Friday, August 14, 2009

User Pay Proposal Just Another Attack On Liberty

A proposal has emerged from a submission to the Henry review of taxation which recommends that every vehicle on the road should be fitted with a tracking device in what would be the ultimate “user pays” system of raising revenue. The idea is that the movements of every vehicle could be monitored, and the driver could be charged a road user fee based on distance travelled, the congestion of the road, and the time of day. It is intended as a way of combating congestion and pollution, and supposedly making road use charges more fair. The trouble is that it has been proposed by city based academics who probably have no understanding of the needs of ordinary everyday people, especially in regional Australia.

The argument is flawed for a number of reasons, but the most important is the simple fact that the user has already paid. We all have already paid our taxes, we have already paid our registration, we have already paid our petrol excise, we have even submitted to paying tolls to traverse what should have been public roads. Now apparently we are to be expected to pay on a per kilometre basis, and even then some kilometres will be more expensive than others depending on demand. It is economic rationalism taken to the extreme, and fails to recognize the fact that road ways are supposed to be community infrastructure, owned by all the community, and we all should be entitled to access them.

Paying more to access more heavily populated areas will only discriminate against those who are less able to pay. It is an affront to liberty which cannot be justified by the failure of state governments to provide adequate and efficient public transport in metropolitan areas. The whole idea of having everybody pay the same registration fee is that the cost of the infrastructure is spread across the community. If there must be a user pays component to using the roads, well it already exists in the form of the petrol excise. The more you drive, the more you pay.

There is another even more sinister aspect to this which should be ringing alarm bells. If every motor vehicle is fitted with a tracking device, we take another step closer to becoming an Orwellian Big Brother society. It may not be the intention at first, but the opportunity would arise for the government to track every movement of every vehicle at every moment of the day. Where you go, when you go and how fast you go could all become data at the fingertips of the authorities, and once the ability to collect that data exists it is only a matter of time until somebody abuses it.

We will of course be told that if we do no wrong then we have nothing to fear, but I would hope that nobody would ever fall for that. It is a line which has been wheeled out by authorities around the world as long ago as the inquisition, and it is no protection against injustice. The fundamental principles of a free and democratic society are supposed to be based upon freedom of expression, freedom of faith, and freedom of movement. Under this proposal, our movements would no longer be free, in any sense of the word.

Thursday, August 13, 2009

Politics Rather Than Policy Dominates Climate Debate

The Carbon Pollution Reduction Scheme has been shot down in the Senate today as expected, putting in place the first step towards a possible double dissolution election. If, in three months time, the government puts up the same legislation and it is rejected again, the trigger for such an election will be armed. In that case, it will be up to the Prime Minister to decide if it is a trigger he wants to pull, a shot he wants to fire. Given the disarray of the opposition parties, especially on the climate change issue, it’s hard to believe that he would choose not to.

In many respects, the debate about the merits or otherwise of the proposed emissions trading scheme has been overwhelmed by the politics, and all parties have been guilty of contributing to that. The government is no doubt taking great delight in the prospect of the coalition splintering over this question, despite all the earnest observations about the urgency of introducing legislation for a scheme which is not scheduled to commence until 2011, and even then not with its full impact until 2012. But the temptation of dividing and conquering the opposition is obviously too great to resist.

The Liberal Party too has been focusing so much on the politics that it hasn’t even formulated a policy. The best it has come up with so far is the Frontier Economics report which makes a list of recommendations, and even that remains the subject of debate within the party. Meanwhile, the Nationals look very much as if they will refuse to accept any form of emissions trading scheme on the basis of the impact on industry, and especially on primary industry. Many of their members are still in the climate skeptics camp, questioning the evidence of human activity contributing to global warming at all.

At least the Liberal Party has now indicated that it will stick with Malcolm Turnbull and work on producing a series of amendments to the legislation to put forward when the bill is presented again. Assuming that those amendments resemble the recommendations of the Frontier Economics, it is possible that the National Party will not support them, the Greens most certainly won’t, and there will still be an impasse in the Senate, even after months of haggling. That is, unless the Liberals actually manage to produce amendments which the government is prepared to accept.

While that may be possible, it is more likely that politics rather than policy will determine the outcome. Under the circumstances, with clear divisions in the coalition, and the government sticking to its guns, the temptation of a double dissolution election will be very strong. Given the opportunity, the Rudd government would be able to go to the polls as the only major party able to claim to have a consistent policy, which they will represent as also being the only responsible policy, while the Greens would be painted as too radical, and the coalition as a divided rabble. The chances are very good that in the circumstances, the Rudd government would win, and the ensuing sitting of the joint houses of parliament would see the CPRS finally passed, and the government back in office for a fresh term of office.

The task for Malcolm Turnbull now is to get an acceptable suite of amendments formulated before then. If he can manage to do that, it will be his most significant achievement yet, and perhaps a true indication of his leadership ability. By the time he has finished negotiating with his own party, negotiating with the government will seem easy.

Wednesday, August 12, 2009

Confident, But Not Too Confident.

It is certainly encouraging that business confidence is rising, as shown in survey results from the National Australia Bank. At the same time there are also suggestions that consumer confidence is also improving, adding even further to the good news. It seems that there is increasing reason to be confident, with the rise in unemployment lower than expected, and an increase in home lending, both pointing to economic conditions being less dire than previously predicted. It would seem that even if we are not out of the woods yet, perhaps we are coming into a clearing.

It would be fairly easy to get a bit carried away with the good news lately, even though the news isn’t really all that good, just less bad than we had feared. Much of the apparently good news reflects other factors which help to cast a rosy tint over the outlook. For example the leveling out of unemployment appears to be good news, but it masks the reality that full time jobs are dwindling, and it is an increase in part time work which is propping up the figures.

This is further born out by the results of research by the Australian Industry Group which has found that half of Australian businesses have scaled back the number of hours worked in order to avoid job losses. In addition to that, 17% of businesses have cut back the pay of senior executives. The net result is that while people still have jobs, which is good, they have less disposable income, which is not so good.

The problem is that much of the economy depends on consumer spending, and if consumers have less money to spend, or even if they are simply worried about their future job security, the result can be a fall in consumer spending. To some extent, we are already seeing that with the June retail sales figures falling, although much of the fall has been attributed to the fact that the cash bonus stimulus payments have now dried up. There is some concern also that when the first home buyers boost also comes to an end there will be a similar slow down in the property and construction market.

Long term, the prospects for the Australian economy remain good, in fact far better than many other countries around the world, still grappling with the effects of the Global Financial Crisis. But that too means that some of those effects will still be felt here for some time yet. Wayne Swan is right when he says that to abandon the stimulus spending now would be to pull the rug out from under the recovery. In fact, it is too soon to definitively claim that a recovery has begun. It may be that we still have to plunge further into those proverbial woods, before we can find out way out of them entirely.

Confidence is a good thing, and important to the economy, but it would not necessarily be a good idea to become over confident.

Tuesday, August 11, 2009

Innocent Until Proven Guilty, But Suspension Is Still The Right Step

The news that Greg Inglis has been charged by police over an alleged assault against his girlfriend brings Rugby League back into the headlines for reasons that have nothing to do with football at a time when the focus should be on the lead up to the finals. While the real issue is the question of domestic violence and the behavior of both men and women in relationships, the inescapable fact is that on this occasion the allegations involve a sporting celebrity which guarantees front page coverage. It also guarantees the questions about the behaviour of Rugby League players, and the potential damage to the image of the sport.

It has been said that if it was anybody else the story would not be front page news, and while that is true, it is also irrelevant. Whenever anybody is successful in a public arena, and is both well paid and much admired for that success, there is also an added responsibility of being seen as a role model whether you want to be or not. It isn’t something that you can choose, it is something that happens to you. It is then up to the individual to either accept that responsibility, or to ignore it. Either way, there will be consequences.

One of the consequences of such adverse incidents is that it does reflect poorly on the image of the sport as a whole. When there is a series of incidents, even unproven allegations, it further leads to questions over whether there is something fundamentally wrong with the culture of the sport, or its administration, or some other intrinsic defect. And there are commercial consequences, with the possibility of losing support from both fans and sponsors. That’s why the administrators, both at the club level and at the NRL level must be seen to deal with such matters effectively.

But that is the challenge. What is the right and effective way for managers to address the issue, especially considering that the primary consideration should be for protecting women from violence, not just protecting the image of the game? In this case, Melbourne Storm C.E.O. Brian Waldren has won praise for acting quickly to suspend Greg Inglis, but even that is not without controversy. Some are asking why the presumption of innocence shouldn’t apply, and Greg Inglis be allowed to continue playing until such time as he has his day in court. And that’s a fair question.

Once again however, it comes down to the added responsibility that comes with public admiration, whether you like it or not. Remember, he has only been suspended, not sacked. He still has his contract, and his livelihood is not going to be threatened by any action that the Melbourne Storm have taken. Surely any such impact on his longer term prospects would hang on the outcome of the police investigation and the hearing in court. He is still innocent until proven guilty, but it is also in the best interests of the game and the club that he, or any other player caught up in such a controversy, step aside to sort it out.

Monday, August 10, 2009

First, Malcolm Must Convince His Own Colleagues

Today’s briefing by Malcolm Turnbull is not the coalition’s policy on emissions trading. Despite newspaper headlines designed to give the impression of a policy announcement, what we actually witnessed was the announcement of a report from a consultancy engaged by the opposition along with independent Senator Nick Xenophon. The report presents economic modeling by Frontier Economics and a range of recommended alterations to the carbon pollution reduction scheme proposed by the government. It is the emissions trading policy that you have when you don’t have an emissions trading policy.

The recommendations themselves fit well with the Malcolm Turnbull view of the world, and provide a framework which is supposed to be twice as green for two thirds of the cost, while saving heavy polluters the inconvenience of paying their own way. In that respect it sounds a bit like the magic pudding, but there are some features which will be appealing not only to big business but also to people who are worried about paying an extra $260 a year for their electricity. And that’s where Mr. Turnbull could be onto a winner.

Nobody wants to pay more for their electricity if they don’t have to, and while many people might be prepared to pay a higher price if it is for the greater good, Mr. Turnbull’s message is that they can achieve a better result while paying less. Who is not going to welcome that? The report by Frontier suggests that by allowing electricity generators to produce greenhouse emissions up to a so called “baseline” level before having to pay for permits, the cost of electricity would rise by substantially less. More importantly, it would result in less need to compensate pensioners and other low income people, making the process more efficient by removing the so called “churn” of higher subsidies to pay for higher prices.

Equally appealing to a large section of the coalition constituency is the recommendation to exclude agricultural emissions from the scheme, while allowing credits for biosequestration, which many people believe is much easier to achieve than the much vaunted geosequestration. On top of all that, not only can the Frontier recommendations save coal miners, save farmers, save pensioners and save jobs, it can also put a smile on the faces of the Greens by doubling the unconditional target for emissions reduction from 5 to 10% of 2000 levels by 2020. Everyone’s a winner in Doctor Malcolm’s Carbon Trading Snake Oil Show.

Of course, the real fly in the ointment is that despite all the song and dance, it isn’t actually coalition policy. It is a set of recommendations from a consultant’s report. Of course, it is intended to give us all the impression that the coalition has a policy and that the opposition parties are united on the platform. But the truth is they are not. The truth is that there is no agreed opposition policy for an emissions trading scheme. At this point, many of the Nationals, including Barnaby Joyce the leader in the Senate, and one or two Liberals, are still saying that they don’t believe their should be any carbon trading scheme. There remains a wide range of diverse opinions in the opposition, and the true test for Malcolm Turnbull now will be whether or not his own opposition colleagues will fall into line, rather than whether he can bring the government to the negotiating table.