EDITORIAL WEDNESDAY 14.04.10.
The fallout from Monday’s traffic disaster on the F3 continues with the head of the RTA, Michael Bushby, stood aside pending an independent investigation ordered by the Premier. Ever since the debacle, there have been calls for heads to roll, as if that might somehow magically fix the problem, and this appears to be the first. Of course, much of the heat has been directed at the Transport Minister David Campbell, lampooned by critics as “Mr. Slow”, who has been found repeatedly at the centre of disaster after disaster. The list is apparently endless, with such failures as the T-Card saga, the cancellation of the CBD Metro, and the apparent inability to improve ferry services all landing at his feet. But is Mr. Campbell really to blame, or is he just the meat in the sandwich?
It has been famously reported that former Transport Minister Carl Scully remarked that the job was so challenging that he had to drag himself by the neck to the office each day. And it is a monumental challenge. The problems besetting all aspects of transport in New South Wales, including both roads and public transport, have their roots in the decades of failure to adequately prepare for future growth and to build the necessary infrastructure accordingly. Despite awareness of the growth pressures, especially around the Newcastle – Sydney – Wollongong axis, Premier after Premier and Government after Government have failed to recognize the need for adequate investment in roads and other essential infrastructure. Of course, the current government has been in office for 15 years, so it’s getting pretty difficult for them to avoid responsibility by pointing the finger of blame at anybody else.
While calling for the resignation of the Minister might feel satisfying, the real question is whether it would make any difference. The decision making process which resulted in the abysmally poor response to Monday’s disaster is a process which is and should be within the RTA. It is supposed to be their responsibility to manage the road system to ensure that the safest possible environment is provided, and that when things do go wrong they are dealt with as effectively as possible. Critics have long suggested that the RTA has become a heavy handed bureaucracy which does more to punish drivers than to help them. Perhaps it is time for a shake up of the Authority and a review of how it operates.
But the buck has to stop somewhere, and responsibility for what has happened this week comes with the territory of being the Minister, and for that matter being the Premier. This government has had fifteen years to deliver a better outcome for not only the motorists of New South Wales, but also the users of public transport, the patients of the Public Hospital system, the residents who cannot find affordable housing, and all of the constituents who feel that our elected representatives have forgotten just who it is they are supposed to represent. For a large number of people, it would not be enough to get rid of the Transport Minister; they can’t wait to get rid of the whole government.
There are just 346 days to go, until they get the opportunity to make that happen.
Thursday, April 15, 2010
Tuesday, April 13, 2010
Defending Our Rights By Destroying Them
EDITORIAL TUESDAY 13.04.10.
The United States Ambassador to Australia Jeff Bleich was asked about the Australian Government plans for internet censorship when he appeared on ABC Television last night. While it is not normally the role of a foreign Ambassador to comment upon matters of domestic policy, the question was relevant because the internet is an essential platform for international trade and communication, and the United States State Department has previously expressed its concern over any attempt to impose censorship, including the plan by the Australian Communications Minister Stephen Conroy. The Ambassador responded to the question by saying that the internet must be free, meaning freely accessible, and that the United States has been able to capture and prosecute child pornographers without having to use internet filters. He said, “We have other means, and we are willing to share our efforts… it’s an ongoing conversation.”
Senator Conroy on the other hand continues to defend his plan, insisting that “Having no regulation to combat illegal activity actually weakens all that is good about the internet. This is a modest measure, which reflects long-held community standards about the type of content that is unacceptable in a civilised society." He argues that filtering the internet can successfully weed out child pornography and other undesirable material, despite a wide range of concerns expressed by critics, including the impact on the speed of internet services, the likelihood that not all undesirable material will be blocked, and the possibility that innocent material will be inadvertently caught in the censorship net.
When Senator Conroy suggests that the alternative to his plan is to have no regulation, he is either missing the point or deliberately misleading us. Nobody is suggesting that it should be legal to use the internet to disseminate child pornography, in fact quite the opposite. But to try to shut it off by filtering the internet is a bit like trying to stop people sending undesirable material through the Post Office by spending hundreds of millions of dollars on opening every letter to make sure it’s compliant. It’s not very practical, it’s not very efficient, and it would just motivate the perpetrators to use other means of distribution. All of these are legitimate concerns, but none of them identify the real problem with Senator Conroy’s proposal.
The truly insidious thing about the proposal by Senator Conroy is the legal structure that would be created which would give the Minister, or his minions, the unchallenged power to determine what is and is not acceptable, to create a secret blacklist without any accountability, without any requirement for those affected to be informed, and without any recourse or appeal for those affected to challenge decisions made in secret. It represents a lack of procedural fairness and natural justice that would not be tolerated in any other context. But because Senator Conroy throws around the words “child pornography” we are expected to take him at his word that he and all of his future successors can be trusted to do our thinking for us. Once the framework exists it is only a very short step to censoring artistic expression, political ideas, and free thought of any kind which might be determined to be “unacceptable” by the self appointed guardians of moral standards. Even if we trust this government not to abuse the power it seeks to give itself, can we trust future politicians to do the same?
This is another classic example of seeking to defend our rights by destroying them.
The United States Ambassador to Australia Jeff Bleich was asked about the Australian Government plans for internet censorship when he appeared on ABC Television last night. While it is not normally the role of a foreign Ambassador to comment upon matters of domestic policy, the question was relevant because the internet is an essential platform for international trade and communication, and the United States State Department has previously expressed its concern over any attempt to impose censorship, including the plan by the Australian Communications Minister Stephen Conroy. The Ambassador responded to the question by saying that the internet must be free, meaning freely accessible, and that the United States has been able to capture and prosecute child pornographers without having to use internet filters. He said, “We have other means, and we are willing to share our efforts… it’s an ongoing conversation.”
Senator Conroy on the other hand continues to defend his plan, insisting that “Having no regulation to combat illegal activity actually weakens all that is good about the internet. This is a modest measure, which reflects long-held community standards about the type of content that is unacceptable in a civilised society." He argues that filtering the internet can successfully weed out child pornography and other undesirable material, despite a wide range of concerns expressed by critics, including the impact on the speed of internet services, the likelihood that not all undesirable material will be blocked, and the possibility that innocent material will be inadvertently caught in the censorship net.
When Senator Conroy suggests that the alternative to his plan is to have no regulation, he is either missing the point or deliberately misleading us. Nobody is suggesting that it should be legal to use the internet to disseminate child pornography, in fact quite the opposite. But to try to shut it off by filtering the internet is a bit like trying to stop people sending undesirable material through the Post Office by spending hundreds of millions of dollars on opening every letter to make sure it’s compliant. It’s not very practical, it’s not very efficient, and it would just motivate the perpetrators to use other means of distribution. All of these are legitimate concerns, but none of them identify the real problem with Senator Conroy’s proposal.
The truly insidious thing about the proposal by Senator Conroy is the legal structure that would be created which would give the Minister, or his minions, the unchallenged power to determine what is and is not acceptable, to create a secret blacklist without any accountability, without any requirement for those affected to be informed, and without any recourse or appeal for those affected to challenge decisions made in secret. It represents a lack of procedural fairness and natural justice that would not be tolerated in any other context. But because Senator Conroy throws around the words “child pornography” we are expected to take him at his word that he and all of his future successors can be trusted to do our thinking for us. Once the framework exists it is only a very short step to censoring artistic expression, political ideas, and free thought of any kind which might be determined to be “unacceptable” by the self appointed guardians of moral standards. Even if we trust this government not to abuse the power it seeks to give itself, can we trust future politicians to do the same?
This is another classic example of seeking to defend our rights by destroying them.
Monday, April 12, 2010
Making Heroes Out Of Hoodlums
EDITORIAL MONDAY 12.04.10.
The new series of Underbelly has proven to be an instant success with a national audience of more than 2.2 million people tuned in to watch the story of crime and police corruption in Kings Cross in the late eighties and nineties. Many of the events that will be depicted in the coming weeks are fresh in our memories because it’s not so long since they were front page news. No doubt, the notion that this is a true story only adds to the appeal, with many of us fascinated by stories of a world which is different from our mundane existence as wage slaves and mortgage holders.
Some have been critical of earlier installments of the Underbelly series, and other similar programs, because they glamourise criminal activity and the real life villains who in the end are usually dangerous and obnoxious people. Police in particular have condemned the way in which a criminal life can be made to seem alluring and attractive by the way it is portrayed on television. It has made heroes out of hoodlums and celebrities out of people who would literally knock off your grandmother if it suited them.
Of course, the story told by Underbelly is great drama, and Underbelly tells it well. But the fact is that Underbelly is not a documentary. It is a dramatic work which happens to be based on real events and real people, but which relies on artistic license to make a good story great. People who have an intimate knowledge of the facts behind the fiction, including investigative journalist Chris Masters and former detective Roger Rogerson, have offered a different account of the events depicted so far in the new series.
For example, Chris Masters reports that police doubt that John Ibrahim ever met George Freeman, and that Lennie McPherson had long since retired to the Gold Coast by the time Ibrahim arrived in the Cross. Roger Rogerson says that as far has he knows the Federal Police officer played by Sigrid Thornton never existed at all, and the drug deal sting which saw her ripped off by the State police was in his words “complete fabrication”. Of course, it was great to see Sigrid back on the screen and looking incredibly hot, and that really is the point. Underbelly is a piece of entertainment, not an essay in recent history.
In that respect, it’s hard to see how Underbelly does any more to glamourise crime than any other television show or movie. Whether it’s Miami Vice or CSI or even The Sopranos, the bad guys have always driven the fancy cars, had the fancy girlfriends, and flashed plenty of cash. But they have also always met with justice of one kind or another, whether real or poetic. The bad guys never win in the end, and even the ones who seem to get away with it usually pay the price one way or another. It’s the curse of Michael Corleone, condemned to destroy the people he loves.
These are morality tales, and far from making crime seem glamorous to sensible people, actually show the consequences of making such choices. Any one who is inspired to take up a life of crime and violence after watching them is more than likely already that way inclined, and not too bright either. So, if you enjoy watching Underbelly, or other crime shows, you can relax and indulge your guilty pleasure… it’s not going to turn you into a criminal just because you watch.
The new series of Underbelly has proven to be an instant success with a national audience of more than 2.2 million people tuned in to watch the story of crime and police corruption in Kings Cross in the late eighties and nineties. Many of the events that will be depicted in the coming weeks are fresh in our memories because it’s not so long since they were front page news. No doubt, the notion that this is a true story only adds to the appeal, with many of us fascinated by stories of a world which is different from our mundane existence as wage slaves and mortgage holders.
Some have been critical of earlier installments of the Underbelly series, and other similar programs, because they glamourise criminal activity and the real life villains who in the end are usually dangerous and obnoxious people. Police in particular have condemned the way in which a criminal life can be made to seem alluring and attractive by the way it is portrayed on television. It has made heroes out of hoodlums and celebrities out of people who would literally knock off your grandmother if it suited them.
Of course, the story told by Underbelly is great drama, and Underbelly tells it well. But the fact is that Underbelly is not a documentary. It is a dramatic work which happens to be based on real events and real people, but which relies on artistic license to make a good story great. People who have an intimate knowledge of the facts behind the fiction, including investigative journalist Chris Masters and former detective Roger Rogerson, have offered a different account of the events depicted so far in the new series.
For example, Chris Masters reports that police doubt that John Ibrahim ever met George Freeman, and that Lennie McPherson had long since retired to the Gold Coast by the time Ibrahim arrived in the Cross. Roger Rogerson says that as far has he knows the Federal Police officer played by Sigrid Thornton never existed at all, and the drug deal sting which saw her ripped off by the State police was in his words “complete fabrication”. Of course, it was great to see Sigrid back on the screen and looking incredibly hot, and that really is the point. Underbelly is a piece of entertainment, not an essay in recent history.
In that respect, it’s hard to see how Underbelly does any more to glamourise crime than any other television show or movie. Whether it’s Miami Vice or CSI or even The Sopranos, the bad guys have always driven the fancy cars, had the fancy girlfriends, and flashed plenty of cash. But they have also always met with justice of one kind or another, whether real or poetic. The bad guys never win in the end, and even the ones who seem to get away with it usually pay the price one way or another. It’s the curse of Michael Corleone, condemned to destroy the people he loves.
These are morality tales, and far from making crime seem glamorous to sensible people, actually show the consequences of making such choices. Any one who is inspired to take up a life of crime and violence after watching them is more than likely already that way inclined, and not too bright either. So, if you enjoy watching Underbelly, or other crime shows, you can relax and indulge your guilty pleasure… it’s not going to turn you into a criminal just because you watch.
Friday, April 9, 2010
It’s The Thought That Counts
EDITORIAL FRIDAY 09.04.10.
I am reminded of the old song that goes, “I woke up this morning, I felt so sick I thought that I was dead.” I think it was actually a comedy song by Bill Oddie of the Goodies, but I cannot be certain. Nevertheless, I woke up this morning and read in the Herald that obesity is now more deadly than smoking. I was immediately tempted to give up eating and start smoking again instead. After all, everybody knows that smoking helps to suppress the appetite, and is an essential part of the well known supermodel diet of coffee, cigarettes and cocaine. Obviously, supermodels have no problem with obesity at all. But somehow I think that I may have misinterpreted the message.
After clearing my head with a strong black coffee (but no cigarette and certainly no cocaine), it gradually dawned on me that one was not necessarily linked to the other. It’s probably just a coincidence that the increase in obesity has occurred alongside the gradual decline in smoking. Just because we are no longer sucking on the fags doesn’t mean that we are going to automatically stuff our mouths with MacWhoppers instead. More sensible appraisal has led me to the realization that smoking never made me thin when I was a puffer, and so it probably wouldn’t do anything to help me now. Besides, the social life of a smoker has been severely curtailed in recent times so it’s just not the fun it used to be anyway.
What we do know however is that over the past forty or so years we have cut the level of smoking down from about three quarters of the population to just over 15% today. By comparison, more than 60% of Australian adults are now either overweight or obese, and becoming more so every year. Obesity, if you will forgive the obvious pun, is an expanding problem. So much so that it has now overtaken smoking as the leading cause of premature death and illness in Australia. Despite decades of community education programs advising us to eat healthier food and to exercise more, we just seem to keep on getting fatter. Something is just not right.
Why is it so hard to keep ourselves at a healthy weight? This is a complex question with no simple and easy answer, no matter how many well intentioned health Nazis might tell you that no fat people came out of concentration camps. And before you take offence at such a politically incorrect observation, let me explain that I am quoting the exact advice that was actually given to me once by a doctor. The truth is that metabolism, genetic predisposition, environment, lifestyle, and a range of diverse factors all play a part.
But wait, there was one more thing that I read this morning. A British news service reported on a woman who had lost about 40 kilograms after being hypnotized to believe that she had had gastric band surgery. Without any other treatment she lost almost one third of her body weight simply because her mind believed she could not eat more than modest servings. The power of the mind is a miraculous thing, and I am wondering if perhaps, with the right attitude and maybe a little hypnotherapy, I might be able to lose weight just by thinking about it. So I have been thinking about losing weight ever since I read that article this morning, and you know what they say… it’s the thought that counts.
I am reminded of the old song that goes, “I woke up this morning, I felt so sick I thought that I was dead.” I think it was actually a comedy song by Bill Oddie of the Goodies, but I cannot be certain. Nevertheless, I woke up this morning and read in the Herald that obesity is now more deadly than smoking. I was immediately tempted to give up eating and start smoking again instead. After all, everybody knows that smoking helps to suppress the appetite, and is an essential part of the well known supermodel diet of coffee, cigarettes and cocaine. Obviously, supermodels have no problem with obesity at all. But somehow I think that I may have misinterpreted the message.
After clearing my head with a strong black coffee (but no cigarette and certainly no cocaine), it gradually dawned on me that one was not necessarily linked to the other. It’s probably just a coincidence that the increase in obesity has occurred alongside the gradual decline in smoking. Just because we are no longer sucking on the fags doesn’t mean that we are going to automatically stuff our mouths with MacWhoppers instead. More sensible appraisal has led me to the realization that smoking never made me thin when I was a puffer, and so it probably wouldn’t do anything to help me now. Besides, the social life of a smoker has been severely curtailed in recent times so it’s just not the fun it used to be anyway.
What we do know however is that over the past forty or so years we have cut the level of smoking down from about three quarters of the population to just over 15% today. By comparison, more than 60% of Australian adults are now either overweight or obese, and becoming more so every year. Obesity, if you will forgive the obvious pun, is an expanding problem. So much so that it has now overtaken smoking as the leading cause of premature death and illness in Australia. Despite decades of community education programs advising us to eat healthier food and to exercise more, we just seem to keep on getting fatter. Something is just not right.
Why is it so hard to keep ourselves at a healthy weight? This is a complex question with no simple and easy answer, no matter how many well intentioned health Nazis might tell you that no fat people came out of concentration camps. And before you take offence at such a politically incorrect observation, let me explain that I am quoting the exact advice that was actually given to me once by a doctor. The truth is that metabolism, genetic predisposition, environment, lifestyle, and a range of diverse factors all play a part.
But wait, there was one more thing that I read this morning. A British news service reported on a woman who had lost about 40 kilograms after being hypnotized to believe that she had had gastric band surgery. Without any other treatment she lost almost one third of her body weight simply because her mind believed she could not eat more than modest servings. The power of the mind is a miraculous thing, and I am wondering if perhaps, with the right attitude and maybe a little hypnotherapy, I might be able to lose weight just by thinking about it. So I have been thinking about losing weight ever since I read that article this morning, and you know what they say… it’s the thought that counts.
Thursday, April 8, 2010
The Rich Get Richer…
EDITORIAL THURSDAY 08.04.10.
We’ve all heard the old saying that the rich get richer while the poor get poorer. It’s an expression which has the ring of familiarity to it, but is it actually true? The short answer is yes but no. While the rich do indeed on the whole become richer over time, aside from the occasional market crash or global financial crisis, the poor also often become less poor. It is safe to say that it is far better to be poor in today’s society than a hundred years ago thanks to improved social welfare, better health and modern technology. But the real hitch is that any improvements in the living conditions of the poor are vastly outstripped by the advances made by the rich, with the gap becoming wider over time.
Research from the Australian National University working with Britain’s Oxford University has shown that since the 1980’s the share of total income going to the top 1% of taxpayers has consistently grown. The most recent figures show that the top 1% of people took home almost 10% of the available income in the 2008 tax year. Interestingly, that puts it at the highest level it has been since the 1920s, and we all know what happened in 1929. Following the Wall Street crash at the end of the twenties, the gap between rich and poor actually got smaller until the eighties when the recent growth in executive salaries took off. Perhaps it’s no coincidence that record levels of income growth for the top earners have been recorded just before both of the two biggest financial disasters of the past one hundred years.
Perhaps there is also a connection between the growing wealth gap and the plight of low income earners who are now confronting the choice between feeding the family and paying the power bill. The price of power has already risen significantly, and the recent ruling by the Independent Pricing And Regulatory Tribunal means that it will increase even more, perhaps by as much as 60% over three years. Leaving aside the potential impact of an emissions trading scheme which may or may not be introduced, the bulk of the price rise is supposed to pay for the maintenance, upgrade, and expansion of the distribution network. It’s money that must come from somewhere if we are to continue using electricity, but the real question is why provision has not already been made for this known expense out of the massive dividends already paid by the power companies to the government over the years.
The fact is that over the last decade and a half, the New South Wales government received about $11.4 billion from electricity suppliers through taxes and dividends. The suppliers have been amalgamated, corporatized, and now are in the process of being privatized. Throughout this process the insidious philosophy of bottom line thinking has driven a process of maximizing apparent profits at the expense of proper maintenance and provision for future supply. The people at the top have sucked the money out for their own purposes, and now that the system needs to be fixed they expect the people at the bottom to pay for it.
That’s just one more way that the rich keep on getting richer, while the poor keep on getting… well you know the rest.
We’ve all heard the old saying that the rich get richer while the poor get poorer. It’s an expression which has the ring of familiarity to it, but is it actually true? The short answer is yes but no. While the rich do indeed on the whole become richer over time, aside from the occasional market crash or global financial crisis, the poor also often become less poor. It is safe to say that it is far better to be poor in today’s society than a hundred years ago thanks to improved social welfare, better health and modern technology. But the real hitch is that any improvements in the living conditions of the poor are vastly outstripped by the advances made by the rich, with the gap becoming wider over time.
Research from the Australian National University working with Britain’s Oxford University has shown that since the 1980’s the share of total income going to the top 1% of taxpayers has consistently grown. The most recent figures show that the top 1% of people took home almost 10% of the available income in the 2008 tax year. Interestingly, that puts it at the highest level it has been since the 1920s, and we all know what happened in 1929. Following the Wall Street crash at the end of the twenties, the gap between rich and poor actually got smaller until the eighties when the recent growth in executive salaries took off. Perhaps it’s no coincidence that record levels of income growth for the top earners have been recorded just before both of the two biggest financial disasters of the past one hundred years.
Perhaps there is also a connection between the growing wealth gap and the plight of low income earners who are now confronting the choice between feeding the family and paying the power bill. The price of power has already risen significantly, and the recent ruling by the Independent Pricing And Regulatory Tribunal means that it will increase even more, perhaps by as much as 60% over three years. Leaving aside the potential impact of an emissions trading scheme which may or may not be introduced, the bulk of the price rise is supposed to pay for the maintenance, upgrade, and expansion of the distribution network. It’s money that must come from somewhere if we are to continue using electricity, but the real question is why provision has not already been made for this known expense out of the massive dividends already paid by the power companies to the government over the years.
The fact is that over the last decade and a half, the New South Wales government received about $11.4 billion from electricity suppliers through taxes and dividends. The suppliers have been amalgamated, corporatized, and now are in the process of being privatized. Throughout this process the insidious philosophy of bottom line thinking has driven a process of maximizing apparent profits at the expense of proper maintenance and provision for future supply. The people at the top have sucked the money out for their own purposes, and now that the system needs to be fixed they expect the people at the bottom to pay for it.
That’s just one more way that the rich keep on getting richer, while the poor keep on getting… well you know the rest.
Wednesday, April 7, 2010
Why Interest Rates Are Going Up, Even Though It Hurts
EDITORIAL WEDNESDAY 07.04.10.
The decision by the Reserve Bank to increase interest rates was not unexpected. Even those who believed that the Bank might leave rates unchanged acknowledged that such a reprieve would be temporary. It was never a question of if, only of when. Of course, that hasn’t stopped the outcry today in response to the increase. Obviously, mortgage holders will feel the pinch, with record levels of mortgage stress already being registered, as well as business groups expressing concerns that the series of rapid increases in rates could undermine what is quite clearly a fragile economic recovery.
There seem to be two main reasons why the Reserve has taken the decision it has. One is the ongoing minerals boom, driven by demand from China and other developing countries. Mineral exports are so strong that the overall economic figures are given the appearance of robust growth. Unfortunately, that is a distortion, because most of us don’t have a direct stake in the mining sector, and the real economy, the retail economy which does affect us all directly, is still showing signs of weakness. Retail sales are thin, and while unemployment has been kept to reasonable levels, it is concealing an underlying problem with underemployment.
The second contributing factor to the Reserve Bank’s decision has been clearly articulated by the Bank’s Governor Glenn Stevens in that past few weeks. He has repeatedly expressed his concern about house prices, and the speculative investment bubble which seems to keep driving them up. While others are talking up the property market, including the government which has a vested interest in staving off a price collapse because of all the first home buyers it encouraged into ownership, Glenn Stevens is one of only a very few who are prepared to tell the truth about house prices.
The truth is that house prices are too high, and the only solution for that dilemma is for them to fall in relation to average incomes. Such a fall is of course a disaster for those who have already bought into the market, especially those who have borrowed heavily to do so, but the truth is that propping up those prices can only lead to an even greater disaster ahead. Already it is impossible for a family on an average income to buy an average house. While prices keep rising, speculators will keep chasing profits, leaving ordinary Australians who just want to buy a home for the family frozen out indefinitely, unless they are prepared to take a gamble and risk everything by borrowing beyond their means to achieve the Great Australian Dream.
Of course, that is exactly what the government has encouraged by providing the recent boost to the first home owners grant. Total mortgage debt is now 85% of Gross Domestic Product, as compared to 20% twenty years ago. That means that more Australians owe the banks more money than ever before. That means that the supernatural price of property has been overinflated by a big fat balloon of debt. That’s the problem that Glenn Stevens has been talking about, and that’s the problem that he must address by discouraging us from taking on any more debt. The only way he can do that is to put interest rates up.
The trouble is that already 40% of first home owners are now experiencing mortgage stress even before yesterday’s rate rise, and you can bet your bottom dollar that will only get worse over the coming months.
The decision by the Reserve Bank to increase interest rates was not unexpected. Even those who believed that the Bank might leave rates unchanged acknowledged that such a reprieve would be temporary. It was never a question of if, only of when. Of course, that hasn’t stopped the outcry today in response to the increase. Obviously, mortgage holders will feel the pinch, with record levels of mortgage stress already being registered, as well as business groups expressing concerns that the series of rapid increases in rates could undermine what is quite clearly a fragile economic recovery.
There seem to be two main reasons why the Reserve has taken the decision it has. One is the ongoing minerals boom, driven by demand from China and other developing countries. Mineral exports are so strong that the overall economic figures are given the appearance of robust growth. Unfortunately, that is a distortion, because most of us don’t have a direct stake in the mining sector, and the real economy, the retail economy which does affect us all directly, is still showing signs of weakness. Retail sales are thin, and while unemployment has been kept to reasonable levels, it is concealing an underlying problem with underemployment.
The second contributing factor to the Reserve Bank’s decision has been clearly articulated by the Bank’s Governor Glenn Stevens in that past few weeks. He has repeatedly expressed his concern about house prices, and the speculative investment bubble which seems to keep driving them up. While others are talking up the property market, including the government which has a vested interest in staving off a price collapse because of all the first home buyers it encouraged into ownership, Glenn Stevens is one of only a very few who are prepared to tell the truth about house prices.
The truth is that house prices are too high, and the only solution for that dilemma is for them to fall in relation to average incomes. Such a fall is of course a disaster for those who have already bought into the market, especially those who have borrowed heavily to do so, but the truth is that propping up those prices can only lead to an even greater disaster ahead. Already it is impossible for a family on an average income to buy an average house. While prices keep rising, speculators will keep chasing profits, leaving ordinary Australians who just want to buy a home for the family frozen out indefinitely, unless they are prepared to take a gamble and risk everything by borrowing beyond their means to achieve the Great Australian Dream.
Of course, that is exactly what the government has encouraged by providing the recent boost to the first home owners grant. Total mortgage debt is now 85% of Gross Domestic Product, as compared to 20% twenty years ago. That means that more Australians owe the banks more money than ever before. That means that the supernatural price of property has been overinflated by a big fat balloon of debt. That’s the problem that Glenn Stevens has been talking about, and that’s the problem that he must address by discouraging us from taking on any more debt. The only way he can do that is to put interest rates up.
The trouble is that already 40% of first home owners are now experiencing mortgage stress even before yesterday’s rate rise, and you can bet your bottom dollar that will only get worse over the coming months.
Tuesday, April 6, 2010
Thinking Big
EDITORIAL TUESDAY 06.04.10.
Federal opposition leader Tony Abbott is not one to shy away from an opportunity to create a clear point of difference between his position and that of the government, so it should be no surprise that the latest point of contention is population policy, or more to the point, the lack of it. But is the opposition leader genuinely concerned about the question of sustainable population growth, or is he exploiting an undercurrent of xenophobia for political advantage? The opposition’s hard line on the asylum seeker issue has clearly enjoyed some success with many in the voting public, so could it be that the broader question of immigration, currently at historically high levels, is now being dealt with in the same way?
It is true that there are legitimate concerns about whether or not Australia’s natural resources and built infrastructure can sustain a population projected to reach 36 million by mid century. Water in particular could be a major problem for such a large population. The trouble is though that we just don’t know for sure. What has been missing has been any kind of rigorous examination of just what a sustainable population growth path would be. All we have had is Kevin Rudd observing that he thinks a “big Australia” is a good thing, and an opposition partial to taking a contrarian position on everything.
Now that the issue has become front page news, the government has allocated a minister to formulate population policy, while the opposition has supported a proposal for the Greens for an independent study. The fact is that population growth is taking place right now, so it would be prudent to start asking the sensible questions about natural resources, built infrastructure, population density and distribution now, and coming up with answers based on more than a gut feeling. It may well be that a population of 40 million is feasible, or even desirable, but the point is that we don’t know if we don’t do the study.
Without any kind of empirical assessment, all we have is politically driven ideas based on seeking votes. On the one hand we are told that a big Australia is the key to economic prosperity and national security, while on the other hand we are told that excessive population growth will reduce our living standards as more people compete for jobs, houses, and water. Throw in the temptation to appeal to fears of cultural invasion and it’s easy to see how the debate could very easily become driven by political expediency rather than any kind of rational assessment of just what is the best plan for our future.
Federal opposition leader Tony Abbott is not one to shy away from an opportunity to create a clear point of difference between his position and that of the government, so it should be no surprise that the latest point of contention is population policy, or more to the point, the lack of it. But is the opposition leader genuinely concerned about the question of sustainable population growth, or is he exploiting an undercurrent of xenophobia for political advantage? The opposition’s hard line on the asylum seeker issue has clearly enjoyed some success with many in the voting public, so could it be that the broader question of immigration, currently at historically high levels, is now being dealt with in the same way?
It is true that there are legitimate concerns about whether or not Australia’s natural resources and built infrastructure can sustain a population projected to reach 36 million by mid century. Water in particular could be a major problem for such a large population. The trouble is though that we just don’t know for sure. What has been missing has been any kind of rigorous examination of just what a sustainable population growth path would be. All we have had is Kevin Rudd observing that he thinks a “big Australia” is a good thing, and an opposition partial to taking a contrarian position on everything.
Now that the issue has become front page news, the government has allocated a minister to formulate population policy, while the opposition has supported a proposal for the Greens for an independent study. The fact is that population growth is taking place right now, so it would be prudent to start asking the sensible questions about natural resources, built infrastructure, population density and distribution now, and coming up with answers based on more than a gut feeling. It may well be that a population of 40 million is feasible, or even desirable, but the point is that we don’t know if we don’t do the study.
Without any kind of empirical assessment, all we have is politically driven ideas based on seeking votes. On the one hand we are told that a big Australia is the key to economic prosperity and national security, while on the other hand we are told that excessive population growth will reduce our living standards as more people compete for jobs, houses, and water. Throw in the temptation to appeal to fears of cultural invasion and it’s easy to see how the debate could very easily become driven by political expediency rather than any kind of rational assessment of just what is the best plan for our future.
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