Friday, December 17, 2010

21st Century Feudalism

The 2010 household survey by the Independent Pricing And Regulatory Tribunal shows that 16% of low income families are having difficulty paying their electricity bills. That’s not exactly surprising, but it is rather surprising to learn that this is the case even though average consumption of electricity has fallen by 6% over the last four years. It’s even more alarming to consider that the figure for low income families with a mortgage is 53%. That means that any further increase in interest rates is going to have a dramatic impact on the ability of those people to pay their bills. But even without any change to interest rates, the one thing we can count on is that electricity prices will continue to rise, putting more and more pressure on people who are already stretched.

The problem has become so bad that people who have already done everything they can to reduce their consumption, turning off lights, abandoning airconditioners and dishwashers, upgrading to low consumption appliances, and eating less hot food, are still seeing their power bills go up, not down. And despite all of the advice from government agencies about the need for investment in the renewal of the infrastructure, nobody can really understand why? Power company executives are getting big juicy salaries, driving around in big fancy cars, and the energy providers are delivering big juicy dividends to the government, so why are the people who can least afford it being asked to pay so much, even though they are actually using less power?

Despite the promise that privatisation will create competition and deliver better deals, nobody actually believes it. Most people expect that privatisation will only lead to price increases as the new purchasers of the assets seek, quite rightly, to achieve a return on their investment. Then of course, there is the expectation that climate change policy will lead to either an emissions trading scheme or a carbon tax, pushing power prices up even further. And to cap it all off, most of us lack the expertise to decipher our power bills anyway, so it’s difficult to determine whether we are being billed correctly anyway, leading to the suspicion that power companies, like banks and the oil companies, are all just taking us for a ride.

Something about all this just doesn’t add up. Every other form of technology gets cheaper as it evolves and becomes more efficient. A pocket calculator in the seventies would have cost you hundreds of dollars, now you can buy a whole computer for the same money, despite the fact that inflation has made the money worth less. So why is the technology of power production getting more and more expensive? Surely, over the decades, we should have been getting better and more efficient at it, so that energy in the 21st century would be cheap as chips. Sure, there are costs involved in developing new technology, and we tend to use more energy than previous generations, but it’s easy to develop a suspicion that consumers are becoming 21st century feudal serfs, lured into a state of perpetual indebtedness to big corporations.

Thursday, December 16, 2010

It’s Time To Honour Our Promise

There seems to be a number of people lining up to blame Julia Gillard and the federal Labor government for at least contributing to conditions which led to the tragedy at Christmas Island yesterday. On the one hand, newspaper columnist Andrew Bolt is demanding the resignation of the Prime Minister, accusing her government of having blood on its hands because of what he calls the relaxation of asylum seeker policy. It is his view that “Even before yesterday, up to 170 people had been lured to their deaths by the Government’s dismantling of John Howard’s ‘Pacific Solution’, scrapping temporary protection visas and softening mandatory detention rules.”

On the other hand, refugee activist Ian Rintoul of the Refugee Action Coalition has also blamed the Gillard government for causing the tragedy through what he describes as its “anti-refugee policy”. He says, “… the blame lies with the Australian government. If the Australian government was willing to properly process asylum seekers in Indonesia and resettle successful refugees in Australia, then far fewer people would get on boats to travel to Australia.” In contrast to Andrew Bolt, Mr. Rintoul is saying that the government’s policies are too harsh, and ironically both are claiming that the current policy is to blame, even if for opposite reasons.

The truth is that they are both right up to a point. The current policy represents a diabolical compromise between being compassionate to people in need and being tough on border security, and this kind of disaster is perhaps more likely in such a policy environment. Mr. Bolt may be correct in that if we simply shut our border completely and refuse to allow anyone to enter in this manner then it is less likely that anyone would try. But that would involve abrogating our responsibility, and our promise to help those in need. However, Mr. Rintoul is also right to say that if there was an effective and orderly process for dealing with asylum seekers both here and in Indonesia then there would be no need for anyone to undertake the dangerous sea voyage in order to seek asylum.

The difference is that choosing to follow Mr. Bolt’s advice would simply push the refugee problem beyond our borders. It would perhaps placate anyone of the view that it is all someone else’s problem, and so long as people are not dying on our doorstep, it’s okay if they are dying somewhere else. It is a case of out of sight, out of mind. It ignores not only the obligation that Australia has accepted by being a signatory to the United Nations Convention on Refugees, but also the reasons why our nation chose to make that obligation in the first place.

But this tragedy did happen on our doorstep, and it serves as a reminder of our own hypocrisy as a nation which claims to believe in a fair go, but then labels asylum seekers as “queue jumpers”. We have the policy we do because our government has cobbled together a patchwork policy which tries to appease a broad array of disparate opinions, while failing to actually stand for any identifiable principle. Australia could easily double its intake of recognised refugees with no adverse effects on our own wellbeing, and yet we have a policy which panders to a myopic fortress mentality because there might be a few votes in it.

It’s time for someone to be brave enough to do the right thing and radically change our approach to the asylum seeker challenge. It’s time to assess the claims of potential refugees before they leave Indonesia. It’s time to get people who have been proven not to be a security risk out of detention centres. It’s time to honour our promise to offer dignity and safety to those who are fleeing the oppression and persecution that we claim to denounce and despise. Unfortunately, none of our current politicians seem to have that sort of courage.

Wednesday, December 15, 2010

So Much For Democracy.

After a saga stretching over many years, beginning with the failed proposals of Premier Bob Carr, through the political demise of Premier Morris Iemma and the subsequent revolving door on the Premier’s office, the New South Wales Government has finally sold off its interests in the electricity sector. Sort of. The energy retailers along with some of the generating trading rights have been sold off to Origin Energy and TRUenergy, while negotiations to sell the remaining gen-traders are expected to be completed in the reasonably near future. That means the state still owns the actually generators even though the private sector will be buying and selling the power that they generate, and the state also continues to own the poles and wires. In the end, it is a deal which seems to have satisfied no-one but the government and presumably the purchasers.

Opponents, including the state opposition parties, the unions, some industry analysts, consumer groups, and a fair chunk of the general population fear that the assets have been sold too cheaply at a poor time when the market confronts significant uncertainty, and that the result will be higher prices for consumers. While it’s tempting to suggest that since the government has been such a colossal failure at managing the sector that things can only get better now that private enterprise is about to step in, that simply isn’t the case. One of the reasons the government has been so keen to unload the business has been the need for massive new investment to renew the infrastructure. However, the structure of this deal still leaves the bulk of the physical infrastructure in government hands, while somebody else makes money out of it.

It also means that private operators driven by the profit imperative have the motivation to (a) increase prices, (b) reduce service standards to cut costs, and (c) cut jobs for the same reason. It means that consumers will have to put up with more desperate sales people knocking on the door in the early evening trying to sign them up to change providers, whether they want to or not. And it means that the New South Wales government will pocket about $5.3 billion, which sounds good until you compare it with the $20 billion which was bandied about a few years ago, or even the $10 billion suggested while Nathan Rees was Premier. Of course, it’s possible that the government might actually do something useful with that $5.3 billion, but judging by past performance I wouldn’t count on it.

In fact , when you consider the extraordinary amounts of money wasted on things like the Sydney Metro debacle, profligate waste of the federal funds for the B. E. R. schools program, and just about everything else the New South Wales government has done, I’d be surprised if we ever see a penny of that money put into anything that actually amounts to anything. But the sad reality is that for the significant number of people who believe that public utilities should rightly remain publicly owned assets, there is no longer any political party which will support that view.

So much for democracy.

Tuesday, December 14, 2010

Oprah Oprah Oprah! Oi! Oi! Oi!

She came, she saw, and she captured the imagination of millions. If anybody is still criticising the fuss and expense of welcoming the Oprah Winfrey whirlwind to Australia, their sniping has been completely drowned out by the adulating roar of the masses. 6000 fans assembled in front of the Oprah House today for the taping of two television shows to be screened next month. Samples of the event have already been broadcast showing the overwhelming enthusiasm of the crowd, and the unbridled exuberance of Oprah herself as she arrived on the stage. After leading a spirited chant of Aussie Aussie Aussie, Oi Oi Oi, Oprah declared that she now knows why we call our land “Oz”, as it truly is at the end of the yellow brick road.

Of course, it is show biz, and it is all very carefully stage managed, but there is no doubt that the enthusiasm is genuine. Equally, there can be no doubt that the positive publicity for Australia that will reach millions of people, not only in the United States, but around the world is likely to exceed even the wildest expectations of Tourism Australia, the agency which helped to make it all happen. Far from being a waste of taxpayer dollars, as some have suggested, the contribution from Tourism Australia is the best money they have spent since Paul Hogan was throwing another shrimp on the barbie.

It’s not just the impact of the Oprah seal of approval, which in it self can make or break businesses, but the opportunity for an audience of hundreds of millions worldwide to see the best of Australia on show. From Uluru to the Great Barrier Reef, to a back yard barbie in Earlwood, this will probably turn out to be the best travelogue ever made. In fact, the two hours of television which result from this escapade will deliver vastly more bang for the buck than the $120 million that it cost for Baz Lurhmann to make his “Australia” motion picture, and will probably be a damn sight more entertaining too.

Monday, December 13, 2010

A Better Deal? Don’t Bank On It!

Well, after many weeks of anticipation, the federal government’s banking reform plan has been announced over the weekend by Treasurer Wayne Swan. While the wrappings have finally come off the package, there are no real surprises in what the government has put forward, including the most widely anticipated step: the abolition of mortgage exit fees. In fact, this move was so widely expected that some banks had already removed their fees in anticipation over the past couple of months. This, along with a proposal to make mortgage insurance portable, is intended to give consumers greater freedom to “go down the road”, as Treasurer Swan put it, and take their business elsewhere.

In theory, if it is easier for customers to abandon one bank and move to another in search of a better deal, it should result in greater competition between the banks. This should result in all banks giving their customers better service and keener rates. It’s an argument that would seem to make sense, but is it really likely to achieve such a result? Well, that depends. Many people are cynical enough to suspect that if banks are forced to abandon exit fees, they will simply find another way to replace the money they would have otherwise collected. That might come in the form of increased application fees, or higher establishment fees, or bigger account service fees. Or even a higher interest rate.

Of course, the move against exit fees is only one of the range of measures announced yesterday, and things are never quite as simple as they might first appear. Removing exit fees will help make it easier for people to change mortgages, and the other measures will mean that customers are better informed, and that banks and other institutions will be able to access more sources of funding. Consumer protection has been strengthened, and transparency has been improved. But none of that guarantees that customers will actually get a better deal. It doesn’t mean that loans will necessarily be any cheaper or easier to obtain in the first place.

And it certainly doesn’t do anything to guarantee that interest rates will be any lower.