Tax Alone Won’t Stop Alcohol Abuse

The campaign against teenage binge drinking has taken another step forward with the announcement over the weekend of the increase in tax on premixed drinks. Health experts and social policy advocates alike have welcomed the move enthusiastically with claims that it will reduces alcohol abuse. I’m not so sure of that.

It is reasonable to expect that the increased price will reduce consumption, but that is not the same thing as reducing abuse. The fact is that hard core alcohol abusers, the ones who deliberately get smashed and often become aggressive or violent, will continue to binge. They will find a way to pay the increased prices, or simply switch to a different drink. It has even been suggested that some might be more likely to steal in order to come up with the money.

Having said that, the tax increase still remains a valid measure to discourage excessive drinking, especially as it simply brings the tax treatment of this class of product into line with other forms of alcohol. It is a reasonable step to take when combined with other measures to make up a complete strategy to target alcohol abuse, not just in teenagers, but throughout the community.

The other important measures that must be addressed include trading hours, competition policy, education and support services, and social policy that promotes positive attitudes and activities.

On its own, increasing the tax is not the answer. In fact, unless it is matched by a serious effort to address those other issues, it is little more than a revenue raiser.

Petrol Prices Fueling Inflation

The latest inflation figures have hit the front pages and the news is not good. At 4.2% for the year to March, inflation is still well outside the desired range as decreed by the Reserve Bank Of Australia. So does that mean we should expect more increases in interest rates? Perhaps. But at the very least it means we can’t expect interest rates to fall anytime soon. The problem is that successive interest rate rises so far don’t seem to have stopped inflation. Maybe there’s a lesson in that.

If we look at where the CPI is rising most quickly it’s easy to see that petrol is at the top of the list. The price of petrol has increased 18.9% in the past year. Far from indicating an economy that is overheating, the rising price of petrol is more likely to actually be putting the brakes on the economy overall as both people and businesses struggle to cope with increased costs. Worse than that, because the price of fuel is largely determined by international factors, interest rate increases are unlikely to cause the price of petrol to fall. The result is that overall inflation will be seen to continue to rise, even in the face of higher interest rates.

There are also signs of an economic slowdown, with reports that retail sales figures have dramatically slumped. Add to this the uncertainty of the global credit crunch, and it’s not a big leap of the imagination to start worrying about a possible recession.

All of this leaves Treasurer Wayne Swan confronting a significant challenge in constructing his first budget. The notion that the government needs to preserve a budget surplus is only part of the picture. While inflation is making it increasingly difficult for Australians to make ends meet, it will be seen as arrogant and out of touch to sit on $20-Plus Billion while pensioners go without groceries. It is impossible for budgetary measures to prevent the effects of a global downturn, but it is possible to help cushion people from them.

The battlers of Australia are depending on Wayne Swan not to let them down.

Keeping The Olympic Dream Alive

Well the Olympic flame has arrived in Canberra for the Australian leg of the torch relay for the 2008 Beijing Olympic Games. Whether or not that also means that trouble and rowdy protests will overshadow the event remains to be seen, but it has certainly been the case elsewhere in this relay. Around the world, protestors have disrupted the relay, and regardless of the validity of their concerns, have in some cases taken their protests too far.

The so called Olympic Spirit is one of peace, harmony and goodwill. It’s a bit like the Christmas spirit… it only exists if we all believe in it and work to make it happen. Instead, at every stage around the world the torch relay has been dogged by excessive protests, draconian security, and a disconnection with ordinary people. In some ways, it might have been better not to have the relay at all. But of course that would be an admission by all concerned that the Olympic Dream did not extend to the people and government of China, who have after all accepted the honour of hosting the games.

What should be a proud moment for China has become an embarrassment, but ironically the more the Chinese authorities seek to defend the flame using attendants described as “thugs”, the more obvious it becomes that they have missed the point. Rather than defending the “Dream”, they themselves serve to devalue it. It is also clear that they simply don’t understand the concern that people around the world have for Tibet.

Despite the tremendous progress made by China it still remains a totalitarian communist regime. So for those who want to believe in the Olympic Spirit the question is this: are the ideals of peace, harmony and goodwill best served by supporting the torch relay as it passes briefly through our nation, or by protesting against it?

Right or wrong, the International Olympic Committee made its choice a long time ago when it awarded the games to China.

Come Back Peter, Your Party Needs You.

If he wants it, Peter Costello can still be Prime Minister. There are two interesting developments today which could combine to push the former treasurer in that direction. One is the announcement that Melbourne University Publishing will publish his memoirs, at which he is currently working. The second is that according to Newspoll, coalition voters want Peter Costello as Liberal Party leader, with Malcolm Turnbull as his deputy.

Despite Mr. Costello’s decision to step down from the front bench and consider other employment opportunities in the days following last year’s election loss, he has kept his options open, quietly attending to his duties as a backbencher. There would most certainly be strong support within the party for him to return to the leadership team, and take charge. Some observers have questioned whether he has the “ticker” to take it on, but I think the real question is does he have the patience?

After years of patiently waiting in vain for Mr. Howard to pass the baton, it would now take many years more to drive the coalition back into government. Realistically, Kevin Rudd is still enjoying a remarkable honeymoon with voters, and unless he and his government do something incredibly stupid, could well be in office for two or three more terms. Although that is uncertain, it could mean that any Liberal Party leader has a very long wait ahead of them.

Even if Peter Costello succumbs to temptation and takes the leadership, he still might never be Prime Minister. He could become the Liberal Party’s Kim Beazley, guiding the party through the tough times of opposition, but never reaching the pinnacle of office. There is no doubt that Peter Costello has the ability and the experience, and the party would benefit from his leadership. But on careful assessment, he may yet decide that six or nine more years is too long and he could make his contribution to society in another way. And who could blame him? After all, he has already been (arguably) Australia’s most successful treasurer.

Either way, I still think that the next Liberal Party Prime Minister will be Malcolm Turnbull.

There’s No Such Thing As A Level Playing Field

While the nation’s best and brightest get together for the confabulation known as the 2020 Summit, perhaps they should be pondering the realities of globalization, and free trade. The latest victims of this process are the 310 employees of Fisher & Paykel who will lose their jobs when the company closes its Brisbane factory and shifts the manufacturing operation to Thailand.

Apparently the workers in Thailand will be paid about $2 an hour, as compared with the Australian workers at $18 to $21 per hour. As if that is not enough economic incentive, it also seems that Thailand is prepared to offer incentives and subsidies to manufacturers that Australia is not, despite the fact that our two countries have a free trade agreement.

Free trade and globalization are a fact of life, and they are not going to go away. But the important thing is to find ways to benefit from globalization, and to manage the process to our own advantage. So long as our trading partners continue to subsidise their industries in this way, so called free trade is undermining our industry and our way of life.

It is also important that Australia maintains, and improves, both its capacity and expertise. To that end, properly directed subsidies for manufacturing should not be seen as protectionism or as propping up inefficient industries, but as an investment in both prosperity and security.

If we ever reach the point where we can no longer manufacture anything for ourselves we will have arrived at the Banana Republic that Paul Keating once warned us about.

2020 Vision

Kevin Rudd’s big suggestion for discussion at the 2020 summit is the establishment of Parent and Child Centres to provide one-stop-shop facilities for parents of young children. The Centres would deliver every aspect of child care and welfare, from maternal and child health services through to long day care and preschool. The Prime Minister claims that such an arrangement would save money and reduce duplication of services.

However, the Prime Minister also had to admit that the proposal is both uncosted and unfunded. He proposes that the centres be up and running by the target date of 2020, but the reality is that he would have to survive at least four more elections to see it through. Although that’s not impossible, it has led some to speculate on just how concrete the proposal really is.

It also remains to be seen whether it really would save money and provide a better service to parents. Despite the scattered nature of current services, is there really any great benefit in co-locating such things as post-natal health and welfare with preschools? In fact, the creation of such super-centres might create facilities of unwieldy size. Bigger isn’t always better.

The other factor is the question of how government and private enterprise would combine to manage these centres. Daycare for example might be run by private operators, but maternal and child health units are run by state health departments. Or is this a move to privatize those aspects of the operation?

The 2020 summit is supposed to be an opportunity to openly discuss and debate the issues that are of great significance to the future of the nation. I wonder though if it’s possible that the whole thing is turning a giant distraction from more pressing matters.

Rent Rort Is The Symptom, Not The Cause.

It has been reported (in the Daily Telegraph) that “greedy landlords are rorting rents”, and that real estate agents have been caught out scheming to gouge more money from renters. This stems from a notice in the window of one agent urging landlords to increase their rents now due to market conditions, and another sending out letters to tenants warning that failure to pay on time could result in increases. While these measures certainly seem harsh, are they unreasonable or unexpected?

A landlord has invested a great deal of capital in a property and should be entitled to seek the best possible return on his investment. That means if the market is paying higher rents then he is entitled to benefit from that. That’s free market economics. In the same way, it is the job of the real estate agent, in the role of property manager, to obtain for his client the best possible return on investment. In fact, not to do so would be remiss of the agent and he would soon lose clients.

Now to balance those observations it should also be recognized that both landlords and agents need tenants or they won’t make any money. Good landlords and agents will value good tenants and treat them reasonably and fairly. Less scrupulous operators will seize the opportunity to squeeze as much out of the bottom line as they can, but to blame landlords and agents for high rents is simply not right.

The problem results from a combination of extremely short supply, high capital values, and increasing interest rates. The real problem is that governments and planning authorities have not adequately provided for the housing needs of the community, and now have the headache of dealing with the social fallout. It has reached the point where there are no simple answers, but the solution has to begin with addressing the fundamental underpinning fact that demand for housing is outstripping supply to the tune of 30 000 dwellings per year.

That’s the simple equation at the bottom of a complicated problem.