’t have to increase official rates by as much because the banks have already increased their rates independently.
What this means is that the current official rate is now, in Mr. Battellino’s words, “back in the normal range”, even though it is still below historical norms. On that basis, there is no rush for the Reserve Bank to push rates up again when they meet again in February. It also means that not only are banks actually making more profit out of their loans now than they were before the Crisis, but most importantly they have no excuse to pass on any more increases above the rate set down by the Reserve. If they do it will only prove that they really are being greedy and profiteering at our expense.
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