Friday, October 8, 2010

Leaving Dracula In Charge Of The Blood Bank

(Today's editorial has been written by William Allan)

We’ve all experienced it. You’re sitting down to dinner when the phone rings or the doorbell chimes, and you are confronted with a barrage of sales tactics at such a pace you are barely able to interrupt with a polite but firm “no thanks”. Ceiling insulation, cheaper phone rates, bargain holiday packages, and now even electricity are being sold both door to door and by unsolicited phone calls. In recent times, the ‘Do Not Call’ register has delivered some success to those of us who’ve had enough of the harassing phone calls. Introduced in a wave of sweeping reforms, it was a firm response to what clearly was an inability of businesses to play by the rules. So if businesses can not be trusted to ‘self regulate’ when it comes to telemarketing, how on earth can they be trusted to ‘self regulate’ when it comes to ‘door to door sales’.

Yet that’s just what the Energy Retailers Association of Australia has been touting as part of a new era in improved customer service and standards. They’re making a formal proposal to the ACCC to establish a ‘self-regulatory’ scheme to monitor and control door to door sales tactics used by electricity companies – a marketing strategy the companies themselves admit has been plagued by underhanded tactics and false information. The electricity companies want to register and track the door knockers, weeding out those who use questionable sales tactics. Fair enough. The problem however is not with the door to door sales person - they’re just trying to make ends meet. The problem is with the electricity companies themselves – companies that are making substantial profits, paying exorbitant executive salaries, and charging prices that fewer and fewer can afford. These companies are pressuring their door knockers to resort to extreme tactics.

Who is really to blame, when an employee’s ability to put food on the table is directly proportional to their ability to convince people to change electricity providers – all for the sake of a few cents in savings. Marketing practices employed by the energy companies continue to account for almost 10% of Ombudsman complaints. Shockingly, energy marketing complaints continue to grow at a rate five times faster than similar complaints made about phone companies. Despite this, the energy companies believe that complaints are at an acceptable level, and that they should be given more control.

The trouble is most people see that as nothing more than leaving Dracula in charge of the blood bank.

Thursday, October 7, 2010

At Least New South Wales, The Premier State, Is Number One In Something

It’s no secret that the price of electricity is going up. We have all seen our bills increasing over recent years, and we’ve all been told repeatedly by the government, the regulator, the industry, and the media to expect more of the same. We know that prices are expected to increase by as much as 40% over the next few years even without a price on carbon dioxide emissions, and as much as 60% if and when there is a carbon price. We even have a pretty clear idea of why the price has risen so far, and will continue to rise even further. A number of factors are involved, but by far the most significant is the long term lack of investment in the infrastructure as successive governments have repeatedly sucked all the cash they can out of the sector to beef up the budget bottom line.

What’s worse, is that there isn’t really all that much to show for it in terms of government services or community infrastructure with so much of the budget bottom line evaporating into sheer waste. $400 million and counting for a Sydney Metro system which will most likely never be built. $100 million wasted on a T-Card system which was never delivered, and the money might never be recovered. That’s a total of half a billion dollars right there for those two items alone. And who pays? You and I do, with the cost of our electricity being driven upwards to pay for the belated investment in the infrastructure which should already have been covered by the past dividends of the publicly owned power providers.

It’s not a problem which is peculiar to New South Wales, with prices all around Australia being driven higher for much the same reasons. But sadly it is the state of New South Wales which leads the way. A report by the Institute of Public Affairs has shown that around the nation the price of electricity has outstripped inflation by almost four times over the past five years. Yet some cities have fared better than others, with the best performing city Adelaide registering an increase over five years of 16%. Sydney, by contrast, has experienced an increase in the price of electricity of 61.3% over the same period. As Duncan Gay, the Shadow Minister for Energy said to me today, “at least New South Wales, the premier state, is number one in something.” He was of course being sarcastic, as he levied the blame at the feet of the current government which has had more than 15 years to address this problem.

While it is relatively straightforward to identify the problem, it is much harder to devise a solution. With the government having proven to be such a poor manager of what is supposed to be a public asset, perhaps privatisation really will deliver better administration. But sadly that is no guarantee of lower prices or better service. In fact the reason for the problem is that the government has behaved just like a greedy corporation in the first place, rather than as a responsible government. Privatisation, in any form, is only going to see the perpetuation of the principle of profit before people, as any private operator will quite reasonably expect to be allowed to manage their investment in a manner which maximises their profit. That is what private companies do, so we cannot and should not expect any form of privatisation to deliver consumers a better deal. Unless a cheaper source of energy is discovered, the only solution will inevitably involve greater subsidies for low income families, or the reduction of living standards.

Neither of those options should have ever been necessary in the first place.

Wednesday, October 6, 2010

It Just Doesn’t Add Up

While business borrowers and mortgagors breathed a sigh of relief that the reserve Bank Board decided to leave interest rates on hold, there continue to be signs that not all is well in the Australian economy, and consequently in the Australian community. Today, we have seen the call by Shadow Treasurer Joe Hockey for industrial relations policy to be reformed yet again. The opposition leader may have declared Work Choices to be “dead, buried and cremated” during the election campaign, but there is every indication that certain elements of that policy remain very much on the coalition agenda. Specifically, exemptions from unfair dismissal laws for small business along with individual contracts, which were both key features of Work Choices, are likely to be objectives of any revision to Coalition policy. Of course, Tony Abbott promised that current industrial relations laws would remain unchanged for this term of parliament, but as he did not win the election it’s fair to say that all bets are off and the Coalition is free to rewrite its policy any way it wants.

This comes at a time when it has been revealed that the much vaunted benefits of the resources boom and the resilient response to the Global Financial Crisis has come at the cost of declining wages and conditions for ordinary Australians. A report by the Sydney University Workplace Research Centre has found that while workers in the mining sector have done very well, people employed in retail, hospitality, and community services such as health, are experiencing reduced hours, a move to casual and part time jobs, and wages growth which is failing to keep pace with inflation. In other words, they are literally going backwards. At the same time, essential goods and services such as electricity and many grocery items are increasing in price at a rate above inflation. It all adds up to a significant number of people finding it increasingly difficult to make ends meet at a time when we are all being told how well we are doing. For those people it just doesn’t add up.

Further to this, the Sydney Morning Herald has used figures from the Australian Bureau of Statistics to make a comparison between what would have once been described as “working class” suburbs and the suburbs which are home to our highest income earners. The result is that in the five years from 2003 to 2008 the eastern suburbs average income increased from two and a half times the western suburbs average up to almost three times. As they say, the rich get richer… The same effect can be seen more broadly with the rate of average wages growth being rapidly outstripped by the growth in executive salaries, with CEO pay packets exploding in the past twenty years. Now there’s nothing wrong with top people being paid top money, but there is a structural problem for both the economy and the community as a whole when ordinary people can no longer afford to pay for the goods and services that they themselves produce. You simply cannot have a consumer economy without consumers.

Neither bringing back Work Choices, nor pushing up interest rates can fix that.

Tuesday, October 5, 2010

Two Deaths In Two Days.

Two men have died over the past two days when arrested by New South Wales police, one after being subjected to capsicum spray and the use of a baton; the other after being shot with a Taser. In both cases, questions are now being asked about police procedures and whether or not excessive force has been used. In the case of the first man, Steven Bosevski, witnessed have reportedly claimed that it was police who initiated the violence, not the alleged offenders. In the second case, the alleged offender appeared to be mentally disturbed and was armed with a pair of knives. Police claim that under the circumstances they behaved appropriately, and that although the loss of life has been tragic, there was very little else that they could do.

This follows the report from Western Australia over the weekend which has revealed the excessive and inappropriate use of tasers. In one case, a mentally disturbed man was subjected to 14 Taser shots, before being shot again by prison guards a week later. Last year, a man in Queensland died after receiving 28 jolts from a Taser fired by a police officer. Here in New South Wales, the Ombudsman Bruce Barbour has reported that he has found repeated cases of Tasers being used excessively and inappropriately. Mr Barbour said that in “situations where there are multiple officers surrounding an individual, the individual is compliant but is acting in a little way strangely, they may be drunk, they may be affected by drugs but they're not presenting a direct threat… In those cases, we think that the traditional methods of resolving a dispute are far preferable to shooting somebody with 50,000 volts of electric current."

There is clear evidence from other jurisdictions both in Australia and around the world, that the idea of a Taser representing a “less than lethal option” can and does lead to a more casual attitude, and a greater propensity to rely on the weapon as something other than a measure of last resort. In fact, the evidence seems to indicate that it is very easy for a tendency to develop where the use of a Taser becomes the preferred option to resolve a situation quickly, and, in Bruce Barbour’s words, “with some finality.” That might be a viable policy if the Taser really was a “less than lethal” weapon, but the truth is that it is not. Although other factors obviously have contributed to Taser related deaths, it is abundantly clear that a Taser should always be considered to be a “potentially lethal” option. As such it is vital that its use should be governed by guidelines which are similar to those which apply to firearms.