Friday, December 3, 2010

They Don’t Know What They’re Missing

Like many people I never really expected that Australia would win the bid to host the World Cup of Football in 2022, but I did expect that our bid would at least receive strong support. After all, the competing nations were the United States, Japan, South Korea, Qatar and Australia. Of those, I believed the bid would most likely go the United States or Japan, possibly South Korea, and perhaps Australia would come second or third in the vote. And there was, I believed, a genuine chance that we might actually pull it off and win. But to discover now that the Australian bid only received one vote in the first round is something of a shock.

What were they thinking? Here we are, the best country in the world, with the best climate in the world, home to some of the best players in the world, and with the proven experience of staging the best Olympics ever, and yet the executives of FIFA have simply brushed us aside. Qatar, on the other hand, has very few players and fans, and even fewer facilities, and is so hot that entire stadia will have to be air conditioned to stop people from dropping dead in the heat. It is such a bizarre outcome that it can only heighten concerns about the nature of the whole bidding process, which have ranged from collusion through to outright corruption.

While many people might debate the benefits of hosting such a massive event, with some insisting that it would have been too big, too expensive, and of little benefit to Australia, the fact is that Australia would have mounted a magnificent World Cup. It’s disappointing to have lost out, and insulting to have been given just one vote, but in the end, Australia is not the loser from this decision. We have offered the world the opportunity to come play in one of the best counties in the world, and we would have given them the time of their lives. But they have made another choice, and that is their loss more than it is ours. The rest of the world just doesn’t know what they’re missing.

Thursday, December 2, 2010

A Trainload Of Money

Today, the New South Wales Auditor General Peter Achterstraat released his report on transport projects, with an assessment which has been described as “scathing”. Here is the bottom line, in the words of the Auditor General: “Of the $412 million spent on the Sydney Metro, $356 million represents expenditure with no apparent benefit to the people of New South Wales.” This one sentence neatly sums up everything which has been wrong about the Labor government in New South Wales, and reflects the failure of successive Premiers to deliver on their transport promises.

Each newly installed occupant of the Premier has boldly announced visionary plans to address the transport challenges confronting Sydney, only to be pushed out through the revolving door of the Premier’s office and to have their plans consigned to the dustbin. But not before millions of dollars had been spent on scoping studies, feasibility studies, environmental impact studies, compulsory land acquisition, planning and design. There was the North West rail link, the Parramatta to Chatswood line, the South West rail link, the North West Metro, the West Metro, The CBD metro, and back to the future with the North West and South West lines back on the agenda. But can we really be certain that any plan currently on the table will actually be completed?

When Kristina Keneally took over the position of chief seat warmer, out went the latest grand plan, the Sydney Metro. With it went not only the hundreds of millions of dollars identified by the Auditor General, but also any good will which might have remained with those who had their businesses and livelihoods disrupted by a plan which had come to absolutely nothing. With it also went any level of credibility or trust that might still have existed among the voters of New South Wales. Never mind that the Metro was a flawed plan from the start, and that Premier Keneally probably made the right call to dump it, so much political capital had already been invested into it that it was now, like the cash, all gone.

And it is an awful lot of cash. The $356 million identified by Mr. Archterstraat could have been much better spent on any number of things. It could have built a major new hospital, or upgraded dozens of existing hospitals around the state. It could have employed thousands of nurses to work in those hospitals. It could have paid for the entire backlog of overdue maintenance at state schools, and still had money left over to build some new schools as well. Or it could have paid for about half of the maintenance backlog for public housing. In anybody’s language, it’s a trainload of money, and we can all think of dozens of ways it could have been more productively spent.

Instead, it has been sucked into a black hole “for no apparent benefit”, never to be seen again.

Wednesday, December 1, 2010

Economic Irrationalism

A study by the Australia Institute has shown that a majority of Australians are costing themselves money by not keeping track of a range of financial details like what interest rate they are paying on their home loan, whether or not they have the best mobile phone plan, and keeping money in low interest savings accounts instead of paying off credit card debts. When you look at it objectively, it would seem to indicate that people are either dumb, don’t care, or just plain irrational. But that’s not really a fair assessment of what is going on. Modern life has become so complicated and so overburdened with endless details to keep track of that you would really have to be some kind of human calculator to stay on top of it all.

In fact, that’s exactly what the study calls people who seem to master the challenges of modern life: human calculators. Apparently they make up 22% of the population, while the rest of us can’t seem to get on top of things like this, even though most of us believe ourselves to be “better than average money managers”. So why is that? A clue can be found in the fact that so called human calculators are more likely to be found among the older population. Other factors are not as significant as you might think. For example, those with tertiary educations were no more likely to be good money managers than those who left school early, and high income earners are actually just as likely to struggle to make ends meet as low income earners. But people over 55 are more likely to be “human calculators”.

Now this might be as a result of the benefit of experience and wisdom, but I suspect that there is another reason. In general, older people have more time to invest in making sure that they get the best deal. The rest of us are so flat out just making money in the first place that we just don’t have the time to manage it as well as we might. Despite all of the promises of the benefits of competition in the market place, all it really means is that we now have to wade through mountains of information comparing banking details, insurance policies, mobile phone plans, internet plans, electricity costs, petrol prices, health insurance, motor mechanics, grocery prices, all while holding down a job and looking after the family.

Nobody has the time to deal with it all. The idea that people are always rational beings is at the centre of most economic theory. It underpins the concept of free markets, and is supposed to guarantee that overall the economy will work itself out. But the fact is that the assumption is just plain wrong. People can be rational, but people also have a range of differing priorities. For many people it is more important to spend their time with their families, going to the beach, having barbecues and watching the football, than it is to devote their lives to counting beans. When you look at it that way, you really have to ask just what is so irrational about that.

Tuesday, November 30, 2010

The Poisoned Chalice

In what was always the only possible outcome, Bernie Riordan has resigned as New South Wales President of the Labor Party. In doing so, he has accused the Premier of an over-reaction, and indicated that if it were not for the approaching election his decision would have been different. But, in the end, there was no other choice. To be presiding over a union which has published a statement that it will not support the Labor government makes it impossible to also remain Party President. The two positions are simply impossible to reconcile. It doesn’t matter that he was not personally responsible for the remarks, or that he did not authorise them. It only matters that it created an unacceptable appearance of disunity within the party.

At the same time, that is really only part of the story. In fact, it is the tip of the proverbial iceberg, with the disaffection between Mr. Riordan and a succession of Premiers itself symptomatic of significant tensions between the unions and the parliamentary Labor Party. In particular, the internal war over the plans to privatise the electricity sector has taken its toll with Bob Carr, Morris Iemma and Nathan Rees all becoming casualties in one way or another. It’s no surprise that all three of those former Premiers have been so vocal in their support and praise for current Premier Kristina Keneally, and in Mr. Rees’ case that is in itself a remarkable result.

It was Mr. Rees who famously predicted, on the day before he was deposed, that whoever was his successor would be a puppet of the party powerbrokers. By contrast, Kristina Keneally has not only grasped the poisoned chalice with steady hands, but she has effectively flung its contents back into the faces of her critics. Time and again, she has dealt with the fallout of a party apparently bent on self destruction in a firm and decisive manner. Dealing with the matter of Bernie Riordan has been no different, and she has attracted more admirers in the process. Finally, the New South Wales Labor Party seems to have a leader who knows how to take charge.

What a pity the party she has been asked to lead is in such a sorry state of disarray.

Monday, November 29, 2010

Time’s Up!

At the risk of sounding like a cracked record, absolutely nothing can save the New South Wales Labor government from copping a massive hiding at the state election next March. I have been saying the same thing for years and the evidence only continues to grow to support this view. In the wake of the Victorian state election over the weekend there have been even more logs thrown onto the fire. Now, Victoria is not the same as New South Wales, and the issues are not all the same, but even so the outcome in Victoria remains a very clear message for the New South Wales government. That message is, “Time’s up!”

To some, the result in Victoria has been seen as a surprise because the Labor government in that state was not in anywhere near as much trouble as the one in New South Wales. It was largely seen as a competent and stable government which might have become a bit stale, but nobody expected it to be tossed out of office. And yet, when the votes are all counted over the next day or so that will be the end result. By contrast, here in New South Wales, the Labor government is seen as anything but competent, riddled with scandal, and unable to command the support of even their own Party President, Bernie Riordan.

Over the weekend, it emerged that the union which Mr. Riordan leads published a statement in its newsletter that it would support candidates from any political party, including the Liberals and Nationals, based on where they stood on workers’ rights. Now, Mr. Riordan claims not to have seen the comments before they were published, but to say that it leaves him in an embarrassing situation is an understatement. While the Premier is rightly calling for his resignation as Party President, it should also be seen as an indication of just how much support the government has lost among some of the unions.

But it goes even deeper than that. Across the nation, the Labor Brand has become severely tarnished. The federal election result in August was a reflection of that, and it has been a combination of state and federal factors which has seen the reputation of Labor, not only trashed, but shredded in a matter of months. A little over two years ago, Kevin Rudd was the most popular Prime Minister ever, presiding over a nation with Labor governments in every state and territory. Even after Labor lost government in Western Australia in 2008, the federal government was still in good shape.

While it has been obvious for some time that the New South Wales government was in trouble, they at least had the benefit of time on their side with the state locked in to the four year electoral cycle. There was at least time for things to be turned around, and for the party to get itself back into a position where it might have a chance to survive in 2011. Instead, the phenomenon described by some as the “New South Wales” disease spread to Canberra and Kevin Rudd has become history. Now, in every state, at every level, Labor is seen as both incompetent, and as incapable of seeing past its own internal workings to the real issues affecting real people.

Kristina Keneally hasn’t got a snowflake’s chance… well, you know the rest.