Friday, February 5, 2010

Comedy Or Horror Show?

According to Empire Magazine, the worst movie of all time is Batman And Robin. You know, that’s the one with George Clooney. They stopped making Batman movies for a while after that one and only started again when Christian Bale signed on to reinvent the whole story starting from the very beginning. Luckily for everybody involved it worked and it was once again OK to admit to watching Batman movies, just so long as it wasn’t the George Clooney one. More recently, director J. J. Abrams has done the same thing for Star Trek by throwing out the ponderous, self important and self indulgent aspects of the story, and starting over with fresh new actors and fresh new ideas.

Although it is debatable whether Batman And Robin really is the worst movie of all time, I am starting to wonder if Tony Abbott and Barnaby Joyce might be the Batman and Robin of Australian politics. Just as the Liberal and National Party Coalition was about to disappear into a cloud of boredom along came The Caped Crusader, that’s Tony Abbott just in case you’ve missed the connection, to lead the Liberals to renewed success and popularity. At his side, the Boy Wonder Barnaby Joyce couldn’t wait to take on the bad guys of the government and wasted no time firing from the lip at every opportunity. Of course, he probably forgot that the Joker was always fond of referring to him as the “Boy Blunder”.

Now it would all be OK if Tony Abbott was the Christian Bale Batman, overcoming all obstacles to defeat evil and restore truth, justice and the Australian way, even though that is borrowed from a different superhero. Unfortunately, it is looking increasingly like Mr. Abbott more closely resembles the George Clooney Batman, the one that was credited with nearly destroying the franchise and who ultimately became a laughing stock. Mr. Abbott’s Climate Action Plan is in fact a plan to take No Action, centering on offering cash payments to anyone who volunteers to cut emissions, but imposing no obligation to do so and no penalty for failing to do so. It is very much like trying to round up the crooks of Gotham City by offering them a few dollars to turn themselves in. One or two who are finding life difficult might take up the offer, but the hard core cases will just respond with what George Bush called the one finger victory salute.

Meanwhile, Mr. Abbott’s faithful sidekick Barnaby Joyce has reportedly been stumbling over figures, mixing up his billions and his trillions. That would probably be OK if he really was a superhero, but sadly that’s just a metaphor and in real life he is supposed to be the Shadow Minister for, wait for it… Finance. Oh dear. Mr. Abbott was forced to deny suggestions by Senator Joyce that a Coalition government would cut foreign aid and reduce the public service. Both are populist ideas which might seem good at first glance, but the truth is that foreign aid is both a moral commitment and an investment in our relationships with important trading partners, while cutting public servants inevitably cuts actual services one way or another.

Just like the George Clooney movie, it is difficult to tell whether the current specatacle is a comedy or a horror show. But either way, it does explain why we keep on seeing Tony Abbott appearing in public in his speedos.

Thursday, February 4, 2010

It’s Not The Alcohol, It’s The Attitude

In evidence given the government’s Family and Youth Committee, representatives of the Australian Hotels Association have suggested that alcohol consumption is not to blame for the apparent increase in violent and antisocial behavior. While it might be cynically suggested that the Association has a vested interest and could be expected to deny the dangers of alcohol, it is worth considering the points they have made. Association President Thomas McGuire said “We are getting people… going out having showered, shaved, and slipping a knife into the posket, which is a very strange attitude to going out and having a good time.” He described it as a “significant change in social concern for one another” and he believes that this is the root of the problem. In other words, it’s the attitude, not the alcohol, that’s to blame.

The CEO of the Association, Bill Healy, gave evidence that the increased concern about alcohol violence was at least in part driven by greater visibility thanks to the proliferation of security cameras. Even though the actual numbers of violent incidents have not increased over a period of ten years, there is a much greater likelihood of the video ending up on Today Tonight or A Current Affair. But it is more disturbing to note that Mr. Healy also described a notable rise in the level of viciousness. This is something that he ascribed to a combination of exposure to more violent material on television and in video games, along with a more sheltered environment in schools. He said that “they have not actually experienced a lot of pain. They don’t get kicked at school, the empathy factor of knowing how it feels.”

Now that’s a pretty radical thing to say, and it should not be construed as suggesting that fighting and bullying in schools should be condoned. But it does suggest that there could be a whole range of factors in childhood development which contribute to what appears to be the “significant change in social concern for each other” that Mr. McGuire described. And it should be obvious that this change in attitude has become pervasive in our society. We see it in road rage, we see it in car park altercations, supermarket confrontations, and just downright rudeness, discourteousness and disrespect every day. And that’s something that occurs with people who haven’t had a drop to drink, but are just obnoxious by nature.

Of course there are people who become more aggressive, more hostile and more violent when they drink. But they are most likely to be that way inclined anyway, and there are plenty of other people who are happy to have a drink or three, and who become more cheerful, more relaxed, more exuberant, or just more quiet. Then there are those who are mixing their alcohol with illegal drugs, and in some cases those really are substances which can dramatically alter your behavior. But in most cases, it’s not the alcohol, it’s the attitude. The truth is that blaming alcohol alone is too simple, too easy, and too much of a cop out, when the real issue should be about personal responsibility for our behavior, our wellbeing, and the wellbeing of those around us.

Wednesday, February 3, 2010

Miranda’s Assets Command A Higher Rate Of Interest

Yesterday’s decision by the Board of the Reserve Bank of Australia to leave official interest rates unchanged caught just about everyone by surprise. So certain were most commentators that they had most likely already written their editorials explaining why the 25 basis points increase was inevitable. But instead, they must have found themselves scrambling to find an explanation for such an unexpected turn of events. Then, when the stunning news was revealed, the Aussie dollar fell, the share market rose, except for the shares in the big banks who would have profited from any rate rise. All this over a decision where nothing happened. Is it possible that we are all over reacting just a little to the movements, or in this case lack of movement, in interest rates?

At 3.75% the current cash rate remains well below the so called “neutral range”, which is supposed to be the zone where the balance between supporting economic growth and holding back inflation is maintained. While there have been signs of strong economic growth, declining unemployment, and new signs of emerging inflation, all of which would point to the need for an increase in interest rates, those factors only tell part of the story. The Reserve Bank’s own explanation is that the retail banks have already put interest rates up independently, reducing the need for the regulator to take action. But there is more than that going on.

Despite the signs of economic recovery, there remains a number of serious challenges for the economy. Most significant is the continued decline in business credit, with businesses who can reducing their exposure, and businesses who need funding finding it increasingly difficult to obtain. If that continues, the strength in jobs growth could quickly evaporate. At the same time, the housing shortage appears to be creating a bubble in home prices, but jacking up interest rates isn’t going to make it any easier to build more houses, in fact quite the opposite. It is also important to realize that the overall strength of the Australian economy is not spread evenly across the board over all sectors, or all geographical areas. Some areas are faring well, while others continue to struggle.

Finally, there are offshore factors which are in some ways less predictable, and certainly less manageable, but which are capable of having an enormous impact on the Australian economy. A great example of that is China, where ongoing demand for our resources is a major contributing factor to our prosperity while much of the rest of the world is in the doledrums. It is something over which we have no control, but from which we benefit greatly. But that’s a two way street, and should anything happen to China there goes a big chunk of our economic stability. Similarly, adverse events in other parts of the world can and do hit home here, as we have seen in the past two years, and right now there is continuing concern about sovereign debt issues in several parts of the world. Any significant defaults in that regard can also impact upon conditions here.

Altogether, although the Reserve Bank decision was an unexpected one, it is probably the right one, especially if they know something about international sovereign debt issues that the rest of us don’t. The fact is that as long as the economic recovery continues, we will see interest rates rise, and that should not be any surprise. But just because they didn’t rise yesterday shouldn’t be seen as anything terribly significant one way or the other. Perhaps the only one who really got it right yesterday was the Macquarie Bank Trader who was caught out on national television looking at photos of supermodel Miranda Kerr. Obviously her assets command a much higher rate of interest.

Tuesday, February 2, 2010

Intergenerational Forecast Is Fair Warning

The third and latest Intergenerational Report, released yesterday, tells us a number of thing sthat we already know. But it does hammer home the need to actually do something to plan for the future while we still can. It has been well publicized that the Australian population is projected to reach 36 million by the middle of the century, and that one quarter of that population will be over 65 as compared to just 13% at present. What this means is that health and social welfare costs will increase dramatically while tax receipts from a proportionally shrinking workforce will be falling on a per capita basis.

Some have questioned whether it is possible to make accurate forecasts over such a long period, and to use those forecasts as a basis for planning. But that misses the point. The Treasurer Wayne Swan has made this clear by saying that “It is important to keep in mind that these numbers are not carved in stone, and they are not targets.” His point is that this is not a crystal ball prediction. Instead it is a projection of where things are likely to go if nothing is done to change the way we are doing things now. The point is that it is an opportunity to create a future, not be condemned to it.

That being the case there are some things that need to be addressed urgently. One is the matter of national savings, both at the individual level and the community level. The superannuation system, along with the way it interacts with the tax and welfare system, must be reformed to ensure that in the ordinary course of events retirement incomes are adequately funded. That means making the tax treatment of super fairer for low income earners, reducing the excessive fees and commissions which deplete super savings, and increasing the money going into contributions in the first place.

Another urgent issue is health reform, especially in the field of aged care. The sheer numbers of people expected to be requiring residential aged care by mid century mean that there is a need for a dramatic increase in the number of nurses and aged care professionals. While cash incentives have been provided to attract more people into nursing, the unfortunate fact is that they aren’t working, and potential nurses are staying away in droves. While the money is important, obviously there are other factors that are also discouraging people from entering the profession, such as working conditions and professional status. These issues must be addressed now or it will be too late.

As for the sheer size of a population reaching 36 million, many people are concerned that the potential impact upon the environment is unsustainable and unacceptable. Water is just one issue. Food is another. Many people worry that we don’t have enough of either to accommodate such a large population. Decisions have to be made, and either we take steps to prevent the population expanding so rapidly, or we must do something about water and agriculture infrastructure. Given that Australia has a poor record in developing such infrastructure, having basically done nothing since the snowy river scheme, it might be a good idea to stop and ask if we really want that many people living here at all.

Monday, February 1, 2010

What Is A Life Worth?

While it always makes for good headlines to claim that judges are too lenient and crooks are getting off lightly, the claims made by the Daily Telegraph in their front page story do raise genuine questions about the shortcomings of the legal system. It is always difficult comparing apples and oranges, but when you can be sent to jail for two years for driving without a license and maybe only a year or two more for killing someone, things just don’t seem to add up. This apparent disparity arises because despite the maximum sentence for manslaughter being 25 years, the maximum is rarely handed out. By contrast, the unlicensed driver is much more likely to be given the two year maximum, so that while it looks like there is an appropriate scale of punishments, the reality is that it all depends on the discretion of the judge.

Although some people are proposing mandatory minimum sentences, it should be recognized that every case is different and there can sometimes be special circumstances which warrant a reduced sentence. It is appropriate for a judge to have that discretion available. But the problem is that in the case of manslaughter, an offence which should be held to be extremely serious, the maximum penalty has only been given out once in the past ten years. Instead penalties as light as three years are handed out, presumably because of the special circumstances of each case. But they can’t all be special. The special cases should be the exception, not the rule.

Obviously there is a difference between manslaughter and murder, and that difference is intent. But even allowing for that, the truth is that manslaughter usually results from what is described as reckless indifference to human life. It is often the result of violent assault rather than simply an accident, and this is where the law truly does become an ass. One of the discrepancies in the law is the fact that a defendant whose victim survives might actually be confronting a tougher penalty that a defendant whose victim has died. It is a flaw in the system which has left the families of victims devastated in the belief that the justice system has failed them.

The taking of a life, regardless of whether or not it was intended, should be regarded as a matter of the greatest seriousness, and sadly that is not the message being delivered by the judicial system as it now stands.