Friday, March 13, 2009

Let The People Decide

It should come as no surprise that Barry O’Farrell has hatched a plan to allow voters to dump an unpopular government before the expiry of its allotted term. The Leader of the New South Wales Opposition has expressed his frustration many times that the present government is locked into its fixed four year term regardless of how many bad decisions it might make. More importantly he is not the only one. Many constituents share the same frustration over being powerless to remove a government which cannot deliver on its own promises to build railways, run hospitals and repair schools. Just how many people feel this way is difficult to tell, but if Mr. O’Farrell’s proposal were to be adopted we would soon find out.

The purpose of fixed four year terms is to provide stability of government and a framework for long term strategic planning with the distraction of a shorter election cycle. That’s all very well so long as there is a government which is functioning smoothly, meeting its obligations and delivering on its promises. But what happens when a government ceases to function smoothly, fails to meet its obligations and appears incapable or delivering anything? It’s an important question because many people believe that such a scenario has already arrived.

At present there is no mechanism to remove a sitting government before the end of its term without that government effectively sacking itself. Barry O’Farrell has explained to me that there is no constitutional reserve power held by the State Governor to dismiss a government as Governor General John Kerr did with the Federal Government in 1975. More importantly, he doesn’t see it as appropriate that there should be either. He believes the office of Governor should remain non-political. Instead, his plan is to amend the constitution of the state to give that power to the people.

The mechanism to trigger what is known as a “recall election” exists in many states in the United States of America, and was most famously used when Arnold Schwarzenegger was elected governor of California. Mr. O’Farrell proposes that a similar mechanism should be created here allowing ordinary citizens to bring about an election should sufficient signatures of enrolled voters be collected in a specified period of time. If the required threshold was high enough, and other safeguards to prevent manipulation were imposed, this method would at least provide a measure of last recourse to make it possible to act against a dysfunctional government without resorting to outright rebellion.

It’s a matter worthy of debate because if the mechanism was available it would be possible to truly test the mood of the people. Instead of whinging about the government, people could actually do something about it. In such circumstances I wonder how many actually would. Either way, it is in the best interests of healthy democracy to have some form of mechanism available to dispose of a rancid government without staging a revolution. Barry O’Farrell’s proposal is one way to achieve that, and is a system which has been demonstrated to work effectively elsewhere.

Of course, there is a certain irony to the fact that Barry plans to introduce the necessary referendum after his first four year term of office.

Thursday, March 12, 2009

Reports Of The Death Of Capitalism Are Greatly Exaggerated

Rodney Adler is not exactly the most popular person in Australia. His involvement in the $5.3 billion collapse of H.I.H. in 2001 has meant that his reputation has been permanently wrecked. He may have done his time in prison, but the people who were affected by that disaster are still suffering form the fallout, and Mr. Adler will always be remembered in that light. But, at the same time he is uniquely qualified to offer a view about the causes and effects of the Global Financial Crisis, and what he has to say is worthwhile considering.

In an article in BRW Magazine, Mr. Adler is quoted as saying “all the politicians and leading people are saying that this is the death of capitalism. I actually have a different view.” He goes on to explain that great capitalists do not base their wealth upon debt. They may employ debt along the way, but success is built slowly over 20 or 30 years. In Mr. Adler’s view, the Global Financial Crisis has been brought about by an insidious undermining of capitalism from within.

He says, “About 10 or 20 years ago executives on good salaries who hadn’t taken the risk, who hadn’t built the corporation, they said to themselves: ‘I’d like to be rich, I’d like to have equity in the company but I don’t want to buy it. And a whole new set of instruments evolved out of America which then infested the rest of the world, certainly the Western World, where executives became owners but with no risk.”

Mr. Adler may have been in the wrong about many things in the past, but he is right about this. This is the crucial point of difference between successful business people who invest their own time, effort, and money, and take the risk to build up their own enterprise and create something where there was nothing before, and the high flying overpaid corporate buccaneers who make a living by raiding other people’s investments. It has become popular to criticize the excessive pay packets of corporate executives, along with the bonuses, the benefits, the handshakes, the parachutes and the go-away money handed out to people who have often cut jobs, reduced customer service and destroyed shareholder value. What Mr. Adler has done is explain why that criticism is justified, and also to warn that blaming capitalism itself misses the real culprits.

It is the abusers of capitalism who are to blame for the mess, and now that the rest of us are left with picking up the pieces we should remember that healthy capitalism is the solution and not the problem. Capitalism is not the villain. It is the potential hero of the story so long as the pirates don’t get back in charge of the ship. Market forces did not fail. They did what they should do, and punished poor decision making and bad business practices. The way to restore prosperity is to return to the time honoured sound business practices that reward diligence and prudence… exactly the sort of business practices that might have kept Rodney Adler out of jail in the first place.

Wednesday, March 11, 2009

Ban The Boofheads Not The Beer

The question of what Brett Stewart may or may not have done outside his apartment block after the Manly season launch will now be answered by the court. However the question of how both the club and the National Rugby League should deal with the matter is still being hotly debated. Should the player be suspended? Should he be fined or disciplined in any way pending the outcome of the court matter? Should the club carry the responsibility for serving alcohol at an official event? There are no simple answers to these questions, but the real question is why are we even having the debate?

Given the alarming frequency of incidents where high profile sports people are involved in some form of unseemly public conduct, whether or not it involves a criminal investigation, why are the administrators not better prepared? Shouldn’t there be a protocol in place which would determine the steps to be taken in the event that any player finds himself at the centre of such an incident? Wouldn’t it make sense to have a game plan already drawn up so that whatever circumstances might come to pass, the NRL and the club management teams can consult the guidelines and implement a consistent response which removes doubt and confusion?

There has been a great deal of debate over whether or not Stewart should play, whether there should be a blanket ban on alcohol during the season, and what should be the consequences if such a ban is breached. All of these questions are important questions, but more importantly they should already have been answered. There should have been a policy already developed and in place to automatically provide the answers to those questions. Whether or not that policy includes a ban on alcohol, or any of the other measures that have been proposed, is up to the NRL and the clubs to hammer out between them, but it is essential that such a policy is drafted so that in future there is no such debate, only clear and effective action.

Of course, the idea of imposing a blanket ban on alcohol is not really practical. It would be almost impossible to enforce, and it would penalize responsible people who have no problem with enjoying a quiet beer and staying out of trouble. A more practical approach would be, as some commentators have suggested, to ban the boofheads, not the beer. What this means is to have a code of conduct which sets standards of behavior, including sanctions against public drunkenness, and clearly defined consequences for breaches of the code whether or not those breaches involve alcohol.

There is also debate about whether or not Rugby League players should be considered to be role models. Obviously, they are just ordinary everyday people who happen to possess a particular talent, and that talent doesn’t necessarily make them better people. It just makes them famous. But that’s the problem. Being a role model isn’t something that someone chooses. It is thrust upon them by circumstances which place them in the public eye, and whether they like it or not their words and actions will be an influence on others. It is a responsibility which comes with the privilege of recognition. Not everyone is equipped to live up to that responsibility, and that is where the clubs and the administrators must provide support to their players by having in place the right framework to help guide their behavior and their response to the pressures of being in the limelight.

The truly great aspect of any sport is its capacity to build character and social responsibility at the same time that it builds physical skill and fitness. Rugby League is no different in that respect and has the potential to provide people at every level with a framework for living a useful and productive life by increasing an individual’s skills for teamwork, leadership, respect and tolerance. Unfortunately that opportunity is being squandered by the failure to address the excesses and temptations which undermine those qualities.

Tuesday, March 10, 2009

IMF Wants To Punish The Victims

The latest advice from the International Monetary Fund has suggested that Australia should combat rising welfare costs by cutting entitlements to such luxury items as healthcare, and increasing the retirement age. The IMF has identified the very real problem that the dramatic drop in the value of the sharemarket has impacted on superannuation, increasing the number of people who will be seeking government pensions. This fallout from the Global Financial Crisis has compounded the already existing problem posed by the ageing population, and it has made the need for welfare reform more urgent. In what might be considered an alarmist warning the IMF has indicated that if budgetary pressures were to threaten the solvency of governments then the financial markets would be at risk of what it describes as “a complete meltdown”.

While it is true that there is increasing pressure on government resources, Australia is not yet at the point where it needs to start denying people healthcare. Unfortunately, the IMF seems to have a habit of offering policy solutions to economic problems, rather than offering economic solutions to policy objectives. They are very good at going around the world telling governments what they ought to do, when perhaps they should have been paying more attention to the regulation of the world’s capital markets so that we could have avoided the GFC in the first place.

Retired Australians, whether on a pension or funded by superannuation, are not responsible for bringing about the GFC. Instead, they are the victims of it, as are the workers who may lose their jobs, or who may be required to reduce their hours. Any suggestion that they should also have their entitlements to healthcare removed is an insult added to the injuries they have already suffered. But that’s not something that the highly paid boffins at the IMF are likely to understand.

Instead, our government must remain committed to improving the retirement incomes of those who rely solely on the pension and deliver a significant increase in the May budget as promised. Our government must remain committed to building up the superannuation system to provide for the future needs of successive generations of Australians as they grow older and retire. And our government must remain committed to a guarantee of universal healthcare available to all regardless of status. These things all represent triumphant achievements of the Australian way of life and must not be abandoned now.

In order to ensure that these commitments are met it will be necessary to make some changes. When the base pension is increased in May, don’t be surprised to see that self funded retirees may find it more difficult to get a part pension. But the trade off should be to bolster superannuation so that ultimately fewer people will need the pension. At present the system is designed in such a way as to encourage people to dispose of assets just to qualify for a concession card. Instead, people should be encouraged to preserve their assets so as to be better able to fend for themselves.

Simply cutting access to welfare isn’t going to solve the GFC. In fact, it is punishing the victims. It is inflicting the damage on those who were not responsible for causing it, and who are the most vulnerable to the impact, while allowing the corporate buccaneers to float away on their golden parachutes.

Monday, March 9, 2009

A Little Of What You Fancy

The National Health and Medical Research Council on Friday released their new guidelines for the consumption of alcohol. The bad news for the many who enjoy a quiet drink or three is that the new guidelines are even more restrictive than the old ones. It is now recommended that adults drink no more than two standard drinks per day, regardless of whether they are men or women, and no more than four standard drinks on any single occasion. Pregnant women and breastfeeding mothers are advised to drink no alcohol at all, and those under eighteen are also told to remain alcohol free.

It is claimed that these guidelines are based on the best available scientific evidence and are intended to prevent both long term and short term harm. The two drinks a day average is supposed to be the limit before people increase the risk of long term damage to their health, while the four drinks at a time limit addresses the short term harm of risky and antisocial behavior. In many respects the guidelines reflect a level of drinking which amount to what ought to be common sense, but at the same time they do represent a one size fits all approach.

Where once there was a distinction made between the effects of drinking on men and women, and on people of differing body mass, the new guidelines seem to suggest that such distinctions no longer matter. Many people might find this a little confusing, and perhaps even contrary to their own experience. After all, it’s widely accepted that different people have differing capacities for handling their drink. That may well be true, but that may also be part of the problem.

For some people there is a mistaken idea that they are somehow the exception to the rule, and that they are perfectly all right drinking more heavily because they have a strong constitution and they can “handle it”. Indeed, almost all the behavioural problems associated with alcohol could be said to stem from people’s misconceptions about their own limits and the effects that the alcohol has upon them. That may be why the Council has chosen to apply one set of guidelines across the board, but I’m sure there will still be people who say to themselves that the guidelines are an average and that they are somehow exempt. In fact, I suspect that some will see the guidelines as being so restrictive as to be irrelevant.

Of course, human beings are never going to be perfect machines of good behavior, and most of us recognize that life could get pretty boring if they were. The purpose of the guidelines is to give us an understanding of what’s risky and what’s relatively safe. It will always be true that some people should not dink at all, while others will be able to indulge their habit in moderation without getting into trouble. The truth is that even if the experts insist that a single glass of wine during a nine month pregnancy poses an unacceptable risk, life is full of much greater risks, and most people are going to look at these guidelines as exactly that: a guide.

They say a little of what you fancy does you good, and so long as it is just a little the chances are that you will stay out of trouble. That is of course unless you play Rugby League.