Friday, May 22, 2009

Pot Plants Paid For With Political Allowances Are Probably A Good Thing

Following the attention given this week to allowances and benefits paid to Federal politicians, it’s not altogether surprising that the spotlight would swing around to state politicians as well. It has been revealed that in New South Wales M.P.s have been claiming a wide range of interesting items against what is supposed to be a logistical support allowance. Claims have been made for such things as promotional items like personalized pens, mugs, and balloons, along with one case where a politician hade his face emblazoned on Frisbees. Other claims included the cost of cable TV, travel, pot plants and even haircuts.

The good news is that many of these claims have been rejected, although some have been approved in the past including $1000 worth of personalized pens for the opposition leader Barry O’Farrell. In the wake of revelations of British politicians making use of public money for some very doubtful purposes, questions are now being asked here in Australia about our own parliamentarians. As a result, the speaker of the New South Wales parliament has put all requests on hold pending a ruling from the Parliamentary Remuneration Tribunal as to just what items should be covered by the allowance.

It’s a similar problem to the one confronting the Federal Parliament. While there is a legitimate purpose for such allowances to pay for the expenses involved in attending to the needs of the electorate, there appears to be so much latitude in the rules that the system is virtually designed to encourage abuses. In the case of the Federal politicians, the unspent electoral allowance money can be kept as taxable income for the politician, in what amounts to a back door pay rise. This is quite clearly a disincentive to actually use the money for the intended purpose, that is to serve the electorate.

At the state level, it seems that our politicians are fond of using the logistical support allowance to pay for promotional material reminding the public of what good fellows they are. It comes awfully close to party political promotion when money is spent on plugging the public image of the politician rather than actually providing support and services to the community. The intended purpose of the allowance is supposed to be to cover office expenses, and some travel costs, for both the parliamentarian and his or her spouse. Instead, voters are given pens with the name of the opposition leader printed on them, which probably indicates just how difficult it is for most members of the public to remember without prompting anyway.

The problem is not that politicians are provided with these allowances, or even that some of them use the money for dubious purposes. The problem is that the rules governing the allowances are not clearcut, and allow too much latitude for them to be used either for the personal benefit of the politician, or for what should be considered party political promotion and which should therefore be paid for by the party, not the public.

Although, I am prepared to make an exception for the pot plants. Obviously, adding a pot plant not only improves the ambience in a political office, but there’s also a good chance that it might improve the average IQ in there as well.

Thursday, May 21, 2009

20% Increase Indicates Failed Management

It’s not likely that anyone will welcome the news that electricity prices are set to increase by 20%, which is a result of the combined effects of determinations by the Independent Pricing and Regulatory Tribunal in New South Wales, and the national regulatory body, the Australian Energy Regulator. The price increases have been deemed necessary to reflect the increased costs of producing, purchasing and retailing electricity, including an increase in retail margins. Nobody is seriously denying the need for price increases, but there is certainly criticism of the circumstances which have brought about that necessity.

Of the total price increase by far the largest chunk is the federally mandated increase in network charges, which according to the tribunal are necessary to fund improvements in network reliability. In other words, the money is needed for the maintenance and upgrading of the physical network infrastructure. This is where the criticism is directed, because it would be reasonable to expect that such maintenance, upgrading, and expansion should and would have been provided for from past earnings. But the truth is it hasn’t been.

Instead, over the past 14 years, the energy providers in New South Wales have delivered to the government $11 billion in dividends, which has disappeared into consolidated revenue in an effort to keep the budget in the black. Even that hasn’t been successful, given that the State Budget was plunging towards deficit well before the Global Financial Crisis began to wreck the economy. Instead of those dividends being appropriately invested into future capacity, they have been squandered on recurrent spending, and many would say government wastefulness.

So now, somebody has to pay for the system to be modernized and expanded to provide for reliable electricity supply into the 21st Century, and it seems that it’s you and me who are once again left to pick up the bill. The State Government was desperate to avoid the need to spend big money on upgrading the infrastructure by selling it off, and hoping that private investors would do the job. But that process was derailed in a cloud of messy politics, and selling any or all of the industry now while the financial markets are weak is not likely to produce a worthwhile return anyway. In any event, it is clear that the people of New South Wales are opposed to privatization anyway.

So, it would appear that we are stuck with the prospect of paying more for our electricity in the future, to pay for the recklessness of the past. But, given that the Government has benefited so handsomely from those special dividends for so long, isn’t it only fair that the Government should chip in to pay for the needed infrastructure? Having extracted those billions from what is a public enterprise, surely there is a responsibility to put something back into it, rather than simply jack the prices up and slug the consumer. A 20% increase is not only unfair to the consumer, it is also an indication that something has gone very wrong in the way things have been managed.

Now, more than ever, it is the role of government to provide for the common good. I know that this brings us around full circle, and returns to the old fashioned idea of public infrastructure being paid for the public purse for the public good, and that notion does seem to have gone way out of fashion over the last couple of decades, but in the light of the current economic situation, and the neo-Keynesian policies of governments around the globe, and the call for nation building programs to both boost the economy now and lay the groundwork for recovery down the track, surely this is a philosophy whose time has come. Or I should say, has come back.

Wednesday, May 20, 2009

Nero Fiddling Is Just A Distraction From The Fire

There must be a reason for the latest beat up story beating up on the politicians for using their living away from home allowance to pay off mortgages on houses in Canberra. It’s not news, as this has been going on for ages, and in fact was given a run a couple of years ago when Malcolm Turnbull was made to defend himself over this very practice. It’s not even a scam, or a rort. It is merely an allowance intended to provide for parliamentarians to be able to accommodate themselves when required to be in Canberra. So why all the fuss? Is it simply a matter of sensational headlines to sell more papers? Or is it a red herring to distract us all from something else that’s going on?

For those who think that this is just another example of politicians enjoying the gravy train, there will never be an acceptable level of pay or perks for parliamentarians. Any amount will be too much, but of course that view is unsustainable when examined with any kind of rational consideration. The basic rate of pay for a backbencher is currently $127 060 per annum, or roughly double the male average total earnings. It’s a comfortable salary to be sure, but by itself it isn’t going to make anyone wealthy. For the nature of the job and the level of responsibility involved, it is not an unreasonable amount.

Then there is the recently increased electoral allowance, which is supposed to fund community contributions and activities by the member of parliament. Controversy surrounds the practice of allowing politicians to retain any unspent funds from that allowance as taxable income for themselves. It should be obvious that such an arrangement is a disincentive to actually use the funds for the purpose intended, that is in service to the electorate. For that reason, the recent criticism was justified, and a far more satisfactory arrangement would be to require unspent funds to be returned to treasury.

At the same time, the living away from home allowance is specifically intended for the benefit of the politician, putting it into a different category. Rather than running an expense account system where hotel bills and the like are picked up by the taxpayer, which would require the expense and effort of accounting and auditing, the politicians are paid an allowance and left to make their own arrangements, which is arguably a more efficient approach. Given those circumstances, what does it matter whether the politician spends the money on a hotel room, or on a mortgage to pay off a residence in Canberra?

Yes, of course that provides a benefit for the politician, but only if he or she has been smart enough to take this approach. So who would you rather have running the country? People who are smart enough to put this money to productive use for themselves, or who are stupid enough to simply squander it on four star hotels? Or would you simply prefer them to pay for their Canberra accommodation out of their basic salary? Perhaps if the basic salary was significantly above community standards that might be justified, but despite the popular opinion to the contrary, politicians are not overpaid. Sure, it could be said that some individual politicians are not up to standard, but that’s our fault for electing them.

When I am flying in a commercial airliner, I want the pilot to be well paid, because I want him to be calm confident and in control. I do not want him to be stressed out and worried about making his next mortgage payment, or anxious about finding the money for medical treatment for his children. I want him to have his mind on the job. If I am going to have brain surgery, I want my surgeon to be well paid, so that he is not distracted by the fear of having his car repossessed, or his mortgage foreclosed. In the same way, I want the people who are running my country to remain focused on the job and not constantly distracted by the need to make a few dollars on the side.

There’s nothing wrong with reviewing pay and perks for politicians to ensure that scams and rorts are not encouraged, but at the same time there is a need for some balanced perspective. The sort of hysteria that can be generated by sensationalist headlines is all too often a convenient smokescreen to distract us all from far more important issues. That’s why I wonder what’s really going on when such artificial controversies are whipped up in the popular press. I suspect that rather than being distracted by politicians’ perks, we should be more concerned with whether or not they are making the right decisions for our economy, our wellbeing and our future. What really matters is not whether Nero is playing the fiddle, but whether Rome is burning at the time.

Tuesday, May 19, 2009

Computers Are Supposed To Assist The Driver To Keep Control Of The Vehicle, Not To Take It Away

The plan by the New South Wales government to test new technology to prevent drivers from speeding has triggered a heated debate. While many people would be likely to consider it a good idea, there are still some concerns about a range of issues. Two forms of the technology will be the subject of the trial. One will alert the driver whenever the speed limit is exceeded, and it will be up to the driver to take action, while the second will allow the computer to cut power to the engine if the driver ignores the warning. This version will allow the driver to override the computer, but a third variation where the driver has no power to override the computer is also possible. All three depend on a GPS navigation system and a database of every speed limit on every road in the state. That is where the trouble starts.

Already many people use GPS in-car navigation systems, and most of those already offer the speed advisory feature which warns the driver by sounding an alarm if he is travelling too quickly. It is a very useful feature, and works well to keep drivers out of trouble. Unfortunately however, the database is not always correct. There are occasions when the speed limit in the computer is not the same as the speed limit posted on the road. Sometimes there are variations because of road works. Sometimes there is simply a mistake in the programming. While the driver still has control of the vehicle he can recognize such errors and act accordingly. On the other hand, if the computer takes control of the car at an inopportune moment it could potentially be dangerous.

In the development of computer management systems for modern aircraft, problems were encountered in situations where pilots were unable to regain control of the aircraft from a computer which was following its programming despite impending disaster. Any computer is only as good as the input it has been given, and is incapable of judgement or discretion. That is why it should be a device which assists the driver, but which leaves the ultimate responsibility up to the individual in charge of the vehicle.

In the end, the driver of the vehicle is supposed to be responsible. The driver is supposed to exercise sound judgement. If society continues to remove the need for personal responsibility, we will only have more and more individuals who are not responsible, and who don’t know how to act independently without the nanny state to think for them. As personal responsibility is undermined, individuals will also come to feel disempowered, potentially promoting resentment, frustration, and anti-social reactions.

While it might make some sense to restrict the top speed of cars in a country where the highest speed limit is 110 km/h on motorways, there is another reason why the George Orwell system of complete computer control is unlikely to get the green light anytime soon. Indeed, 82 million reasons, as that is the number of dollars collected by the state from speeding drivers in a year. If the government were to be serious about so called “intelligent speed adaptation” devices, assuming that they could be made to work properly and fairly, it would then need to find that revenue somewhere else.

Of course, speeding is against the law because it is dangerous, and it would not be right to encourage or condone speeding. Road safety is important, but the most important contribution to road safety is responsible driver behavior. That means drivers being in control of their cars and making responsible decisions. If we give that responsibility away to a computer we are diminishing the individual. If the individual abuses that responsibility, then it is a matter for the law. Computers are supposed to assist the driver to keep control of the vehicle, not to take it away.

Monday, May 18, 2009

No Double Dissolution Just Yet

Well, after all of the blood and thunder of budget week, with the Opposition Leader accusing the Prime Minister of rushing to an early election, while being reported as calling the government’s bluff, the whole thing has turned into a damp squib. After seeing Malcolm Turnbull standing up in the parliament, to all intents and purposes challenging the government to bring it on, it would be easy to get the impression that an early election would suit him just fine. Nothing could be further from the truth. Last week I asked just who was bluffing who, and although the question was obviously rhetorical, the opposition have given a clear answer with its abrupt reversal on the question of the alcopops tax increase.

In order for the Prime Minister to be in a position to “rush to an early election”, there must be a trigger for calling it, at least if there is to be a double dissolution, and without that there is not much point. For a double dissolution to be called, the government must have had a piece of legislation rejected twice by the senate in a period of not less than three months. The alcopops legislation, originally rejected so dramatically by the combination of the opposition and the lone Families First Senator Steve Fielding, has been re-introduced by the government and would have been such a trigger if it had been rejected again. But instead, after all of the chest thumping last week, the opposition has quietly decided to wave it through without any further resistance.

Originally, the opposition opposed the alcopops tax hike on the grounds that it was simply a revenue measure masquerading as health policy. Now they say that they support it for the very same reason, pointing to the budget bottom line and claiming that they don’t want to do anything to add to the deficit. Quite aside from the obvious point that the distinction between a revenue measure with health benefits as compared to a health measure with revenue benefits is really just a case of excessive pedantry, I have to wonder does this mean that the opposition will also backflip on its promise to block the introduction of a means test on the private health insurance rebate? I seriously doubt it, but by their own logic, they could, and will, be accused of placing greater strain on the budget bottom line.

The opposition could also be accused of hypocrisy, and of not having a coherent policy on anything other than a policy of opposing government measures for the sake of opposition. That would not be entirely fair, as the private health insurance matter is an ideology close to the Liberal heart, and linked to their central political philosophy. I would expect that their opposition to the government’s proposal on that will be more robust than has been their stand on alcohol. Either way though, the coalition is unlikely to be in a hurry for an election, and last week’s bravado was more about style than substance, as illustrated by the opposition’s reluctance to load the double dissolution gun for the government.