Friday, March 26, 2010

Is Kristina Leading The Team, Or Is The Team Leading Her?

It is exactly one year today until the New South Wales State election, and the countdown has begun with a flurry of politicking. The Government has produced a television advertising campaign to spruik its achievements, the opposition has fired back with its own ads featuring a five point strategy and a brand new slogan to “Make New South Wales Number One Again”, and today we have seen the Premier and the Leader of the Opposition face each other in a televised debate. Of course, unlike the recent federal debate, you needed to have access to pay TV to see it.

At the same time, the Daily Telegraph has revealed that opinion polls now show Premier Kristina Keneally to be the most popular political leader in Australia, surpassing even the Prime Minister Kevin Rudd, who may have suffered some damage in recent months but still retains healthy approval ratings himself. Overwhelmingly, people like Kristina Keneally, but the same polls also show that they consider her to be what the Telegraph described as a “political lightweight”. More importantly, the polls indicate that Kristina Keneally’s popularity has failed to improve the Labor Party’s approval which remains at an historic and terminal low.

The point is that it doesn’t matter how popular the Premier might be while the Government remains so unpopular. Even so, Kristina Keneally’s personal popularity is a remarkable achievement, and vindicates the decision to change the party’s leadership last year. At the time, much was made about the role of so called powerbrokers Eddie Obeid, Joe Tripodi, and Eric Roosendaal, with the allegation that the new Premier would be nothing more than a puppet. Perhaps that is why so many people might like the Premier as much as they apparently do, but still distrust the government she leads.

But even Kristina Keneally was installed as premier by decision makers behind the scenes, it has turned out to be one of the best decision they could have made. The Premier is so well liked because she is a genuinely likeable person: attractive, charming, warm, articulate and intelligent. She is well skilled in the art of public relations, and that is one of the crucial functions of any political leader. It is the job of the leader to be the front person for the party, to represent the policies and the agenda of the team, and to be the public face of the government. Any leader can only do that with the proper support of the team behind them, something which Kristina Keneally’s predecessors did not always enjoy, but given that support she is more than capable of filling the role.

The only question is whether or not she can convince the people of New South Wales, in the next twelve months, that she really is leading the team, rather than the team leading her. The people of New South Wales know that it is still the same team that was responsible for all the failures of the past decade and a half. It is still the same team that most people are no longer prepared to trust. That is what is reflected in the opinion polls, and that is what will determine the election.

Thursday, March 25, 2010

Job Losses Make Us All Poorer

The latest figures from the Australian Bureau of Statistics show a significant increase in the number of so called “discouraged job seekers”. These are people who are not counted as part of the workforce because they have given up looking for a job. It doesn’t mean that they don’t want to work, and it doesn’t mean that they are incapable of working. It means that they have arrived at the stage where there seems to be no point in even trying to find a job. The most common reason for this is that employers consider them to be too old, and the next most common reason is that there are no jobs in their locality, or in their line of work.

In all, there are almost 5.7 million people aged 15 or over who are not in the workforce. That’s one third of the total population in that demographic. Thankfully, most of them do not want to work either because they are retired, voluntarily inactive, or devoted to “home duties”. But those who are officially categorized as “discouraged workers” have increased in number from 73 900 in 2008 to 111 800 last year. That’s an increase of almost 40 000, or more than 50%. That’s an extra 111 800 people that you can add to the unemployment statistics, along with the much greater number of underemployed, if you want to get a complete picture of how people are managing.

It’s bad enough that so many people have found it so hard to get work that they have given up, but the real problem is that it is only going to get worse. We have a combination of an ageing population, a workplace culture that favours younger workers, and ongoing structural change in the economy as more and more jobs are exported to cheap labour in places like China, Malaysia, and India. The latest example is the closure of the Bonds factory yesterday at Wollongong. 200 staff left the factory for last time and the gates were closed behind them. Some of them will find other work, and some of them will be retrained, but some of them might never find a job again.

This is the cost of allowing entire industries to wither away because workers in China are paid a fraction of the wages paid to Australians. There are all sorts of reasons for encouraging free trade and allowing cheap imports, but there are also great risks, including the dislocation of workers who have spent a lifetime acquiring skills which are no longer required. This leads to other effects including the wider social dislocation of increasing numbers of disenfranchised people, right through to the loss of the capacity, the ability and the knowledge to actually manufacture anything for ourselves should it once again become necessary.

We can all relate to the impact of the personal cost for every individual who is made redundant in this way, but there is also a greater cost to the entire community which should also be recognized.

Wednesday, March 24, 2010

The Number One Campaign Slogan

One year and two days out from the New South Wales election Opposition Leader Barry O’Farrell has launched his campaign. Not everyone might have noticed, but Mr. O’Farrell has actually been campaigning for some time already, making himself available for media appearances at every opportunity, and sniping at the Government over every failure, every broken promise, and every cancelled project. And there’s been plenty of ammunition for the Opposition Leader with a series of Premiers presiding over a series of policy reversals. But even with all of the present government’s failings, it has been difficult for Mr. O’Farrell to make an impression with the public.

Perhaps that is why he has announced his five point election strategy today, even though it is still a long time until the real election arrives. It’s a sign that the clock is ticking, a message that the opposition is ready to take the reins of office. It might be more than a year away, but the opposition wants us to know that they mean business. Not only have they put together their five point strategy, they have also unveiled a sparkling new campaign slogan. Here it is: “Make New South Wales Number One Again.” Exciting, isn’t it?

The five points of the five point strategy are: 1. A strong economy with lower taxes to create jobs; 2. More for the frontline such as hospitals and police; 3. Building the southwest and the northwest rail links; 4. An accountable government; and 5. Giving planning power back to communities. It all sounds good and positive, but haven’t we heard all this before? In fact, with a few minor adjustments much of it could be appropriated by the Labor Party who will also no doubt make promises about a strong economy, more jobs, more for hospitals and police, and so on.

Of course, we all want our state to be “Number One”, but just what exactly does that mean? Number one for economic growth? Living standards? Tourism? Or all of the above? It is a phrase that can be made to mean pretty much anything. And if New South Wales isn’t Number One right now, just which state is? So far, Barry O’Farrell has been handed success in the opinion polls on the back of widespread disaffection with a government perceived to be self serving and incompetent.

But when it comes to crunch time in just over a year from now, that might not be enough. The opposition cannot afford to be complacent and assume that the voters will trust them to be any better than Labor. What is more important than campaign slogans and five point strategies is to have clear objectives that can be defined and empirically assessed. What is really important is not just what promises are made, but actually being able to deliver those promises.

Just look at the current government. They’ve made heaps of promises, but they’ve had plenty of trouble delivering any of them.

Tuesday, March 23, 2010

Credit Card Critics Miss The Point

It’s always so easy to take a shot at the big banks. Greedy, avaricious, impersonal, uncaring, driven only by the desire to make a profit through a range of exorbitant fees and charges, and interest rate differentials that don’t always reflect the Reserve Bank settings. So it’s no surprise that Westpac has once again been the target of widespread criticism following its decision to change the way it charges interest on credit cards. It’s easy to make the criticism, and it’s tempting, but have we missed the point?

Westpac has decided to charge interest on the total balance of the credit card including the accrued amount of fees and previous interest charges, or “interest on interest” as it was reported in the press. It has been described as “sneaky”, but Westpac claims that it is simply bringing its approach into line with industry practice. The truth is that other banks do already charge interest on interest in this way, but there is no industry standard practice. Some do, some don’t, and some charge interest on interest but not on fees. It’s a mixed bag, adding to the confusion for consumers who are trying to work out which credit card offers the best deal.

There is nothing dishonest about charging interest on interest. It’s called compound interest and we all expect to receive it when we make a deposit, so it’s reasonable to pay it when we borrow. What is important is transparency so that we know exactly how we are being charged and how much we are paying. It would be really useful if there was an industry standard practice, so that we are all clear on just what we are paying, and can make simple comparisons between one card and another. But all that is just a distraction from the real problem with credit cards.

The real problem with credit cards is that the interest rates are too high. A quick look at the available rates shows that most full service credit cards are charging around 19% or 20% interest, and even the no-frills low cost cards carry an interest rate around 13%. When the official RBA cash rate is 4% and home loans are around 7%, it’s obvious that there is a huge margin on credit card rates. Banks will tell you that credit cards are unsecured and carry a higher risk, but they’re not so risky that it stops them from mailing out incessant offers to increase your credit limit, regardless of whether or not it would be a prudent idea.

In fact, credit card interest rates do not reflect risk at all. The same customer can choose between the low cost card at 13%, or the full service card at 20%, and the bank will be exposed to precisely the same risk. Other unsecured loans, such as personal loans, can be obtained at a lower rate than any credit card. But credit cards are so convenient to use that we have all been willing to pay over the odds for the privilege. The truth is that credit card debt is a safe bet for the banks to keep on making huge profits at our expense, and charging extra fees is a mere insult compared to the gross bodily injury already inflicted by the excessively high interest rates.

Monday, March 22, 2010

Blaming Police Is Not The Answer

The sheer horror of the road crash in Canberra on Saturday night is undeniable. A 33 year old man, his 29 year old partner and their three month old son all died senselessly, without warning, and through no fault of their own, when their car was hit by a stolen vehicle which was speeding through a red light. The driver of the stolen car also died, and his eighteen year old female passenger was critically injured. The devastation is unspeakable, and the families of all involved are feeling the kind of grief that all of us pray we never will. Perhaps that’s why some of those family members are blaming the police for what has happened.

Relatives of both the passenger in the stolen car and the innocent victims have expressed the view that police caused the crash by pursuing the offender. It is understandable that they want to blame somebody, but the rest of us must take a more rational view about what has happened. This tragedy occurred because a young man stole a car, and attempted to escape police by speeding through two red lights. It was his actions that were directly the cause of the tragedy which followed. If he had not stolen the car, this would not have happened. If he had obeyed the police directive to stop this would not have happened. If he had not run the red lights this would not have happened. To blame the police is just plain wrong.

That doesn’t mean that we should not ask if there is something about police procedure which might be improved. Once again, the policy which dictates how pursuits are managed will be questioned. Some will say that pursuits should be banned altogether. But this is an emotional response to a terrible tragedy, and a more considered, rational approach is necessary. If criminals know that once they get into a car they cannot be pursued, what do you think would happen? If a speeding driver knows that all he has to do is to go just a little bit faster to get away, what do you think he will do? Seriously, what are police supposed to do? Stand by the side of the road and say, “well the offender is in a car now so there’s nothing we can do”?

Perhaps there is a better way to manage the circumstances around police pursuits, and if there is we should expend every effort to find it. If procedures are found to be in some way faulty, we need to fix them. These are matters which can and must be examined. But blaming the police for the actions of criminals is only one step away from blaming the victims. It completely ignores the responsibility that all of us must carry for the consequences of our own actions, by absolving those who are really to blame.