Friday, October 31, 2008

Selling The Farm

It’s old news that the New South Wales Government is confronting a budget crisis. Former Treasurer Michael Costa ran from office screaming about a billion dollar black hole after he failed to sell off the electricity industry, somehow suggesting that it wasn’t his fault. Now, it has been reported that if measures are not introduced to address the slide the deficit could crash through the $2 billion mark before the financial year is out. All the indications are that the mini budget to be unveiled within weeks will contain plenty of pain and no sweeteners.

It has been reported that the big ticket $12 billion North West Metro line announced by former Premier Morris Iemma will be axed completely. If that is the case, it will be completely consistent with the track record of the Labor Government over the past 13 years of announcing major rail projects that are never actually delivered. Even the Chatswood to Epping line which is nearing completion, and which is overbudget, overdue, fails to meet noise standards, and is too steep for modern trains, was originally meant to run all the way to Parramatta. Not one major rail project has actually been delivered, as promised.

With the budget black hole continuing to expand, it has been reported that the minibudget will also include plans to sell off more State assets. Yes, there are some left, but probably not for much longer. One of the few remaining assets that could raise a reasonable sum for the Government is New South Wales Lotteries. It is anticipated that the sale of the Lotteries office could raise about $1 Billion, going a long way towards plugging that budget black hole. But what happens after that?

New South Wales Lotteries is not just a valuable asset; it provides the Government with a very healthy source of income. Last year the return to the Government was $340 million. Revenue from lotteries is continuing to grow, even while other streams of revenue are falling due to the economic downturn. Selling the asset now is killing the goose that lays the golden egg. It is slaughtering the family cow for a week’s supply of meat instead of a lifetime supply of milk and cheese.

There is also the social equity argument about the morality of placing even more gambling revenue into the hands of private enterprise. But we’ve already gone so far down that track that it hardly seems to matter.

The real concern is that the Government is attempting to sell assets because it has run out of money. That prompts the big question of what happens when they finally run out of assets?

Thursday, October 30, 2008

A Monkey In A Suit Is Still A Monkey

The allegation against New South Wales Assistant Health Minister Tony Stewart is not just that he touched a staff member on the leg. That makes the story sound tame and almost harmless. It sounds as if it could even be explained as a simple misunderstanding. But that is a misrepresentation of the allegation.

The details of the allegation are that the Minister was unhappy with the content of a speech which had been prepared for him by Tina Sanger. It is alleged that, in front of other guests at a charitable dinner, he expressed his dissatisfaction by forcefully berating her, saying that she was not up to the job, and that he wanted her out of his office. It is further alleged that she was forced to endure this tirade by the Minister placing his hand on her leg under the table and restraining her so that she could not move away.

That’s a whole lot more than simply touching a leg.

Shortly after Mr. Stewart denied the allegations, it was revealed that an anonymous phone call was made to the office of Opposition Leader Barry O’Farrell, purporting to be from the partner of an employee of the minister. That phone call alleged that all of the Minister’s office staff are threatening to resign, and that the woman at the centre of it all has been told to keep quiet and she will be looked after.

Despite the denial by Tony Stewart, and the willingness of the Premier to accept it, the question still hangs in the air: If nothing untoward has occurred, why has Ms. Sanger been removed form Mr. Stewart’s office and reassigned? Of course, it could simply be a matter of removing a staff member whose performance has been in some way unsatisfactory, but even if that is the case the manner in which this appears to have been done is heavy handed and unprofessional. Any admonishment for poor work performance should be saved for the privacy of the office, not dealt with at a dinner table at a public event.

Of course, if there was something wrong with the speech, shouldn’t the Minister have noticed this before then? Shouldn’t he have read and reviewed the material at a much earlier stage? Doesn’t such an incident tell us more about the Minister than it does about his staff member? It would be easy to believe that the Minister has been embarrassed by his own inattention to detail, and then lashed out to blame someone else.

At a time when there are serious problems confronting the State such as the expanding budget deficit, the erosion of services, and the evaporation of public confidence in health and transport, the people of New South Wales deserve better than the distraction of this sort of tawdry episode. Following so soon after the Matt Brown dirty dancing scandal, this is just one more piece of evidence suggesting that despite the expensive suits, New South Wales is still being run by a pack of monkeys.

Wednesday, October 29, 2008

Retired Australians Deserve A Guarantee

More than two weeks after the Prime Minister announced that all bank deposits would be guaranteed by the Government without limit, there is still no real solution to the unintended fallout of frozen investment funds. With no limit to the guarantee, it should have been obvious that money tied up in non-guaranteed investment funds would be pulled out en masse and shifted into bank deposits. This exodus has prompted the freezing of the investments of about 250 000 Australians who can no longer access their own money. Most of them are not in urgent need, but nevertheless feel frustrated and worried about the security of their funds. Some of course may actually have urgent need of the money.

The first response by the Government was to introduce a $1 million threshold on the bank deposit guarantee, above which a fee would be charged. Unfortunately this has proved to be too little too late, as cunning operators are splitting up their money into smaller parcels of less than $1 million in different banks. Even so, it hasn’t done anything to unlock the frozen funds.

Fund managers have been calling for the deposit guarantee to be extended to cover their truest funds as well as bank deposits, but the Government maintains that it is not appropriate to expose taxpayer’s money to market based investment vehicles. And quite right too. So, the Government has come up with another solution… the Mortgage Funds should become banks, and that way they would of course be covered by the guarantee.

It seems so astoundingly simple, it’s amazing nobody thought of it before now. In reality, it’s not simple at all. This proposal is a political solution, not a practical one. Mortgage Trusts and Cash Management Trusts are not the same as banks, and for them to qualify would require capital reserves that they do not have, compliance with regulations which do not currently apply to them, and a significant amount of time to make the necessary changes. Hypothetically it could be done, but it’s just not a practical solution to the immediate problem of retired Australians being unable to access their own money right now.

Realistically, the life savings of older Australians have been placed in these investments as a direct result of almost two decades of Government Policy dictating how superannuation works, and how the proceeds of superannuation should be managed. Retired Australians have diligently played the game according to the rules laid down by the Government. Now, they are being penalized through no fault of their own, and they deserve a better response from the Government.

It is impossible for the Government to guarantee everything, and impractical to guarantee market linked investments, but perhaps a case can be made for devising a special category of guarantee for cash based investments held by individuals up to a practical cap of around $250 000. That’s about the size of the average superannuation payout, and is also the level at which the bank deposit guarantee should have been capped.

Tuesday, October 28, 2008

Gravy Train Still Running

I don’t know why everyone is so upset about so called “Fat Cats” enjoying hefty pay rises while the rest of us struggle to stretch the budget far enough to buy a box of Weetbix. Really, it must be the Tall Poppy Syndrome. First it was the ongoing expansion of corporate executive pay packets that drew condemnation and now the finger is being pointed at New South Wales bureaucrats. Surely it should come as a comfort in these difficult times to know that at least somebody is prospering.

Despite the New South Wales Government cheerfully admitting that it has miscalculated the State’s budget to the tune of a billion dollar shortfall, it is clearly important to continue paying the top public servants corpulent salaries as an example for the rest of us. No matter that lesser functionaries of the State such as nurses, police officers and fire brigade officers are expected to scrape by with pay increases pegged at 2.5%, well below inflation, it is obvious that to inflict a similar restriction on senior officials would send the wrong message.

It is vitally important that top public servants not only prosper but are seen to prosper, so naturally the current salary of $428 900 is in desperate need of increase to the tune of another $16 727, plus a possible $43 000 recruitment allowance, whatever that means. The State might be going broke, but that’s only all the more reason to make sure the important people at the top get theirs before the money runs out. It all makes perfect sense when you think about it.

So long as the people can see the Fat Cats doing well, they will know that things really aren’t so bad after all. They will know that it is possible to do well, even in the bad times. It will give ordinary people the hope that they too could enjoy the good life if only they are lucky enough or clever enough to make it into one of the top jobs. Ambitious people must have a goal to aim for, something to work towards, and the lure of a big fat salary at the top of the tree gives everybody something aspire to. Without such an incentive people just wouldn’t bother.

A billion dollar black hole might sound bad, but really it’s no big deal. Such an amount can easily be covered by clamping down on wage increases for the front line personnel who actually do the work providing us with all the Government services we depend upon, cutting back on some of that expensive infrastructure program, and waiting for the good times to come again. Besides, there are only a handful of people on the really big money so docking their salaries just wouldn’t actually save the Government as much as you might think anyway.

I know this argument wasn’t what you might have been expecting, but I’m pretty sure this must be the thinking of the New South Wales Government. After all what other explanation could there be for both insulting and shortchanging the hardworking frontline employees, and the taxpayers of New South Wales. After a decade in which not one promise of a major rail project has been delivered, at least one train is still running on time… the gravy train.

Monday, October 27, 2008

In Her Own Words…

It’s normal practice for politicians to read speeches which have been prepared by others. It’s just part of the process of making them look as clever as possible. There is a machine working twenty four hours a day to support politicians in their role as representatives of the people, guiding every step they take and almost every word they speak. It would be impossible to do the job without a cavalcade of advisers, speech writers, researchers and so on. While some of the support staff actually do help a Member of Parliament provide effective representation for their constituents, many of them are devoted to shaping and spinning the political message and the public image of both the Member and the Party.

Given that so many people are working so hard to support high level politicians, you should be able to expect that the result would be a high standard of performance and presentation. You should be able to expect well crafted speeches, and well thought out responses to the issues of the day. You should be able to expect that words attributed to the politician in question are at least original thoughts, even if they are not necessarily the politician’s own words. But apparently not.

Federal Shadow Treasurer and Deputy Opposition Leader Julie Bishop has been caught out in a plagiarism controversy again. The first time, the excuse was that a speech was hastily constructed by staff from another office shortly after her appointment to the Treasury portfolio. The lack of time and the chaos of change led to a mistake made by an unnamed speechwriter, who failed to attribute parts of the speech to the Wall Street Journal where they had originally been published. It was a disappointing and embarrassing mistake, and in isolation might be understandable in the rush of taking on a new portfolio. Even so, there is no justification for stealing another writer’s work .

The trouble is that there is a new episode of apparent plagiarism. An essay purporting to be written by Julie Bishop has been prepared for inclusion in a book to be published by Melbourne University Press. In fact it has been written by Julie Bishop’s chief of staff, Murray Hansen. Again, whole sentences, along with complete phrases have been copied almost word for word from another source, in this case a speech given by a New Zealand businessman almost ten years ago. Again it is claimed that a mistake has been made, and the error is not Julie Bishop’s personal error. But that’s just not good enough.

This isn’t just a speech, it is a published work. We are entitled to expect the words that appear in Julie Bishop’s name should be her own. At least with a prepared speech, she must actually say the words in public, even if they have been written for her. But a published essay is a different matter. If it has her name on it, it should be her work. Anything else is fraudulent. Yes, I know that ghost writers are used all the time, but if I buy the book because I’m interested in Julie Bishop’s views on labour market reform, I want to read Julie Bishop’s views, not Murray Hansen’s.

Incidentally, I wrote this editorial myself, so if you don’t like it for any reason, at least you know who to blame.