Housing affordability is perhaps the most pressing challenge for Australia at this time. While high fuel prices are very much in the forefront, along with grocery prices and inflation generally, it is housing which presents the most fundamental dilemma. If a person’s residential status is secure, other challenges such as fuel and food can be confronted with greater confidence. Take away that security and everything else becomes so much more difficult.
While there has been a lot of focus on the undersupply of housing as a primary cause of the affordability crisis, there seems to be a reluctance to acknowledge the impact of high taxes and charges and user pays levies as causes for that shortage of supply. Ten years ago, those levies did not exist. Ten years ago there was no G.S.T. Of course those things make housing more expensive. Adding insult to injury is the fact that the G.S.T. is calculated on the price including those levies, which is in fact a tax on a tax.
The root of the problem is simple. It is the so called user pays principle which has seen the introduction of developer levies to pay for infrastructure and services which were once paid for by the public purse. The truth is that “user pays” is a con. The user already pays! We already pay our rates and taxes, and yet this all pervasive philosophy means that we also have to stump up for levies and charges which never existed before. It is the same scam which sees us paying an increasing number of tolls to use roads and bridges which should have been built by the tax payer.
Economic rationalism has delivered an economic environment where as much of the cost as possible is shifted to the end user to increase the bottom line at the top end. The result is that the pockets of the ordinary consumer are tapped until they are dry. And that is what we are now witnessing. As the cost of fuel, food, and housing goes up, ordinary people are finding that they have been bled dry.
The brave new world of economic rationalism has been designed so that the people serve the system, without the system properly serving the people. History tells us that any economic system which fails to sustain its general population is doomed to fail. Unless we ensure that ordinary everyday people can afford secure housing, it will be impossible to tackle the other challenges looming on the economic horizon.
Wednesday, June 18, 2008
Tuesday, June 17, 2008
Premier O’Farrell Sets The Agenda
Well, the deal has been done. Against the wishes of the people, the privatization of the electricity industry in New South Wales will go ahead. Despite the significant resistance offered by the union movement, and the community in general, it was always going to happen, one way or another. Ironically, it is Opposition Leader Barry O’Farrell who has been able to make it happen, and he’s not even the Premier… yet.
To get the deal done, the government has been forced to accept the demands of the opposition, the most significant of which are the assessment by the Auditor General and the rural impact statement, both prior to the sale. The Opposition insisted upon these conditions as an assurance that the taxpayers of New South Wales are getting the best possible value out of the sale. In reality the outcome of the Auditor General’s report will depend largely upon just what exactly are the terms of reference he is given. It is unlikely that his report will be allowed to result in a negative outcome.
As for the impact on rural areas, it’s not too hard to foresee that service guarantees will be required for the privatization to proceed. Those provisions have already been factored in to the government’s plan, and the impact assessment is unlikely to present any impediment.
In many respects, the pressure to privatize is so great it is remarkable that it hasn’t happened before now. Of course it has always been politically unpopular, but the reality is that a better deal would have been possible ten years ago than is the case now. If it had been blocked now, it would only get worse. Opponents of the plan might take some comfort from the knowledge that this is a minimalist privatization with distribution networks remaining in government hands, and generators being leased not sold.
The masterstroke for Barry O’Farrell and the opposition is that the privatization process which they see as necessary will go ahead, and the current Premier will take the blame from an unforgiving public.
To get the deal done, the government has been forced to accept the demands of the opposition, the most significant of which are the assessment by the Auditor General and the rural impact statement, both prior to the sale. The Opposition insisted upon these conditions as an assurance that the taxpayers of New South Wales are getting the best possible value out of the sale. In reality the outcome of the Auditor General’s report will depend largely upon just what exactly are the terms of reference he is given. It is unlikely that his report will be allowed to result in a negative outcome.
As for the impact on rural areas, it’s not too hard to foresee that service guarantees will be required for the privatization to proceed. Those provisions have already been factored in to the government’s plan, and the impact assessment is unlikely to present any impediment.
In many respects, the pressure to privatize is so great it is remarkable that it hasn’t happened before now. Of course it has always been politically unpopular, but the reality is that a better deal would have been possible ten years ago than is the case now. If it had been blocked now, it would only get worse. Opponents of the plan might take some comfort from the knowledge that this is a minimalist privatization with distribution networks remaining in government hands, and generators being leased not sold.
The masterstroke for Barry O’Farrell and the opposition is that the privatization process which they see as necessary will go ahead, and the current Premier will take the blame from an unforgiving public.
Monday, June 16, 2008
Petrol Promise Impossible To Deliver
It’s no surprise that almost 80 percent of voters want the Federal Government to take direct action to cut fuel prices, according to figures from the latest Herald/Nielsen poll. After all, it was the Labor Party which went to last year’s election making bold promises to take action against high housing costs, high grocery costs and especially high petrol prices. While no politician was foolish enough to say that they could actually deliver lower prices, they certainly weren’t shy about giving that impression.
Since the election, all kinds of economic hell have broken loose. Of course the seeds of the United States credit crisis were sown long ago and began to emerge well before the election, but in the past six months it has become increasingly clear that all is not well. Inflation has been identified as a significant threat, not only by our own government, but around the world. Coupled with an economic slowdown which is already gripping the United States and may or may not eventuate here, inflation spells tough times for individual consumers, especially Kevin Rudd’s “working families”.
While inflation is being propelled by a number of factors, it is fair to say that oil prices must be at or near the top of the list. And while Brendan Nelson’s proposal to cut excise is a direct and popular approach to cutting the price of petrol, sadly it would amount to no more than a drop in the oil can. Sadly, the truth is that there is virtually nothing any government can do about petrol prices, except perhaps cut the tax. And while that sounds appealing, it does nothing to address the underlying problem, and does nothing to assist climate change policy.
The government only has itself to blame for raising expectations of doing something to halt the incessant increase in petrol prices. But even worse, if the doom and gloom forecasts of a recession do come true, the government, and the rest of us, will have a lot more to worry about than just the price of petrol.
Since the election, all kinds of economic hell have broken loose. Of course the seeds of the United States credit crisis were sown long ago and began to emerge well before the election, but in the past six months it has become increasingly clear that all is not well. Inflation has been identified as a significant threat, not only by our own government, but around the world. Coupled with an economic slowdown which is already gripping the United States and may or may not eventuate here, inflation spells tough times for individual consumers, especially Kevin Rudd’s “working families”.
While inflation is being propelled by a number of factors, it is fair to say that oil prices must be at or near the top of the list. And while Brendan Nelson’s proposal to cut excise is a direct and popular approach to cutting the price of petrol, sadly it would amount to no more than a drop in the oil can. Sadly, the truth is that there is virtually nothing any government can do about petrol prices, except perhaps cut the tax. And while that sounds appealing, it does nothing to address the underlying problem, and does nothing to assist climate change policy.
The government only has itself to blame for raising expectations of doing something to halt the incessant increase in petrol prices. But even worse, if the doom and gloom forecasts of a recession do come true, the government, and the rest of us, will have a lot more to worry about than just the price of petrol.
Friday, June 13, 2008
What’s Fair About The Fair Pay Commission?
The secretary of the ACTU Jeff Lawrence has called upon the Fair Pay Commission to hand down a wage rise in line with the increases already given to statutory officials and judges, including the Commission’s own Chairman Ian Harper. That figure is 4.3 per cent, which is a smidge above inflation and a bee’s wing less than the Union claim for $26 on the minimum wage. It is also well below the 6 per cent wages growth which has been seen in the public service. By contrast, the Australian Chamber Of Commerce and Industry has called for a wage rise of $10.25, which is 2 per cent of the minimum wage.
The Australian people have been told repeatedly of the dangers of inflation and the need to fight it by pushing up interest rates at the same time as restraining wages growth. It’s for the good of the economy and for our own long term benefit, we are told. Unfortunately that doesn’t make it any easier to fill up the tank or buy the groceries.
The fact of the matter is that any increase less than inflation is a de facto pay cut at a time when people on minimum incomes are already struggling. It is no comfort to them to hear that the best way to fight inflation is to reduce their spending power. More than that, it is insulting to hear it from people who are paid six figure salaries, and who are happily pocketing increases well above inflation.
All the politicians, public servants, statutory officials and business leaders who are telling Australians to take an effective pay cut are making their pronouncements from within the ivory tower of privilege. Ordinary working families are entitled to ask a very simple question. If all these highly paid experts think it is so important to impose restraints on the economy, why will they not start with themselves and lead by example.
Don’t be misled by the Orwellian name of the Fair Pay Commission. There is no guarantee that the final decision will actually be fair.
The Australian people have been told repeatedly of the dangers of inflation and the need to fight it by pushing up interest rates at the same time as restraining wages growth. It’s for the good of the economy and for our own long term benefit, we are told. Unfortunately that doesn’t make it any easier to fill up the tank or buy the groceries.
The fact of the matter is that any increase less than inflation is a de facto pay cut at a time when people on minimum incomes are already struggling. It is no comfort to them to hear that the best way to fight inflation is to reduce their spending power. More than that, it is insulting to hear it from people who are paid six figure salaries, and who are happily pocketing increases well above inflation.
All the politicians, public servants, statutory officials and business leaders who are telling Australians to take an effective pay cut are making their pronouncements from within the ivory tower of privilege. Ordinary working families are entitled to ask a very simple question. If all these highly paid experts think it is so important to impose restraints on the economy, why will they not start with themselves and lead by example.
Don’t be misled by the Orwellian name of the Fair Pay Commission. There is no guarantee that the final decision will actually be fair.
Wednesday, June 11, 2008
Taxpayers To Fund Cars That Were Going To Be Built Anyway
It’s ironic and possibly even embarrassing to learn that the Toyota company was planning to build hybrid cars in Australia anyway, even before the Federal Government decided to give them any money. Nonetheless, the company will benefit to the tune of $35 million from the Federal Government’s Green Car Innovation Fund, along with a further $35 million from the Victorian state government. This will help to ensure that Australian workers keep their jobs, and expand the capabilities of Australian manufacturing. But if
Toyota was going to build the car anyway, is the taxpayer getting any value from the investment or is it a waste of funds?
Having made the investment in Toyota’s program, does this mean that other car manufacturers might be able to expect a similar investment if they also decide to build hybrid or other alternative energy cars in Australia? The Toyota plan involves using the existing hybrid drive system from the Prius in the mass produced Camry. Will this funding give Toyota an unfair advantage in selling vehicles using its existing hybrid technology as opposed to other manufacturers developing newer and more efficient technologies?
The opposition claims that this announcement is nothing more than an attempt to look as if it is addressing both environmental and petrol price issues, while doing nothing more than wasting money on existing technology in a product that would have been produced here anyway. In addition to that, if I was one of the Holden Engine Company employees in Melbourne about to lose my job I would be asking why some of that money isn’t being invested in assisting Holden to produce new engine technology and protecting Australian jobs that under threat right now.
Of course, the Green Car Innovation fund totals $500 million dollars and it remains to be seen how and where the rest of it will be invested as it becomes available. Australia’s automotive industry has already survived massive challenges, but the greatest challenge, that of new engine technology, is still ahead of us. If the government is going to meet that challenge then simply investing in existing technology is not going to be enough.
Toyota was going to build the car anyway, is the taxpayer getting any value from the investment or is it a waste of funds?
Having made the investment in Toyota’s program, does this mean that other car manufacturers might be able to expect a similar investment if they also decide to build hybrid or other alternative energy cars in Australia? The Toyota plan involves using the existing hybrid drive system from the Prius in the mass produced Camry. Will this funding give Toyota an unfair advantage in selling vehicles using its existing hybrid technology as opposed to other manufacturers developing newer and more efficient technologies?
The opposition claims that this announcement is nothing more than an attempt to look as if it is addressing both environmental and petrol price issues, while doing nothing more than wasting money on existing technology in a product that would have been produced here anyway. In addition to that, if I was one of the Holden Engine Company employees in Melbourne about to lose my job I would be asking why some of that money isn’t being invested in assisting Holden to produce new engine technology and protecting Australian jobs that under threat right now.
Of course, the Green Car Innovation fund totals $500 million dollars and it remains to be seen how and where the rest of it will be invested as it becomes available. Australia’s automotive industry has already survived massive challenges, but the greatest challenge, that of new engine technology, is still ahead of us. If the government is going to meet that challenge then simply investing in existing technology is not going to be enough.
Tuesday, June 10, 2008
He Said, She Said.
Regardless of what really happened at the Iguana club in Gosford, the reputations of both John Della Bosca and his wife Belinda Neal have taken a hit. The allegations against them are not nearly as grave as the hysteria of the media coverage would suggest, but are those allegations grounds for sacking the Minister, as the opposition has demanded?
If it had been anybody else in dispute with the management it would not be on the front pages of the papers. If a customer believes that he has been unfairly or rudely treated by employees at a venue it would be normal to voice that opinion and perhaps complain to management. In some cases, staff might attempt to appease a dissatisfied customer in the interests of good public relations. In other circumstances staff might become defensive and respond in a less civil manner. It really can become a tawdry “he said, she said” mess very quickly.
In such circumstances, who is to say which party was the first to become rude? Of course, that’s not really the essential question anyway. The question is, given the dispute, how was it handled by the various parties? It may well be that the staff at this venue might have dealt with the matter in a much more diplomatic manner. Or it may be that the minister and his wife could have handled matters more discreetly. What it boils down to is a matter of manners, and how we are all expected to behave in our various stations in life. In this case it appears that nobody was particularly pleasant.
What will rankle most Australian’s however is the idea that Belinda Neal might have been trying to demand special treatment by throwing her political weight around. Australians don’t like big-noters demanding “Don’t you know who I am?” But to cap it off, the allegation that threats were made in relation to the licence of the premises, if true, is simply not acceptable.
The dispute with staff at the Iguana club is not really in itself grounds for sacking the minister, but the manner in which it was handled has amplified the incident and is an embarrassment for all concerned.
If it had been anybody else in dispute with the management it would not be on the front pages of the papers. If a customer believes that he has been unfairly or rudely treated by employees at a venue it would be normal to voice that opinion and perhaps complain to management. In some cases, staff might attempt to appease a dissatisfied customer in the interests of good public relations. In other circumstances staff might become defensive and respond in a less civil manner. It really can become a tawdry “he said, she said” mess very quickly.
In such circumstances, who is to say which party was the first to become rude? Of course, that’s not really the essential question anyway. The question is, given the dispute, how was it handled by the various parties? It may well be that the staff at this venue might have dealt with the matter in a much more diplomatic manner. Or it may be that the minister and his wife could have handled matters more discreetly. What it boils down to is a matter of manners, and how we are all expected to behave in our various stations in life. In this case it appears that nobody was particularly pleasant.
What will rankle most Australian’s however is the idea that Belinda Neal might have been trying to demand special treatment by throwing her political weight around. Australians don’t like big-noters demanding “Don’t you know who I am?” But to cap it off, the allegation that threats were made in relation to the licence of the premises, if true, is simply not acceptable.
The dispute with staff at the Iguana club is not really in itself grounds for sacking the minister, but the manner in which it was handled has amplified the incident and is an embarrassment for all concerned.
Friday, June 6, 2008
Big Picture Politics Has Pitfalls
Is Kevin Rudd a grand visionary, or a master of the grand gesture? The proposal to build an Asia Pacific Community for future prosperity and security has caught people by surprise, and prompted a barrage of criticism for a range of reasons. Firstly, it appears to have been put together in a hurry, with the man appointed to head the program, Richard Woolcott, informed only hours before the announcement. Foreign governments were apparently given a heads up, but were left in the dark as to any detail. The concern is that it might be because there isn’t any.
Secondly, Kevin Rudd made specific reference to the European Union, which is a structure which has taken 60 odd years to develop after World War Two. Critics, including former Prime Ministers Paul Keating and Bob Hawke, have pointed out that European nations have handed over a chunk of their sovereignty to an over-arching level of government which has its own parliament and makes its own laws. Within the EU it’s as if national borders no longer exist, and a single labour market means workers can move about the continent competing for each other’s jobs. Imagine that happening here and having Australians competing directly for work against Indians on $2 an hour.
Of course, Kevin Rudd never said anything about giving an Asia Pacific Community EU style legislative abilities. But having made the reference, it has become the inevitable comparison. In the haste to make a grand statement prior to his visit to Japan, it appears the announcement has been made without the benefit of any in depth planning or consultation. Judging by what the Prime Minister has actually said, and not by what others have inferred, the idea is a constructive effort to promote regional security and prosperity. The trouble is that without the benefit of detail, others have filled in the blanks and drawn the conclusion that this is ad hoc policy making on the run, and has the potential to become an embarrassment.
It seems Kevin Rudd wants to be seen as a visionary leader. Well, that’s fine, but other visionary leaders of the Labor party such as Gough Whitlam and Paul Keating quickly found that voters get tired of big ideas when the little details of ordinary life are hurting them.
Right now, Australians are wondering about the promise to make life easier for working families who have trouble paying for their petrol and their groceries.
Secondly, Kevin Rudd made specific reference to the European Union, which is a structure which has taken 60 odd years to develop after World War Two. Critics, including former Prime Ministers Paul Keating and Bob Hawke, have pointed out that European nations have handed over a chunk of their sovereignty to an over-arching level of government which has its own parliament and makes its own laws. Within the EU it’s as if national borders no longer exist, and a single labour market means workers can move about the continent competing for each other’s jobs. Imagine that happening here and having Australians competing directly for work against Indians on $2 an hour.
Of course, Kevin Rudd never said anything about giving an Asia Pacific Community EU style legislative abilities. But having made the reference, it has become the inevitable comparison. In the haste to make a grand statement prior to his visit to Japan, it appears the announcement has been made without the benefit of any in depth planning or consultation. Judging by what the Prime Minister has actually said, and not by what others have inferred, the idea is a constructive effort to promote regional security and prosperity. The trouble is that without the benefit of detail, others have filled in the blanks and drawn the conclusion that this is ad hoc policy making on the run, and has the potential to become an embarrassment.
It seems Kevin Rudd wants to be seen as a visionary leader. Well, that’s fine, but other visionary leaders of the Labor party such as Gough Whitlam and Paul Keating quickly found that voters get tired of big ideas when the little details of ordinary life are hurting them.
Right now, Australians are wondering about the promise to make life easier for working families who have trouble paying for their petrol and their groceries.
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