What Recession?

EDITORIAL TUESDAY 02.06.09.
Some people are starting to ask “What recession?” And it’s not surprising given the surprising amount of good news in recent weeks. Last month is was the surprise fall in unemployment and the healthy increase in retail sales figures or March. Yesterday the April retail figures showed continued growth. Today, the international trade figures have shown a surprise fall in the current account deficit. The share market has kicked into overdrive in the past few days, showing an increase in value of about 15% since its low point in February, and is today at its highest level for the year. The Australian dollar has suddenly gained value and is now above 80 U. S. cents. New home sales are increasing, and although there are mixed reports about property prices, affordability has also improved. So, what’s going on? Is it the beginning of the end of the gloom, or is it a false dawn, an Indian summer, before the really bad news hits home?

Tomorrow, we will finally get the answer to one of the fundamental questions when the national accounts figures are released. Are we or are we not in an “official” recession? Following the negative growth figure for the December quarter, anything below zero will mean that the answer is “yes”. But despite many observers, including the governor of the Reserve Bank, already having conceded that a recession is occurring, is it possible that all of this unexpected good news might continue with a Gross Domestic Product figure that is actually above zero? Well, actually, it might. But at the same time, it really doesn’t matter a great deal. Either way, the global economic recession is still going on, causing great displacement in the major world economies, which will still poses challenges for Australia in the years ahead.

It is possible that a positive figure could be recorded for the March quarter, before a further decline in the following quarter, and so on, giving an overall decline in the economy over the year without actually registering two consecutive quarters in the red. It would still be a recession in overall trend terms, even if it isn’t actually called a recession. On the other hand, if there is no further decline in coming quarters then this current burst of positive news really would be the turning point, and the first indicator of recovery. But if you believe that, then perhaps you haven’t been paying attention to the bigger picture.

While there is good reason to believe that Australia will continue to avoid the worst of the fallout from the Global Financial Crisis, there will continue to be fallout. Much of the current good news comes courtesy of the government’s economic stimulus policies which have played a critical role in not just boosting economic activity, but also boosting confidence. But there is no shortage of dark clouds on the horizon, including the expectation of worsening unemployment, which in turn begins to undermine all other areas of economic activity, especially both retail and property.

As for the sharemarket, surely recent history should tell us that there is still a strong possibility of further volatility in the market for a while yet. The market seems to be super sensitive, responding positively to the new sense of optimism that some are detecting. But I believe it will be just as sensitive to bad news, so it would be appropriate to attach some caution to the optimism. The recession hasn’t been cancelled, it’s just been held back by a combination of good policy and a little good fortune. Whether that will still be the case after the current burst of positive news runs out, remains to be seen.

It’s Not Ben’s Fault. He’s Just Misunderstod.

EDITORIAL MONDAY 01.06.09.
We should all feel sorry for AFL player Ben Cousins as he is clearly unable to understand the world around him. Of course it is only to be expected. He never really had a chance. Suffering from an unnatural talent for AFL which has set him apart from ordinary people, it must have been hard dealing with all of the money and the adoration. The pressure, the scrutiny, the expectations have obviously all been too much for one individual to handle. And since life at the top was obviously so difficult for him to cope with, how much harder was it for him to find himself at the bottom after his misadventures with alcohol, drugs and wild partying women brought him down, although apparently not all the way down to earth?

Confused by the extraordinary belief that aggressive obnoxious discourteous self-aggrandising behavior is somehow a desirable attribute, Ben Cousins has found himself at the centre of attention once again because he made a one-finger gesture in front of a television camera. In hindsight it is obvious that on the planet where Ben Cousins comes from this is a sign of virility, of prowess, of confidence, and he just doesn’t understand that on this planet it means something else altogether. I’m sure it is an easy mistake to make when you lack sufficient brain cells to learn anything new from past misfortunes. But it’s not Ben’s fault. He’s just misunderstood. He didn’t intend to cause any offence whatsoever. We know this because he said so. After all of the kerfuffle, a bewildered and confused Ben Cousins said: “It was never my intention to cause any offence." The poor man is simply confounded by all the fuss and has no idea why people have become so upset. You really do have to feel sorry for him.

Of course, he’s not the only one. Even ordinary everyday people have become deeply confused over what is an acceptable form of communication and what is not. It’s remarkably similar to the phenomenon where otherwise kind considerate people signal each other on the streets using this one fingered salute. Somehow they have been led to believe that this is the appropriate way of dealing with minor misunderstandings and mistakes in traffic. I did not mean to make a mistake and accidentally merge into your lane, because I was distracted by the other driver with the luggage piled up to the roof who was reversing out onto the roadway without looking, but hey, I’m only human. Despite this there is no shortage of people who will respond by making the one figure gesture, screaming obscene accusations comparing me to sexual body parts, and sometimes even leaping out of the car to make a physical assault with or without a weapon. For some reason they believe it is justified. No wonder poor Ben is so confused.

So, for the benefit of Ben Cousins, all his footballing mates, the enraged drivers on our roads and pretty much everybody who thinks it is their God-given right to indulge their righteous indignation by embarking upon a psychopathic rage, here is a simple tip. If you don’t mean to cause offence, don’t do anything offensive. Don’t make what George W. Bush called the “one fingered victory salute”. Don’t use aggressive and obscene language in your day to day discourse, and above all, don’t make the pathetic excuse that you didn’t mean to cause offence when you know damn well that’s exactly what you intended to do. It really is simple… even simpler than Ben Cousins and his ilk.

Good Luck To Clare “Chk Chk Boom” Werbeloff

EDITORIAL THURSDAY 28.05.09.
Good luck to Clare “Chk Chk Boom” Werbeloff. Here she is, a cheeky, vibrant 19 year old who apparently perpetrated a media stunt on the spur of the moment which has been so successful that she may be about to land a regular TV gig. Despite the seemingly uneducated tone of her original appearance on television, I suspect that she is very bright, obviously inventive and imaginative, clearly articulate, and by her own admission most certainly not camera shy. Her 15 seconds of fame has propelled her to worldwide attention, and prompted others to cash in by marketing merchandise with her now infamous catch cry.

Chk Chk Boom.

I’m sure she wishes she had trademarked the phrase before others hijacked it and turned it into a marketing phenomenon. Nevertheless, it appears that there are many other opportunities available for Clare. It has been reported that Channel 9 is considering giving her a regular spot on A Current Affair to report on “pop culture issues”, and it would be safe to assume that other TV outlets may also be interested. In fact she has engaged an “agent” to manage her potential media career, and he claims to be entertaining a number of offers.

I am tempted to wonder just what all this might mean from the point of view of the thousands of hard-working young people who have spent three or four years studying at university for formal qualifications in journalism, communications, or media, and are slogging away at entry level jobs in country radio stations and regional TV networks, trying to build a career. What about the dedicated individuals who have devoted a lifetime to sharpening their skills as researchers, writers, interviewers, and presenters? What are they to make of this phenomenon? Has all of their hard work been a waste of time? Is the avenue to success in the media to be found by simply making something up and then being cheeky enough to carry it off?

I wonder also about what Tracey Grimshaw might think about this. I do not know Tracey, but I do know that she is a real journalist, who has done the work, earned her position and is very good at it. She is the presenter of the program which has made Clare famous, and now appears set to offer her the type of opportunity that was once available only to people who have proven themselves on a lesser stage such as regional media. I don’t know what Tracey thinks, perhaps she thinks is amusing, perhaps not, but I’m sure she would recognize the irony.

The so called “tabloid television” programs have long ago ceased to be genuine news and current affairs programs, but even so, isn’t it insulting to those who aspire to a serious career in the media for television executives to be turning the whole thing into one giant reality show where contestants are plucked from the streets and offered the chance to compete for a spot in front of the camera? Or perhaps that’s what the media is becoming these days. Ultimately, if an audience doesn’t watch a show, it won’t last very long on the air. Ultimately, we all decide collectively what we find entertaining and informative and useful on TV, as well as on radio and in the press.

And that’s why aberrations will always occur, but they cannot last. Put simply, Clare’s brash media stunt has certainly opened the door for her, but if she has nothing more to offer she will disappear just as quickly. On the other hand, if she has a real talent for social commentary, for comedy, for entertainment she might just manage to make her 15 seconds of fame into a real career. That’s why I wish her luck. After all, in an industry where hard work and dedication can go unrewarded for years, she’s going to need it.

Authorities Missed The Swine Flu Boat

EDITORIAL WEDNESDAY 27.05.09.
The number of confirmed cases of Swine Flu in Australia is now more than 50. Yesterday morning it was 22. One of the biggest contributing reasons for this has been the arrival of the Pacific Dawn in Sydney on Monday. Despite some passengers showing symptoms, authorities apparently assumed it was seasonal flu and not the dreaded H1N1. 2000 passengers were allowed to disembark the ship, and disperse around Australia, some of them travelling interstate on commercial airliners. The result is 14 confirmed cases among the passengers, and exposure to hundreds or even thousands more people in shops cafes cinemas and airplanes before the call went out to urge the 2000 to quarantine themselves in their homes.

The vessel itself was cleaned, any staff showing any signs of illness were relieved of duty, and a fresh batch of passengers was taken on board. The ship then sailed on Monday night, heading to Queensland. Today it has been reported that there are three more suspected cases on board and Queensland authorities have turned it away from the holiday islands of the Whitsundays and diverted it to Willis Island near Cairns. It appears that the genie is well and truly out of the bottle, and questions are now being asked about the actions of New South Wales health officials and the operators of the cruise vessel.

There are of course no 100% guarantees, but Australia does have a well planned pandemic response protocol and it is supposed to be in place to prevent the spread of disease as effectively as possible. The official threat level has been set at “contain”, and we have been told that both the state and federal authorities have the power to detain travelers, and the vessels in which they travel, in order to safeguard public health. If that is so, the question is why was that power not used to hold the Pacific Dawn and its passengers at least long enough for the test results to delivered? Another vessel had been detained for several hours on the weekend before its passengers were released, so why not the Pacific Dawn?

That answer appears to be that an assumption was made that because the vessel had not visited ports known to be infected with H1N1 it was safe to conclude that those who showed symptoms had nothing more serious than the seasonal flu. If that is the case, then there’s really not much point in having a pandemic plan at all. If we learned anything from the equine influenza disaster at all it should have been that a moment of carelessness is all it takes to bring everything undone. On that basis, there is no room for anyone to make any assumptions, least of all people who should normally be guided by rational scientific processes.

We have been led to believe that we can rely on sensible responsible precautions to prevent the spread of swine flu becoming a serious problem. Perhaps it could, but for it to have any chance of success there must be strict adherence to proper quarantine procedures. It’s still not too late to keep the damage to a minimum, but perhaps it would have been easier to hold the Pacific Dawn for a few hours to be on the safe side. After all, weren’t we all brought up to believe that we would be better safe than sorry?

Adios Amigo

EDITORIAL TUESDAY 26.05.09.
Apparently our erstwhile American friend Sol Trujillo has made remarks in an interview on the BBC that he believes Australia is racist, and that arriving here was like “stepping back in time”. When asked if there is racism in Australia, he replied that it was “evident with me personally, but more importantly with others.” The remarks have been met with disbelief in Australia, especially in the light that Mr. Trujillo has profited immensely from his time as CEO of Telstra. In fact he is probably about the only one who has.

While Mr. Trujillo walked away a year before the end of his appointed term, and even then almost two months before his nominated retirement date, he has enjoyed a salary package that reached $13.4 million in his final year, along with a reported $3 million termination payment, even though he decided to quit before completing his contract. As a temporary resident he was not required to pay tax on his offshore investments, and also benefited from Telstra assisting him with relocation and health insurance expenses, despite being more than capable of paying his own way.

At the same time, Telstra shareholders have seen their shares fall in value from over $5 per share when Mr. Trujillo arrived to around $3.10 today. Employee numbers have been cut, while the company refused to even talk to the union about pay and conditions. Customers continue to complain about services, and the Federal Government got so fed up with the aggressive tactics of Mr. Trujillo and his colleagues that they decided to cut Telstra out of the picture altogether when they announced the National Broadband Network. If there is anyone who has profited from Mr. Trujillo’s tenure at Telstra, other Mr. Trujillo himself, it is difficult to find them.

It’s true that while he was here, some Australians made jokes about the “Three Amigos”, and referred to a “Mexican Standoff” when Telstra and the Government were at each others throats. But such phrases are hardly racist. They simply reflect a very Australian sense of humour which calls a spade a bloody shovel, and if you don’t like it or take offence, then you must be remarkably precious. There is a world of difference between making light of ethnic differences and genuine vilification. Yes, there are some racist Australians, just as there are in the United States and any other country you may care to name, but as Victorian Premier John Brumby has pointed out, Australia is the multi-cultural capital of the world and tolerance here is the rule, not the exception.

Besides, I’m pretty sure that the original “Three Amigos”, Steve Martin, Chevy Chase, and Martin Short, are all American anyway, not Mexican. The point of the movie was that these three Americans came into town to try to take advantage of the unsophisticated locals. In that context, it is a remarkably accurate description of Mr. Trujillo, the American executive and his colleagues, who came to the antipodes with an arrogance matched only by their avarice. Who’s the bigot now that it seems we’ve all been treated like a bunch of backwater hicks? But there was nothing wrong with the colour of our money, was there!

Sol Trujillo did nothing to enrich Australia, only to enrich himself at our expense. Now that he has safely departed our shores he now wants to add insult to injury by claiming to have been mistreated. While he might find some comfort in his tens of millions of dollars, the only comfort for Telstra shareholders, customers and workers is that he seems to have burned his bridges and is most unlikely to return.

Work Till You Drop

EDITORIAL MONDAY 25.05.09.
There appears to be a growing backlash against the government’s plan to increase the pension age to 67, which was announced in the federal budget earlier this month. On the night, when Wayne Swan made the announcement, it seemed to take people by surprise. Certainly there had been no indication beforehand that this would be introduced. Instead all of the discussion had been about the need to increase the amount of the pension payment. Perhaps that’s why it seems to have taken a few weeks for a response to be formed.

While there was no doubt that the increase to the pension was well deserved and long overdue, the difficulty was always going to be how to pay for it, especially given that over time, more and more people will be living longer and longer. The aging population means that even if the budget can afford the payment today it would become increasingly unaffordable as years go by until it may not be viable at all. Putting aside the supposedly temporary deficit, savings had to be found somewhere to pay for the pension on a sustainable long term basis.

While unexpected, the proposal to increase the pension age is a sensible rational and logical step to find those long term savings. It is true that when the pension age was originally set at 65 almost 100 years ago the average life expectancy considerably less than it is now, meaning that significant numbers of people simply didn’t live long enough to qualify in the first place. Today, we confront the possibility of reaching a point where there are not enough people in the workforce to pay the taxes needed to provide a pension.

But just because it is logical doesn’t mean that we have to like it, or even that we have to accept it. Many people feel cheated that they will now have to work an extra two years before qualifying for the pension. They feel as if the goalposts have been shifted halfway through the game. The unions have raised a more specific and in fact a more practical concern. They say that for blue collar workers, two more years is a physical imposition which will be injurious to the health of workers. After a life time of hard labour, two more years of physically demanding work could well be too much for many people. It is a legitimate concern, and one which deserves to be taken seriously.

Even so, simply raising the pension age ignores what should be the real solution. When age pensions were first introduced a specific tax was levied for the purpose. It was later incorporated into income tax, and was swallowed up in consolidated revenue, but many people still hold the view that having paid their taxes all their working lives it is not just an entitlement, it is something they have paid for. It is ironic that when it became apparent that pensions would not be sustainable, because of the rising life expectancy and the falling fertility rate, Paul Keating introduced the compulsory superannuation guarantee to achieve exactly the same thing as the original pension system. That is a retirement income system which will pay for itself.

Ultimately, as I have said many times before, this has to be where the answer is to be found. The superannuation system must be allowed to develop to its full potential to provide adequate incomes in retirement for the vast majority of Australians. That means doing more to encourage contributions, more to shelter funds from punitive taxes, and more to protect funds from excessive fees. If the bulk of Australians can be paid a suitable retirement income from their own superannuation then the age pension can be left as what it should be, that is a safety net for the few who are failed by the main system. Superannuation is the answer, but it won’t be in a position to deliver the goods for some time yet, so until then people should be entitled to expect to be looked after by the pension, without being frightening with the prospect of working until they drop.

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

EDITORIAL FRIDAY 22.05.09.
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.