Friday, March 28, 2008

The End Of Work Choices

The acting Prime Minister, Julia Gillard, has officially buried Work Choices. The first piece of the new Government’s industrial relations legislation has now been passed into law, after being proclaimed by the Governor General. There will now be no new Australian Workplace Agreements ever again.

That doesn’t mean there won’t be individual contracts. There will. Employers can still use statutory contracts subject to the newly reinstated “no disadvantage” test. So, why scrap A.W.A.s, which actually operated quite successfully for ten years before Work Choices? Why not simply revise A.W.A.s to restore fairness to the agreements?

The fact is that, under Work Choices, A.W.A.s were given a bad name. They became forever tainted by the fact that they were in some cases abused by unscrupulous employers attempting to exploit workers in a way that left them stripped of pay and conditions.

The outrage inspired by such blatantly one-sided deals as the notorious two cent pay rise left the image of A.W.A.s mortally wounded. So regardless of whatever merit the individual contracts once might have had, they became a symbol of everything that was wrong with work choices.

Of course, the then opposition did everything possible to promote that view, so it follows that A.W.A.s would disappear along with the rest of Work Choices.

The promise that has been made by the new Government is that none of us will be worse off, and that is supposedly guaranteed by legislation. Of course, the question is will we actually be better off?

With the dramatically changing economic climate you can be certain that the current opposition will blame any adverse outcomes in employment on the new industrial relations regime. Right or wrong, some people will believe it.

But, that’s politics.

Thursday, March 27, 2008

The Bank Always Wins…

This week, the National Australia Bank nudged up its interest rates another notch, independently of any Reserve Bank action. The increase of 0.09% comes on top of last months increase in official rates and is just the latest slap in the face for homebuyers. The federal treasurer, Wayne Swan, has responded by suggesting that customers who are unhappy with the increase should “vote with their feet” and look for a better deal from another bank. But how practical is that advice?

There is a confusing range of fees imposed by banks on customers exiting their mortgages, and it’s easy to assume that these are designed to actively discourage bank-hopping. First there are discharge fees which are reported to range between $30 and $2475. The average is $315. Then, on top of that there are early exit fees, which can range from $700 up to $1000. Non bank lenders charge much more with an average of $2448 on a variable rate loan.

Then the penalties which apply to fixed rate loans are even worse with some reaching many thousands of dollars. Of course, it has to be said that you would be less likely to exit a fixed rate loan early because your interest rates are, by definition, not going up. Nevertheless, if you do need to bail out, it does get very expensive.

So, what is the point of advising bank customers to “vote with their feet” when such prohibitive fees make the exercise impossible? Under the circumstances there is very little else the treasurer can say or do. The banks are responding to the changed economic circumstances in which they find themselves, and are naturally attempting to preserve their own profitability. At the same time, for the treasurer to acknowledge that is politically suicidal. Instead he has no choice but to publicly chastise the banks in the full realization that his criticism is unlikely to make the slightest difference to the banks.

What might make some difference is taking steps to reign in the excessive fees charged by banks and other institutions. To that end, the treasurer has already initiated a review of such fees by the Australian Securities and Investments Commission. Whatever the findings of that review might ultimately be, it will all be meaningless unless banks and other lenders are prevented from thwarting genuine competition by using these unfair fees.

Wednesday, March 26, 2008

Power To The People

It appears that a majority of the New South Wales public is opposed to the privatization of the electricity industry. But is the public well informed? The campaign mounted by Unions NSW has been very successful at spreading its anti-privatisation message. The unions claim that privatization will lead to job losses, price increases, and a decline in customer service.

Now, these are all legitimate issues which deserve to be addressed. But the question is what evidence is there to suggest that the private sector would be any worse than the government at managing our utilities. The Australian Industry Group and other business bodies have banded together to form a new alliance to promote the positives of privatization, and to counter the unions’ campaign. It is the Alliance’s contention that privatization is not only desirable, but it is the only sustainable way forward.

There’s a number of reasons for this. First, the government is not lying when it says it doesn’t have the money to build new capacity. Of course the reason why it doesn’t have the money is because rather than reinvesting the profits from electricity into maintenance and infrastructure, it has taken out enormous cash dividends to boost consolidated revenue. Secondly, while it is true that private enterprise must build in a profit margin, that doesn’t necessarily mean that the price of power will go up. The government already takes a profit out of the power industry as I just mentioned. The fact is that the price will go up anyway because of the effects of whatever carbon trading scheme is eventually introduced to combat global warming.

Thirdly, it’s debatable as to whether or not the level of customer service delivered under present arrangements is satisfactory. Which brings us to the point.

Despite the fact that there remains genuine widespread distrust of the privatization plan, I have to wonder if it’s at least in part a case of “better the devil you know”. After all, given the track record of the New South Wales government on hospitals, schools, and transport, it’s amazing that we would trust them to run a chook raffle, let alone the electricity industry.

Despite that, there will always be some who believe that electricity, like roads and other essential services to the community, should remain the domain of government, even if it’s not always efficient.

Tuesday, March 25, 2008

My Brother’s Keeper

The New South Wales Police are now inviting members of the public to be their eyes and ears more than ever before. The latest plan is for a dedicated website where any concerned citizen can upload photos or videos which provide evidence of criminal activity. The hope is that with the proliferation of mobile phone cameras in the community, modern technology can be employed to assist the fight against crime in ways never before possible.

On the face of it this might seem like a good idea. But when you stop and think more carefully it has some significant problems. First there’s the question of evidentiary standards. Digital images are easily manipulated and the standards normally applied to photographic evidence in court would mean that a great deal of such material would be simply inadmissible.

Secondly, the experience of video upload websites such as youtube is that hundreds of millions of people upload videos to show the world. Now, the Police website is not directly comparable, but it would be reasonable to expect that if people take advantage of this opportunity to snap off a photo of every driver that cuts them off in traffic, the service could become deluged with videos containing very little of any value.

Thirdly, just how many man hours are going to be dedicated to sifting through all of this material looking for worthwhile evidence? Even now, in a community with surveillance cameras in every nook and cranny, thousands of hours of video are never seen because those cameras cannot all be monitored. Specific footage is reviewed only when events call for it to be examined. Now, in the case of the new Police website, the public themselves presumably act as the first layer of filtering by only uploading pertinent material, but again, isn’t everyone with a grudge and a camera going to be muddying the waters?

Finally, there is the vigilante effect, where some people will, predictably, take it upon themselves to police the behaviour of their neighbours. They will appoint themselves to the task of community policing, probably with limited understanding of the law, and become a nuisance to ordinary people just going about their daily lives. While we have a civic duty to report crime, it would be dangerous to have people running around deliberately looking for it.

And given the popularity of so called reality television, I wonder how long it will be before the whole thing finds its way onto TV in some form?