Peter Martin has set out the types of ‘error’ Treasury identified in the Coalition policy costings.

The Charter of Budget Honesty sets out guidelines for election costings, in order to make sure they are done on the same basis. One forbids the counting of proceeds from expected ”second-round effects” such as a saving on the dole from a job creation program. The Coalition counted such an effect because it says the National Centre for Economic Modelling told it its program would take 51,000 people off the dole.

That and a similar ‘error’ amounts to some $3.5 billion. But I’m not sure the Charter of Budget Honesty forbids second round effects. Here are the criteria.

The following are standard conventions for the preparation of fiscal costings. Read more »

Bob Katter has issued his own log of claims, which is an apposite term, given that one of his claims is a return to collective bargaining (note, Bob, - this was achieved in the Fair Work Act on which you voted) and compulsory arbitration. 

He also wants the right of collective bargaining extended to farmers without, it would seem, him realising that this right exists within the Trade Practices Act, again an amendment on which he voted.

At least, he seems to have the grace to accept that all his demands would not be met by either party, so here are the ones that both parties need toss quickly in the policy waste paper bin, bound for the shredder: Read more »

http://www.youtube.com/watch?v=7cFkae0j_Ns

The ALP costing (mind you not including the impact of the Greens alliance).

The Coalition costing.

The Coalition does a lot better in the new future – where forecasts are more likely to be more accurate – and worse in the further furture – where the forecasts are more speculative. In those future years the ALP is reliant on income from the mining tax. If that mining tax income is less than forecast (a very likely outcome IMHO) the budget under an ALP-Greens government starts looking very dodgy.

I was invited to address the BioProcessing Network at a dinner on the myths of public science. They were looking for a ‘thought provoking’ presentation for their membership.

I based my presentation around three IPA publications Back to basics: Why government funding of science is a waste of our money, The myths of public science and University research: The need for paying customers.
An author in this field well worth reading is Terence Kealey also the VC of the University of Buckingham.

The days of the Senate representing the states have long passed. It is difficult for many to comprehend that it was originally established as a States’ house and senators were supposed to represent the interests of their state, not a political party.

So reform of the Senate is overdue.

The House is selected by preferential ballot by electorate, where each electorate is as near as possible equal in population. This seems reasonable – after all it is about representing constituents in the Parliament.

Yet the Senate has a proportional representation system corrupted by a fixed allocation across States.

I propose that the Senate continue to be selected by proportional representation – but across the country. That is, there would be 76 senators selected across Australia according to total votes. If you get 27 per cent of the votes, you get 27 per cent of the seats in the Senate. Read more »

There is a movie we went to see last week that is a perfect miniature of the entrepreneurial life. Father of My Children in English (in French, Le père de mes enfants) won a special Jury Prize at Cannes but don’t let that put you off.

I also don’t want to say anything about the film itself since it is a movie best watched with no expectations about what will happen next. In fact, that is part of its theme. The very last moment of the movie, and I don’t think there are any spoilers in saying this, the background music is Doris Day singing Che Sera Sera with heavy emphasis on the “future’s not ours to see” motif.

It is a film to think about on a number of levels. And as there are very few movies with a strong underlying theme embedded in economics – aside from The Fountainhead are there any others? – if that is the kind of thing that interests you, you might put it on your list.

The National Accounts for June 2010 have come out today and will provide those who look no deeper than the headline figure with the belief that the Australian economy is on a shortcut to prosperity. The numbers tell a different story, and while I have no better idea about the future than anyone else, there is nothing in the recent past that should make anyone think things are heading in the right direction.

Three sets of figures stand out as part of a cautionary tale told by the numbers.

The first is the set of figures on Private Gross Fixed Capital Formation, the data on private sector investment. Across the year the growth rate was a quite sedate 1.3% and for the quarter itself (I always use the trend numbers), the growth rate was actually negative, coming in at -0.1%.

Meanwhile, for Public Gross Fixed Capital Formation the growth rate was 38.5%, a monstrous increase. The quarterly figure was only 4.7% which means the numbers are coming back down to sane proportions but even so. Read more »

You will all be pleased to know that our (caretaker) Treasury and Deputy Prime Minister, Wayne Swan, is giving an address to the Sydney Institute tomorrow night, modestly titled:

LABOUR’S ECONOMIC PLAN AND THE STABILITY AND PROSPERITY AUSTRALIANS DESERVE

I can only assume that Mr Swan thinks there are people that really deserve instability and penury.

Note also that PLAN was part of Labor’s spin during the campaign, with the Prime Minister repeating early and often the phrase about her party having a “positive economic plan for the future”.

I’m not so sure about the term PLAN.  Is she thinking Gosplan?  Is she thinking the economic plan of the People’s Republic of Korea?  Maybe a plan like the Great Leap Forward?

What she doesn’t seem to realise is that the word PLAN for a national economy is a negative not a positive; it involves all the mistakes that were made by the Ruddster – ridiculously ambitious targets in a ridiculously large number of areas, badly executed from Canberra. Read more »

Andrew Wilkie, the new independent member for Denison, who by the way received 13,681 primary votes has issued his 20 point log of claims. It would make even the most radical trade unionist blush.

Given the independents’ insistence of appropriate costing of government policies, it is worth pondering how many billions – yes,  I think that is the right ballpark figure for his demands – his log of claims would cost. 

The rebuilding of the Royal Hobart Hospital would not be cheap, for instance.  Contracting out beds to the private sector in the meantime would involve a bill in the millions. And including dental care in Medicare would add many, many millions to the annual cost of running Medicare.  Read more »

There is news today that the Coalition will consider changes to the national school history curriculum, while maintaining its support for the principle of national school curricula.

In fact, the Coalition should reconsider its support for national school curricula as it was always based on the flimsiest of rationales and underestimated the potential downsides. 

The principal reason given for introducing a national school curricula is that families move interstate – all 80,000 or so – and it is confusing for their children.  This number is actually trivial and the differences between the states are not so great as to bamboozle anyone who would not be bamboozled by staying in the same state. Read more »

The blogger formerly known as Jane Galt, Megan McArdle, has an interesting question.

Which raises an interesting question: what if Keynesian stimulus works, but no one can ever actually afford to do it, short of something like World War II, where the government can tap into a patriotic outpouring of national savings by issuing bonds with negative real yields.

This is just another hurdle for Keynesianism. Even if it could work (unlikely), can we afford it? But it doesn’t stop there. Even if we can afford it, would we want to pay the vast amounts of money necessary? What are the costs and benefits of Keynesianism? During the GFC the government seemed to argue that avoiding recession at any price was money well spent.
(HT: Marginal Revolution)

Tony Makin has a very nice piece in the Australian.

IF the battle of the election ads was any guide, fiscal management was a key theme throughout the recent campaign.

The claim that fiscal stimulus saved Australia from recession competed furiously with the admonition to cut the waste and pay back the debt.

Yet the importance of fiscal policy as a reason for the result has been largely ignored by subsequent media commentary.

Fiscal policy isn’t being given the importance that it deserves in the post-election period. I was interviewed on Alan Jones’ show this morning and he was making the point that the Greens fiscal policy needs some scrutiny – especially if they’re going to hold the balance of power in the Senate and contribute a vote to maintaining the Rudd-Gillard government in office. The combination of an ETS with the mining tax would cripple the economy. Rather than play at social engineering, fiscal policy needs to be responsible and prudent. Read more »

We’re going to see a lot more of this in the next few years. It is just waste. At some point citizen-taxpayers are going to have to draw the line at this sort of thing. Hopefully wasteful green policies such as this will start to receive more scrutiny.

TEC today congratulated the NSW Government, householders, and the solar industry on the outstanding success of the Solar Bonus Scheme which has triggered a rush of consumers to install roof top solar power.

“The tariff which is both generous and effective, has so far paid 30,000 householders 60 cents per kilowatt hour to sell their energy back to the grid, which is four times what it costs to buy energy,” said Mr. Jeff Angel, executive director of TEC. “This has meant that householders are able to pay off their investments in record time. It’s a win-win for all.”

Everyone wins except the taxpayer and perhaps future consumers of electricity. Read more »

I didn’t want the month of August to go by without mentioning this. The year 410 has always been electric to me, as has the name Alaric the Gaul although I can’t say I ever knew the specific date.

As has been reported, but not very widely, August 24 was the 1,600th anniversary of one of the turning points of European history – the first sack of Imperial Rome by an army of Visigoths, northern European barbarian tribesmen, led by a general called Alaric.

I continuously find that significant dates go by without much attention. The 65th anniversary of the dropping of the bomb on Hiroshima went by at the start of the month without much notice as well.

On Alaric and the sack of Rome, the BBC has a full report.

From the triumphalism of a mere three years ago.

For once, my electoral predictions haven’t turned out too badly, so I’ll offer one more before we get back to policy: The Liberal Party will never again win a federal election.

This isn’t a prediction of unending Labor rule, rather an observation that the Liberal and National parties are in such dire straits that they can’t continue as they are. They haven’t got enough support, parliamentary representation or ideas for one party, let alone two.

Strictly speaking the Liberals haven’t won just yet but observe the despair of today.

Labor is in very, very deep trouble and its long-term viability as a stand-alone mainstream political party is in doubt. The Greens’ assault on the party in the Senate has now moved to the lower house and the Labor soldiers have started falling. Read more »

I have an op-ed in the Australian today.

Senior Treasury officials must know they will be facing some tough scrutiny in the event of a Coalition government.

The ALP economic record has been designed and implemented by Treasury beyond simply providing technical advice. It would be judging its own performance.

One of the great lessons of the Rudd era is that Westminster institutions can be subverted. The notion of an independent, non-partisan public service has served us well for a long time. Yet it is clear Australians can no longer rely on that convention.

Treasury simply cannot brief the independents on ALP and Coalition policy. Everything it could say should have been said in the pre-election fiscal and economic outlook. For Treasury to do further work on Coalition costings would be a breach of both the caretaker conventions and the charter of budget honesty. Read more »

The ACT Government today announced a target of CO2 emissions reduction of 40 per cent by 2020 (compared to 1990 levels). That is, in 2008 CO2 emissions were estimated at 1.2 Mt in the ACT. The “business as usual” estimate is 1.62 Mt in 2020 (a 40 per cent increase over 1990 levels). The ACT Government’s target is now 0.695 Mt in 2020 (a 40 per cent reduction on 1990 levels).

Compared to “business as usual” this means a reduction of 58 per cent in 2020.

The ABS projects that the population of the ACT will grow from 339,800 in 2008 to 416,500 in 2026 using its middle series “B”.

That implies an annual growth rate of 1.08 per cent.

Therefore the projected population in 2020 is 390,600.

And that’s a 62 per cent reduction in per capita emissions in the ACT to 2020.

Here are the implications of this target: Read more »

Some of you may recall that I was involved in a public debate a few weeks ago on the issue of immigration. Strange Times has posted two video clips of the affair. I’m linking to the short 6 minute clip, that captures – more or less – the gist of the evening. The longer 90 minute clip is at the Strange Times link.

The next debate is 9 September between Alan Moran and John Daley on renewable energy.

Over the past ten years or so, governments have engaged in a curious practice. Maybe they did it before, but that’s when I began to notice. Government has expanded activity outside of its own territory but argued that domestic courts of law don’t bind that activity. I’m sure we can all think of several examples, but I’m thinking of Australian government refugee practices.

The Australian government expends taxpayer dollars, and exercises authority over individuals including making decisions about those individuals subject to Australian law, yet argues that Australian courts cannot review those decisions or hear cases based on those decisions. This is a troubling argument; the rule of (Australian) law must always and everywhere bind the Australian executive. Australian courts are established by the same mechanism that establishes executive power and I cannot understand how and why the executive has managed to avoid that issue.

So I’m pleased to see that two High Court judges are raised this very issue. Read more »

There’s a story in today’s Financial Times with the title “Worries about US Recovery Deepen”. It ought to be a reminder to that dwindling number of Keynesian economists out there just how bad things are in the showcase stimulus economy of the United States. The argument that it would have been worse had no stimulus been provided is wearing very thin. That even more spending is now needed is a policy restricted almost entirely to tenured academics.

The central point of the story, which is mostly about financial markets, is this:

The Richmond branch of the Federal Reserve’s gauge of manufacturing activity for the US’s mid-Atlantic region fell by nearly a third, and sales of existing homes fell 27.2 per cent in July – to the lowest level for 15 years – well past consensus expectations of a 12 per cent decline.

The problem, apparently, at least according to Goldman Sachs, is that there is still too much optimism! As reported in that same story: Read more »

Nine days!

 So what are we complaining about?

The WSJ reports on the state of Virginia.

The usual suspects—the big business lobbies, the Washington Post—thought a major tax increase was needed. So did the previous Governor, Democrat Tim Kaine, who proposed a $2 billion tax hike before he left town, on top of two major Virginia tax increases in the previous eight years.

Mr. McDonnell has proved otherwise. The newly elected Republican put a freeze on hiring and took the knife even to such politically sensitive programs as school aid, police and Medicaid to cut hundreds of millions of dollars. Total state spending has been reset more or less to 2007 levels. If Congress were to do that, the federal deficit could fall by more than $900 billion, or two-thirds. Read more »

If the Coalition and Labor both end up with 73 seats, then the three country independents should look to their own seats to decide which way to jump – the voters have indicated their preferences clearly. Here are the results on the AEC website this morning.

In New England, the Nationals got 20,337 first preference votes against Labor’s 6,472. In Lyne, the Nationals got 25,994 first preference votes against Labor’s 9898. And in Kennedy the LNP got 17,309 first preference votes against Labor’s 13,659. In all three cases the preference distribution shows that the Nationals and LNP ran second.

In all three cases the voters of those electorates have CLEARLY spoken and it is up to Windsor, Oakeshott and Katter to listen.

The CBO have updated their forecasts of US outlays and revenues.

(HT: Mankiw)

Peter Boettke over at Coordination Problem is running an essay writing competition.

I will give a free copy of my forthcoming The Handbook of Contemporary Austrian Economics (Edward Elgar, 2010) to the student (graduate or undergraduate) who writes an essay addressing the question “Is the Blogosphere a Common-Pool Resource?” I will ask my fellow bloggers at The Coordination Problem to help me judge the entries. The book is due out this fall, so lets pick an October 15th deadline for submission, and an announcement of the winner on November 1st. Please submit entries via email to pboettke[at]gmu[dot]edu and use as the subject line: Blogosphere Contest Entry.

This is a good topic and a great incentive to give some thought about open access systems and blogging, so eligible readers should give the contest some serious consideration. Read more »

There is little doubt that the uncertainty of the election result is good for journalists.  There seem to be an enormous number of newspaper articles today analysing the reasons for the poor showing of Labor and the gains made by the Coalition, although some of the commentary is also  focusing on why the Coalition was not able to make it across the line (eg. Baume in the Fin).

Relatively little attention is given, however, to the question: was targetting WorkChoices a mistake for Labor? And, of course, it was not just Labor but the ACTU, Paul Howes (mmmm), GetUp and others.  Certainly, in the dying days of the campaign, Julia stepped up the shrill-o-meter on this issue, repeating the point that Abbott was lying about his intention to leave WorkChoices dead, buried and cremated (always seemed like a bit of overkill, Tony). The journalists travelling with her evidently got to the point of wondering whether she was lying on this point. Read more »

Monash University academic Bob Birrell continues to do his level best to undermine the Higher Education market. Was there ever a social problem not caused by immigration? If not, make one up. Apparently Melbourne is impoverishing the rest of Australia.

”Melbourne is a parasite economy,” says Bob Birrell, the doyen of immigration and population studies in Australia. ”Increasingly, the fiscal dividend from Australia’s mineral boom is having to be distributed to Victoria to pay for the needs of Melbourne’s population boom. That’s why the Victorian Premier, John Brumby, is constantly having to go cap-in-hand to the federal government for assistance.”

I don’t want to suggest that Brumby doesn’t lobby the Feds the same as every other Premier, but perhaps some examples of Brumby seeking special deals would have aided understanding of the argument.

Then we get the usual liturgy of argument against immigration. Read more »

Right now it looks like a hung parliament. Labor party supporters have very right to be angry – last year this time the ALP was cruising to victory on every front. I have no doubt that Kevin Rudd could have won a second term despite all the stuff-ups of his government.

Right now I expect Tony Abbott to be the next prime minister of Australia. The Rudd-Gillard experiment has ended in failure – irrespective of what happens next. This will be the first government since the Great Depression not to win re-election after one term in office. Whatever the merits of Rudd and Gillard, they are unworthy of high office and the result, last night, reflects that view.

I’ve been struck by the recurrence of the $43 billion figure in three separate matters.

The first was the $43 billion absorbed by the Government’s stimulus package. There was then the $43 billion official price tag on the National Broadband Network as first announced. And finally, this week, there is the $43 billion that BHP–Billiton has proposed as a first offer for a potash fertiliser business located in Canada.

The first two have become part of the national conversation on public spending. The third is a private decision that is really up to the parties themselves. No one, at least no one in public life, is saying that BHP should spend the money or that it shouldn’t. It’s nobody else’s business.

Given the commercial nature of the deal, and given the commercial judgement of the principals, it is a deal that would very likely make money for the company. It will pay its way and earn a profitable return. The world will be a tiny bit more prosperous and BHP will be able to add to its profitability and increase its shareholder returns. Read more »

There seems to be several editorials arguing that Gillard deserves a second chance.

For example, the Sydney Morning Herald has an editorial titled

Why Labor under Gillard deserves a second chance

Isn’t that an admission of failure? Because if the SMH editors thought that Labor had performed well over the past 2.5 years, it would have said “Why Labor deserves re-election”.

Now we might give a wayward employee a second chance. We might even give a poorly performing company a second chance. But why should we give a failing government a second chance?

Some of the arguments proffered by the SMH are bizarre. For example on Abbott it states

But it really isn’t yet his turn.

Yes – is it Gillard’s turn?

And Read more »

Possum is looking for a job in the Brisbane area.

For Sale: One economist possum, slightly used, occasionally abused, good with numbers and other stuff. Intermittently snarky but always well humoured

Possum is very good with numbers and has good economic instincts. People with that skill set are somewhat rare and can add heaps of value, so if anyone needs a good numerate economist or knows of anyone who might please give Possum a shout.

The WSJ has an article about press freedom in South Africa.

Mr. Zuma, for his part, is still resentful about frequent press allegations of corruption directed against himself, together with embarrassing reports about his multitudinous wives, children and mistresses. He has filed lawsuits against many journalists and, particularly, cartoonists.

Zuma infamously told a court that he was unconcerned about contracting HIV/AIDS because he showered after intercourse. One famous South African cartoonist Zapiro now often draws Zuma with a shower.

One of the ideas that has come out of the GFC (at least regain popularity) is that government spending is self-financing. Here is Robert Reich making the argument.

The only sure way to bring that debt down and make it manageable in future years is to get the economy growing again — which requires that, in the short term, the government spend a lot of money (because consumers and businesses won’t).

Lateral Economics have just released the Australian version of that argument.

“As our economy turned down in late 2008, Australians’ spending kept other Australians in work. And those kept in work repaid the favour – by continuing to pay their taxes.” said Nicholas Gruen, CEO of Lateral Economics. Read more »

Glenn Stevens gave a speech at the University of Western Australia yesterday talking about the finance industry.

The objective should, rather, be to foster arrangements that preserve the genuine benefits of an efficient and dynamic financial system, but restrain, or punish, the really reckless behaviour that sows the seeds of serious instability. Such arrangements surely have to include allowing badly run institutions to fail, which must in turn have implications for how large and complex they are allowed to become.

We have an arrangement like that already called bankruptcy. The trade-off between too big to fail and too big to discipline is well-known and I have posted on this before. The issue is still topical so I’m basically reposting below what I said before.

I’ve recently had a book chapter accepted for publication where I discuss bankruptcy as a reward for failure and reproduce part of that chapter below. Read more »

Here is the ABC reporting that the Liberal Party doesn’t want its policies costed by Treasury (emphasis added).

The Coalition has refused to submit its policies to Treasury as required by the Charter of Budget Honesty, instead using an independent accounting firm to verify its costings.

Here is the relevant section in the Charter of Budget Honesty (emphasis added).

the Leader of the Opposition may, subject to subclause (4), request the responsible Secretaries to prepare costings of publicly announced Opposition policies.

Julia Gillard proposes the the NBN will substitute for specialist doctors and teachers in rural and outer metropolitan areas.

We understand that this technology is about transforming our economy so we’ve got a fair share of the jobs of the future. Our classrooms, so it doesn’t matter whether you’re sitting in a classroom in Brisbane or in Alice Springs, or in Perth, you can open the door to the world and see it in your classroom.
…
Under this scheme you will be able to go to your local General Practitioner and consult face to face, through the power of the internet, and then evermore quickly through the national broadband, with your specialist, without having to go far from where you live, from the care and concern of your family and friends.

Less incentive to provide public services in rural areas.

Raja Junankar – author of a fine textbook on Marxist economics – has authored an open letter praising the Rudd government’s economic stimulus package.

This remarkable letter contains no economic discussion whatsoever, yet purports to be signed by economists qua economists. Milton von Smith rips into the letter and identifies a fundamental flaw in the ALPs economic narrative.

If Rudd saved Australia from a deep recession, then by sacking Rudd and destroying our one and only saviour, Gillard has committed a crime against the economy.

So although the economists do not say it, that is the only reasonable conclusion that one can draw from their letter. Read more »

51 economists (count ‘em) have released an open letter declaring that “The Labor federal government prevented the Australian economy from falling into a deep recession and a consequent huge rise in unemployment” by its stimulus activities.

What’s more they “hope that the economic achievements of the Australian Labor Government will be recognized by the population.” I wonder what they mean by that?

Christopher Joye has an excellent piece in the ABC’s Drum website about the ‘economics’ of the NBN.  I would recommend you read it in full. He makes the new point that the addition to the nation’s debt is in fact very substantial and that the opportunity cost of this initiative is extremely high when consideration is given to the initiatives foregone.

Now the Prime Minister is spruiking the benefits of the NBN by reference to its ability to facilitate medical consultations and promising a special Medicare rebate for broadband consultations. It’s hard to know from whom she is receiving her advice, but the reality is that the scope for broadband medical consultations is very limited indeed. Read more »

In 1995, the federal government, led by the Liberal Party, passed the most important budget in three generations. Federal spending was reduced almost 10% over two years and federal employment was slashed 14%. By 1998, the federal government was in surplus and reducing the nearly $650 billion national debt. Provincial governments similarly focused on eliminating deficits by paring spending and reducing debt, and then they started to offer tax relief.
…
Tellingly, the last three Canadian elections have all had key debates on tax relief—not whether there should be tax cuts but rather what type of tax cuts. Beginning in 2001 under a Liberal government, even the politically sensitive federal corporate income tax rate has been reduced. It is now 18%, down from 28%, and the plan is to reduce it to 15% in 2012. The U.S. federal rate is 35%. Read more »

Ross Gittins is at it again, defending the MRRT, although mourning the loss of RSPT.

Even so, a butchered mining tax would be better than no mining tax.

One of my favourite quotes from the article is Gittins’ wishful assertion that:

… it is hard to see why these eminent economists (not sure whether he is referring to those on the Henry Review or Treasury officials) would advocate a tax that could damage the economy. Read more »

Harlan Linneus McCracken, utterly unknown to everyone, was nevertheless one of the most influential economists of the twentieth century because it was McCracken who explained Say’s Law to Keynes. That you have never heard his name mentioned even a single time ever is merely an example of how hard it is to get anyone to say anything negative about Keynes, let alone to explicitly recognise that he took his ideas without acknowledgement from others.

But the paper Rafe has brought to your attention from the HETSA Conference last year is worth a look. As the abstract states:

Harlan Linneus McCracken is possibly the least known economist of the twentieth century relative to the level of influence he has had. It was McCracken’s Value Theory and Business Cycles, based on his doctoral thesis written while a graduate student of J.R. Commons at the University of Wisconsin in the 1920s, that when finally published in 1933 may have been the single largest influence on Keynes in giving the General Theory the direction it took in attacking Say’s Law. Read more »

Last year the History of  Economic Thought Society of Australia (HETSA) held a conference with a main theme on Austrian economics. The other main theme was the history of economics in Western Australia, presumably because the conference was at the Notre Dame University, Fremantle campus. Actually I didn’t even know we had a Notre Dame University.

The abstracts are on line and the papers can be downloaded.

Jeremy Shearmur talked about The Road to Serfdom, both to explain the context of the writing and what it really meant – was it a warning or did Hayek really think we are destined to go all the way down the road. It is almost certainly a warning to mend our ways, and not a prediction. To the extent that we have mended our ways, serfdom is still a distant prospect. Read more »

I was driving home the other night,  listening  on PM to a newly returned Australian and now Professor of Politics at the University of Sydney prattling on about the Australian election being the equivalent of shopping at K-Mart, by which I guess he meant, cheap and nasty.  His name was Keane, and I thought at the time that he might be related to Steve Keen, but I found out the different spelling later.

John Keane wants the vision thing, and mentioned Blair, Clinton and Obama as to what he has in mind.  I thought spin and big bucks.  (Don’t you find the vision thing and national building exercises are always very expensive.)

John Roskam has picked up on what this fellow had to say in a recent column, arguing instead that actually there are both real policy substance in the campaign and real differentiation in the policy positions of the main parties.

I started to write down in two columns the differences and similarities in the policies of the Coalition and Labor. Read more »

Joe Hockey has announced today an alternative superannuation policy that does not involve the lifting the rate of the Superannuation Guarantee Charge.

It should be recalled that the Henry Tax Review did NOT recommend the lifting of  the SGC rate; this was a decision of the government in keeping with the on-going nagging of the superannuation funds and the funds managers that work for them. Instead, the Henry Tax Review recommended a series of changes to the tax arrangements affecting retirement incomes, including a zero tax rate for earnings within the fund (currently taxed at 15%).

The net effect of these changes would be to give someone on median earnings, retirement income of 88 per cent of pre-retirement earnings and someone on average earnings, 76 per cent of pre-retirement earnings.  These percentages would be seen to be very reasonable by the reasonable person test. Read more »

I reckon the NBN might just win this election for Gillard.

There is a strong swell from younger people (and some old enough to know better) that if an ALP government will give them super high speed internet, that’s enough for them. Abbott is being positioned as a luddite. If you mention the $43 billion you get an answer like “no-one questioned the cost of the Snowy River Scheme”.

I gently pointed out to a friend living in the bush (sorry, rural and regional Australia) that whoever wins she will not get high speed internet in her lifetime. Though she is almost as skeptical about politicians as I am, she was willing to trust that promise.

The best discussion on the subject I have seen is Grahame Lynch in today’s Australian. But I don’t think anyone is listening – present company excluded, of course.

If this does win it for Gillard and my friend and others do not get fibre before the election after this, will they accept the promise again? Read more »

The other night I saw the Gruen Transfer for the first time and saw two very good ads about the Greens. The first has gone viral and is very, very good.

There was a second ad – an anti-Greens ad. It was also very good, but didn’t appeal the judges as much as the first.

Read more »

I have this piece in the business section of The Australian today on the Dutch Disease. The notion that the Australia’s much higher terms of trade is somehow bad news strikes me as quite bizarre. Perhaps in corrupt, tin-pot nations that strike it lucky with one commodity of limited duration, something of a ‘resources curse’ may arise.

But for Australia, with its multi-commodity resource base and its broad base outside resources, the fact that the rest of the world is prepared to pay us more for what we can mine is a boon, to be handled effectively (largely by letting the mining companies respond to the incentives)  to improve community well-being across-the-board.

Here is the column.

You trot along to work every day.  Things are going well but they could always be better.  The boss calls you in and tells you that your pay is about to be doubled. Read more »

Richard Allsop had a very good piece in the Drum today.

Immigration is a great issue for sorting the optimists from the pessimists.

Supporters of high immigration levels tend to believe that any problems caused by increasing Australia’s population can be overcome and we can have prosperous futures in vibrant big cities. In contrast, those advocating lower immigration argue that the problems are insurmountable and paint a bleak picture of waterless, congested cities.

Of course, using lack of infrastructure as an argument against immigration has not always been the first option for immigration opponents. Opposition used to be either economic (migrants will take our jobs) or cultural (migrants are too different).

Recent history has tended to discredit both of these. The massive expansion of the immigration program under the Howard Government coincided with unemployment falling to a 30 year low of 4 per cent, so it was hard to maintain the argument that migrants were taking jobs from those of us already here. Read more »

Sydney ferries are beaut. We chose our current house because it is close to a ferry wharf. Getting a ferry to and from a concert in the city confirms one’s feelings that there is much right with the world.

So it’s a great pity the Sydney Ferries are so incompetently managed. The mismanagement is well described in painful detail in a report by Brett Walker to the NSW government in 2007. Even if you are not interested in the ferries, the report is worth reading as an example  of why governments should never run businesses.

The business has been reorganized many times of the past 10-15 years. It has been moved about the Transport Department (at one point, when it was part of  City Transit ferries were repainted blue to match the busses), corporatised then uncorporatised. Even when it was the responsibility of a board, the minister (without authority) interfered by firing a chief executive and vetoing a maintenance contract. Read more »

I used to believe in bonuses. It seemed to make sense to pay for performance. If we made a manager’s pay partly dependent on achievement we would get greater achievement. Incentives work. Pretty obvious.

So we set up a sceme under which a significant part of a manager’s pay was at risk. That percentage increased as you moved up the tree and topped out at 30% for a general manager. One third of the bonus depended on total company results (against plan) and two thirds of achievement of the manager’s objectives.

So the first step was to negotiate those objectives. We had always done that – in theory – as part of the appraisal system but now it became pretty serious. Senior managers are good at haggling so in  some cases the setting of objectives took weeks. How tough the objectives were depended on how tough the responsible manager was so some were soft and others hard. Read more »

Hello all, your friendly Ozblogistan Overlord here.

Last week I wrote briefly about slowness being caused by attempts to debug a comments plugin used by several Ozblogistan blogs — Brian’s Latest Comments — in the context of Larvatus Prodeo. It transpires that LP’s database of comments was too large to process without causing errors and slowdowns. During the week I worked on various modifications; these ‘work’ in that they have the correct behaviour and don’t crash, but in actual use they have proved to be unacceptably slow.

Consequently I have asked our blogs to deactivate the offending plugin for a few weeks. Our busiest, Catallaxy Files and Larvatus Prodeo, have done so, which should for now improve performance for everyone.

Why have I asked them to deactivate it for a few weeks? Because yours truly is moving to Darwin to take up a new job. I won’t have my usual computer for 3 weeks, according to the removalists. Once I am settled in I have another plan of attack to try, but until then I will not be in a position to easily fix things. Until then, enjoy the blogging.

This is a good ad.

(HT: Kim)

If, like me, you procrastinated and didn’t get around to getting a ticket to this years CIS John Bonythan lecture until they were all sold out then here is the complete lecture.

Victoria police are sharing data with the AFL.

Secret police files gathered on AFL players, coaches, board members and even staff have been made available to the league.

Victoria Police struck a deal with the league to share any records it has gathered on AFL identities, including handing over photos and videos.

An AFL club president, civil liberties advocates and the state opposition have all blasted the agreement as unprecedented, insulting invasion of privacy.

Hawthorn president Jeff Kennett said the agreement is utterly disturbing.

“I cannot imagine any circumstance that would justify our police force handing over its files to a sporting body,” the former Victorian premier said.

“It is a preposterous suggestion. It beggars belief that the AFL or any of their personnel are entitled to police files for any reason.”

He demanded to know how many files have been handed over and if AFL CEO Andrew Demetriou is aware of it. Read more »

The High Court today ruled that Howard government amendments to the electoral roll were invalid.

THE Electoral Commission has issued voting instructions for thousands of extra people now eligible to do so at the August 21 election after a High Court ruling today.

Political advocacy group GetUp! won its challenge to have the Electoral Act changed to allow up to 100,000 more Australians to be added to the roll for this election after enrolling after the original cutoff.

The full bench of the High Court handed down its majority decision at lunchtime, in the fastest-ever ruling for a full court hearing.

This decision is a bit disturbing and follows a decision at the last election that permitted convicted criminals still serving prison sentences to vote. Read more »

Milton von Smith and I have been having a look at the new ALP website on the economy.

The ALP make this claim.

The Federal Labor Government’s responsible economic management means Australia’s national budget will return to surplus in three years time and three years ahead of schedule. That’s despite the fact the global recession stripped about $110 billion from government revenue over five years.

So we’re invited to believe that the debt and deficits are something that just happened – no mention of all the reckless spending. Read more »

Fraser-Kirk alleges sexual harrasment against the former CEO of David Jones,  Mark McInnes.

Her claim is ridiculously high and disproportionate. Why should the shareholders of David Jones suffer for the behaviour of a person who was dismissed from the company? Whatever happened to individual responsibility?

It is probably no coincidence that Fraser-Kirk is a publicist – she is milking this.

But her frivolous lawsuit sets a new benchmark for over-the-top claims that makes a mockery of our law.

I have a simple proposal. Where a claimant receives a payment of less than one tenth of the amount they seek, the Court should order that the claimant pay to consolidated revenue an amount of no less than one tenth of the amount they sought. That would spell an end to frivolous and vexatious litigation.

It must be every deposed politicians’ fantasy – to be recalled by a grateful nation. It seems a few weeks ago the ALP couldn’t win government with him and now, at long last they realise the aweful truth, they can’t win government without him. Yes people; Kevin Rudd is living the dream.

So much for moving forward.

The SMH has an interesting poll.

The Press Club is hosting a debate on immigration between Tony Burke and Scott Morrison. The first question from a journo about ‘turning back boats’ lead Burke to make the point that once a boat is turned around by the navy ‘the boat will start to sink’. Now he claims this is advice that he received from the public service when the current government came to office. That may well be true; yet this sounds a lot like the children overboard claims that were made in 2001.

The AEI recently had an event Do We Need a New Stimulus Package? Estimates of Spending and Tax Multipliers. Robert Barro spoke – his video presentation is here.
(HT: Cafe Hayek)

There is an Open Letter on the stimulus doing the rounds at the moment that reads to me like a parody but apparently is the real thing. It is not written by the ALP but might as well have been.

It might again be worth pointing out that the Australian economy went into a mild recession, unemployment did go up and we now have debt to deal with where none had existed before. The Government inherited a robust economy from its predecessors, our banking system had a small proportion of toxic assets to work its way through and most importantly, the Chinese economy’s own stimulus created the momentum for growth here.

And given that our own stimulus soaked up the equivalent of four percent of GDP, all of which needs to be found again which means tremendous sacrifices for years to come, we shall see whether the panic reaction to the mildest of recessions will have made all that much sense in the larger scheme of things. And all we have to show for it are a series of poorly constructed and vastly overpriced school facilities and some insulation that is now an actual threat to many of the homes in which they were installed. Read more »

Julia Gillard has announced another change to the baby bonus.

JULIA Gillard has backtracked on Labor policy by announcing advance payments of the baby bonus in a bid to tackle cost of living pressures.

Labor would also liberalise advance payments of the family tax benefit, the Prime Minister said.

Under the changes, parents will be able to get an up-front $500 payment of the baby bonus to help with the arrival of a child.

Under the previous Howard government’s original baby bonus scheme new parents were given a lump sum payment of $5000, but the Rudd government changed the method of payment to fortnightly instalments.

Under the new baby bonus advance, the up-front amount would be recouped over subsequent fortnightly payments and the overall payment will remain at $5,294 per child.

The $500 would be paid together with the first instalment payment, with the remainder to be paid by way of 12 subsequent fortnightly payments of $368. Read more »

A guest poster over at Club Troppo asks the question, “Where are the hordes of bad teachers?” Good question.

It looks like the new Julia being the real Julia campaign has kicked off with a bit of good old fashioned teacher bashing. This reminds me of one of the things that seems really ingrained in many people’s minds, and an assumption which a lot of this teacher bashing is based on, which is that there is a horde of teachers out there who are bored, can’t teach well and are too lazy to get another job that they might actually enjoy.

I’m not convinced that characterisation is correct – rather, I suspect that many teachers face poor incentives and with a change in incentives would change their behaviour. But there is more. Read more »

People often consider how they would re-organise society or the economy if they were a benevolent dictator. Others suggest from time to time that more government power is necessary to do what must be done. The problem with this exercise is that actual benevolent dictators do not suffer from delusions of petit-bourgeois morality. They also tend to not care much about the economy.

Miss Dube first caught the king’s eye when she was 16 at the annual Reed Dance, when tens of thousands of topless Swazi virgins pay homage to the monarch. Inkhosikati LaDube, as she became known, bore him a daughter within a year and a son soon afterwards.

In time, however, Ms Dube allegedly had an affair with one of the king‘s mates.

Lucky Lukhele, of the pressure group Swaziland Solidarity Network, predicted that, if the charges were proved, Mr Mamba would get the death sentence and Miss Dube would be banished. Read more »

Thank goodness for that – imagine what would have happened if she wasn’t. The figure below is the seasonally adjusted unemployment data for the last term of the Howard government and the first term of the Rudd-Gillard government.

Now I wouldn’t normally take too much notice of a column written by Kenneth Davidson (and no doubt he wouldn’t take too much notice of a column written by me, so we’re even), but I happened to notice this recent column by Ken on the economics of the NBN.  And it made complete sense.

He made a number of telling points including: Read more »

We’ve seen some massive movements in Treasury forecasts since the budget was released in mid-May. John Garnaut in the Age has a theory.

Treasury still hasn’t got its own independent and timely view on what’s going on in China.

By late April, when the May budget forecasts were being put to bed, the market knew Rio Tinto and BHP Billiton would be securing huge price increases for the September-quarter iron ore contracts, because they had pushed through a new pricing system in which spot and contract prices would converge, and Chinese spot prices had soared to $US180 a tonne. The pre-election update suggests Treasury has only now caught up. In April, spot prices had started to slide in response to the Chinese government’s edicts to shut down property speculation. By July, steel prices and production were edging down and the China iron ore spot price had fallen by a third. Read more »

From the National Post.

There, at Coleman, I had seen the courage of self-help, the pathos of broken men, the drawn faces of the hopeless, the glazed expression of the heavily medicated, (90% of Americans judged to require confinement for psychiatric reasons are in the prison system), and the nonchalance of those who find prison a comfortable welfare system compared to the skid row that was their former milieu. America’s 2.4 million prisoners, and millions more awaiting trial or on supervised release, are an ostracized, voiceless legion of the walking dead; they are no one’s constituency.

(HT: Eric Crampton)

Today Julia Gillard has promised to introduce a program that will ostensibly empower local schools. For the sake of argument, let us leave to one side the fact that state schools are owned and operated by State governments. 

There seems to be a major fudge in the announced policy – in respect of hiring and firing teachers. According the policy announcement, included in the empowerment will be:

Management of the school staffing profile, including support staff, which will involve determining the right mix of staff, recruitment and staff selection.

Principals will have a greater  role in staff performance management within existing enterprise bargaining arrangements. Read more »

Whoever decided to leak information that Kevin Rudd sent his chief of staff, Alistair Jordan, to NSC meetings obviously didn’t do his or her homework and check that then deputy prime minister Julia Gillard attended even fewer NSC meetings, allowing her bodyguard to deputise for her at the meetings.

The article states

A spokesman for Ms Gillard said cabinet confidentiality meant she could not defend herself from the damaging allegations.

But this is dissembling. Cabinet confidentiality and security at the NSC meetings concerns the topics discussed and so forth. It doesn’t extend to whether a person attended the meeting or not.

In other words, Gillard would not be breaching Cabinet confidentiality if she denied sending along her bodyguard to the NSC meetings. She would not be disclosing the contents of the meetings.

Since Gillard does not deny the substance of the story, the voter has a reasonable presumption of the story’s veracity. Read more »

The Herald Sun have an interesting exclusive.

THE Federal Government has been accused of delaying a high-priority project costing just $7.5 million to improve protection for Diggers in Afghanistan.

Despite Labor’s Budget pledge to spend $1.1 billion to upgrade body armour and weapons for frontline troops, the Herald Sun can reveal a research project called “soldier survivability” that was commissioned by the Army has been put on hold because there is no financing.

Minister Greg Combet’s response? (emphasis added) Read more »

Peter Boettke reckons that people wanting to understand Austrian school economics need to read, at least, four books.

When I teach my PhD course in the Austrian Theory of the Market Process I assign four required books that in my opinion students must master to make a contribution to the this literature — Mises, Human Action; Hayek, Individualism and Economic Order; Kirzner, Competition and Entrepreneurship; and Rothbard, Man, Economy and State.

I have reservations about Rothbard. Not that he wasn’t a great economist, or prolific, but I think too many people start and end with Rothbard. Three of those books are available for download at the Mises Institute (the Kirzner book isn’t there). People should read more Kirzner.

I went along both last night and again this morning to hear Nobel Lauriat Joseph Stiglitz speak. He is actually Nobel Lauriat one and a half times over, having received the Prize in economics and then having shared it again for his work on the International Panel on Climate Change. Given his IPCC work, you can get a fair idea of where he is coming from.

But what I found most remarkable was the following statement of his:

I don’t have an awful lot of confidence in market prices.

I’m not sure anyone is even allowed to be an economist if they take that view but perhaps I’m not keeping up with the latest trends. I will contextualise this by pointing out that his statement was made off the cuff and in response to a very sensible question about Stiglitz’s concern that we might be running out of natural resources so that we need our national accounting measures to better record resource depletion. Read more »

You’ve probably noticed some slowness in the past 2 hours. That’s me, your loving Ozblogistan admin / tyrant, trying to debug a plugin. Apparently asking for debugging information is too much for PHP and MySQL to bear, so they threw an unedifying tantrum which choked the site.

Julia has now gone on the attack about doubts surrounding her support for the government’s paid parental leave scheme.  Her response – hang Cabinet confidentiality – centred on her concerns about the fiscal sustainability of the proposed program.

This seems quite implausible given the relatively modest (albeit in the context of programs with price tags in the billions – eg. BER) of something of the order of $350 - $400 million per year.  The combination of limiting the payment to 18 weeks; using the Federal Minimum Wage as the benchmark; removing eligibility for the Baby Bonus and Family Tax Part B benefits to recipients has kept a lid on the outlays.

Of course, Julia evidently did make several good political points – what would older working mothers who did not receive this benefit think about it and, perhaps a stronger point, what would non-working mothers who will receive lower benefits upon the birth of child think of this scheme.  You can just hear it : is my baby less valuable because I don’t work? Read more »

I don’t think so. The two measures that the RBA look at to measure so-called underlying inflation are both below three percent (they look at the average of the two). While the headline measure is a tad above three percent (probably caused by the tobacco tax hike) and trending up, I suspect the RBA will hold off for another month.

From the ABC.

A building frame for a $1 million outdoor learning centre in southern New South Wales has come tumbling down.

The structure collapsed at Kooringal Public School in Wagga Wagga yesterday.

The building project is funded under the Federal government’s Building the Education Revolution (BER) scheme.

(HT: Menzies House)

Nobel laureate Joseph Stiglitz, just arrived in Australia for a lecture tour, is quoted in The Age as lauding our stimulus program as near enough the best in the world:

THE Nobel Prize-winning US economist, Joseph Stiglitz, has described the Rudd government’s stimulus package as ‘one of the most impressive economic policies I’ve seen, ever’, but also expressed disappointment at the concessions granted to mining companies under the new minerals resource rent tax.

I suppose coming from the United States it is easy to get carried away by the results of a stimulus program in an economy that was not actually in all that much bother to begin with. But quite quite extraordinary is that in spite of everything he has so far seen back home he still would like an additional stimulus applied to the US economy. Read more »

I am a fan of Bob Ellis’s writings. I have enjoyed most of his political books though have been embarrassed for him over his attempts to write about economics. Following his stuff on Unleashed over the past few months, I feared he was losing his touch. But today he is back in form.

I still disagree with much of what Ellis writes, but he writes it so well that he has to be admired. And this piece is not too far wrong in his explanations of much of the dopiness that the government is displaying and in his advice to Gillard. I am not sure she has to get married, though, and expelling Kamahl as a Tamil overstayer is not the best idea Ellis has ever had.

Still, Ellis in entertaining and, for one on the left, quite insightful.

I have an article at Quadrant Online that deals with the “Journolist” website discussion group that emerged during the 2008 American election. It was a list server restricted to left-leaning observers of the political world, which included a number of media people from major newsgathering organisations, Time, Newsweek, The Washington Post, and The New York Times being amongst them. The “Daily Caller” website has been publishing some of these discussions and they are a fascination.

That the American media is largely Democrat and left-liberal is not news. But the evidence that journalists worked together to think through how they could ensure to the best of their ability that Obama was elected and McCain was not ought to be seen as extraordinary and a major concern. Read more »

Alan Jones serves up filleted Gillard for breakfast.
(HT: Noodle)

In the interests of a picture is worth a thousand words, the chart below from the ABS shows what the issue of migration is all about. There has been a sudden a massive increase in Net Overseas Migration (NOM) while the figures on natural increase have increased a smidgen. It is hard to say why this acceleration in net migration has happened, or what the implications are. But what cannot be denied is that it is happening and it is a worthy matter of national debate.

Graham Richardson does a quick sleight of hand in The Australian.

What distinguishes the average rank-and-file ALP type or even those who have risen to great heights is they want to see the country run efficiently with an eye to helping the weakest first.

It’s more of a trickle-up theory of economics as against the trickle-down theory much loved by the Liberals. They believe, for example, if you make Clive Palmer even richer, the rest of us mortals will be better off.

See that? We have made Clive Palmer rich – he had no role to play in the process. I would have thought that liberals believe that we are all better off in a society where people can make themselves rich through effort and hard work.

I’m not a great fan of Francis Fukuyama’s but he does make some good points in this WSJ op-ed.

But the problem of gangs and drug violence should not be confounded with the behavior of the vast majority of illegal immigrants to the U.S., who by and large are seeking the same thing that every immigrant to America has wanted since the time of the Mayflower: to better their condition and that of their families. They are not criminals in the sense of people who make a living by breaking the law. They would be happy to live legally, but they come from societies in which legal rules were never quite extended to them. They are therefore better described as “informal” rather than “illegal.”

One of the more obscure recommendations of the Henry Tax Review (remember it – if you go to the Treasury website, you will now see a series of perky government leaflets setting out the responses, meagre though they were) was as follows:

Recommendation 10: Consideration should be given to a revised regime to prevent the alienation of personal services income that would extend to all entities earning a significant proportion of their business income from the personal services of their owner-managers, whether in employee-like or non-employee-like cases. This regime may also apply an arm’s length rule to deductions arising from payments to associates to ensure deductions reflect the value of services provided. Read more »

Mark Perry points to a very interesting feature of the US housing market – Texas didn’t experience a housing price ‘bubble’ in the last ten years.

This can be linked to the non-restrictive land policies adopted in that state. Read more »

Tony Abbott is about to announce that a Coalition government would ‘slash’  the net immigration intake from 300,000, to 175,000, so the Sunday Age is reporting.

I have been having a bit of fossick around the immigration statistics, having become very confused about the various numbers that are being bandied around.

So here is my ABC guide  to the ABS figures: Read more »

This is an old piece by Barry Cohen on anti-semitism in the ALP. Read more »

Thomas Barthold of the US Joint Committee on Taxation has picked a fight with the Wall Street Journal. My money’s on the WSJ to win this one. It started with this piece (emphasis added).

Even Mr. Obama’s current spending level of 25% of GDP would be more manageable if the slow economic recovery weren’t keeping tax revenue at unusual lows. In 2007, the economy threw off revenue of 18.5% of GDP. That fell to 14.8% in 2009 and may not be too much higher this year. The point is that there is no hope of balancing the federal budget without a return to higher levels of economic growth. Read more »

Many years ago when I was still at Flinders University, my colleagues and I were very involved in undertaking research on immigration, spurred by the Bureau of Immigration Research, a body now long disbanded. In fact, in one piece of research we undertook, we produced a scoop of sorts by identifying the growing importance of temporary migration.

An immense amount of research was sponsored by the Bureau and to give that agency its due – because its brief was in reality to boost the case for immigration – support was awarded to a wide range of researchers, including the more sceptical Profesor Bob Birrell from Monash University.

Sadly, there has not been the sustained reaserch effort in Australia on matters related to immigration for over a decade.  But my guess is that some of the key findings remain valid.

Here are just a few: Read more »

Hugh White, Professor of Strategic Studies at the Australian National University and former a senior Deputy Secretary for Strategy and Intelligence in the Defence Department, once advised the Prime Minister and Defence Minister not to attend the funerals of Australian service people killed in action. His advice was ignored and in a pattern established by John Howard we now have the sad spectacle of a Prime Minister, Leader of the Opposition as well as the Chief of the Defence Force holding press conferences passing condolences and reinforcing commitments to the mission under which the deceased ADF member operated. Read more »

Chris Uhlmann is reporting that Kevin Rudd sent his chief of staff Alistair Jordan as his representative at the National Security Committee.

The National Security Committee of Cabinet is where the gravest decisions of government are made, from the conduct of war to the protection of the borders.

The prime minister chairs the gathering of ministers and senior officials. The inner circle includes the chief of the defence force, the secretary of foreign affairs and the Australian Federal Police commissioner.

The heads of Australian intelligence agencies are also there.

Senior government officials say John Howard was scrupulous in attending the meetings.

But Commonwealth officials and cabinet sources have told the ABC that, as prime minister, Mr Rudd showed a casual disregard for the national security committee, at a time when Australia was engaged in a war and wrestling with its border security policy.

So the question is: Who leaked this information? Read more »

The announcement that the Murray-Darling Basin Plan, originally due for release in early July, was to be delayed was made some time ago.  In its place, a guide, in plain English, was to be released and the draft Plan, with the proposed Sustainable Diversion Limits(SDLs) for each valley/catchment, would then be released at the end of the year.

Further delays have been announced; it seems that the Murray-Darling Basin Authority (MDBA), an independent statutory authority with state representatives, has decided it is inappropriate even to release the plain English guide during an election campaign and with a caretaker government.  The authority says that it has legal advice for this action, although it seems to make a mockery of the adjective ‘independent’. I guess the thinking is that a major shitstorm has thus been deferred. Read more »

Anyone with conservative views is used to the sanctimonious condescention, and then some, of so many of the people they have to deal with. Rush Limbaugh, as the premier advocate of conservative views in the US, and probably the world, gets more than his fair share. This week a National Public Radio producer described her pleasure at the thought of Limbaugh dying “in torment”. Limbaugh’s response to why these views are held by his enemies, as recorded by Noel Sheppard at Newsbusters, is quite interesting, as are most of the things Limbaugh says and writes: Read more »

I’ve got a little paper on voting and the demand for political information doing nothing that I should polish up and send off to a journal. It is joint with two of my RMIT colleagues. In the meantime, given that we’re in an election, it might be of some interest. Our model predicts that governments will run scare campaigns and emphasise their track record while oppositions will run negative campaigns. A scare campaign is one where it is difficult ex ante to establish the veracity of the claim. For example, the statement “Interest rates will be higher under the opposition as government” cannot be established by election day. A negative campaign, however, is one that emphasises the failures of the other party. (Wonk alert).

We consider the decision a voter takes when voting, given how they voted at the last election. We also consider the information they may use when taking that decision. Read more »

The prospect of a left-wing run Labor party and the Greens holding the balance of power in the Senate is frightening. And that they can sneak into power with a coup d’état with minimal scrutiny and without revealing their plans is of further concern.

And the fact that Gillard only agrees to one debate and then tries to have it while Masterchef is on is further evidence of an aversion to scrutiny.

It is not too late to bring back Costello. His performance at the Australia-Israel Chamber of Commerce yesterday shows he is still in top form and still dominates the political environment.

Centrebet shows that the market is moving further away from the Opposition: increasing from 3.9:1 to 4:1.

Costello would be a game changer. He would defeat Gillard and Labor.

It is time for him to step up to the plate. He has until 12:00 noon on Thursday 29 July to nominate for a seat.

Surely, Peter, being Prime Minister would be more interesting than being a board member of the Future Fund?

My favourite survey is the ACCI Survey of Investor Confidence, and not just because it is a survey I devised and originally put together myself. I think it is the most accurate and interesting amongst all of the surveys now undertaken across Australia. And it has had a great track record in the past of picking turning points well before they were noticed by anyone else. The GFC was already visible in these survey results early in 2008 if not actually in late 2007.

It is also very good at picking the relative strength of the economy at different points in time. The higher the index level, the better the economy seems to be going. You can compare the results shown on the charts with your own judgement. Also because it is a survey of the private sector only, it really does get to the heart of how the economy is faring. And because if comes out in real time – the latest data are for July 2010 and were gathered in July 2010 – there actually is a sense of how things are right now. Read more »

I thought I would take a look at the phrase “Moving Forward” to see if it has had any past use by the American President. I googled ‘Obama “moving forward”’ and had 1.3 million hits! The following are a selection from the first five pages of many many. These are the statements that come up on Google. I didn’t look at the underlying articles themselves.

Obama’s Bailout Plan Moving Forward, But Slowly
20 Jan 2009 … Obama’s Bailout Plan Moving Forward, But Slowly. Tuesday January 20, 2009. Obama’s economic stimulus plan includes provisions to help make …

Obama Says Sanctions Moving Forward For Iran’s Nuclear …
10 Feb 2010 … Declaring that the world is “unified around Iran’s misbehavior,” US President Barack Obama said today that a regime of international …

3 Mar 2010 … Highlights: Obama’s Speech On Moving Forward With Health Reform. This video highlights President Obama’s new proposal for health reform, … Read more »

The ALP and its media and bureaucratic allies have run a complacency campaign on public debt. We’ve constantly been told that public debt doesn’t matter because other economies have much higher levels of public debt than we do. That is true, they do have higher levels of public debt, but why does this matter? We haven’t had nearly twenty years of failed Keynesian stimulus like Japan, a decade of Labour like the UK, or the fiscally disfunctionalism of the US. Our welfare state is not as broken as continental Europe. Comparing ourselves to their poor records is hardly a challenge.

The Age is reporting that the RBA governor is unconcerned about public debt, but inflation is a problem.

RESERVE Bank Governor Glenn Stevens has undermined one of the key Coalition election policy planks, declaring Australia has ”virtually no net public debt”. Read more »

Two of Australia’s most well-known economist-bloggers are suggesting they will vote for The Greens.

Harry Clarke

I think urgent action is required around the world to address the climate change problem and Australia should share the costs of doing this. Neither of the major political parties has a credible policy on climate change. My disgust with Tony Abbott is so complete that for the first time in 30 years I won’t be voting for the conservatives.

John Quiggin

Coming to the choice between Labor and the Greens, this isn’t the first time I have given a first preference to the Greens, but it’s the first in some years. The main substantive issues that concern me are economic management and climate change, but these issues (and particularly climate change) can’t be separate from questions about process and principle. Read more »

A ballot of union members is expected to endorse a levy on union members to assist Labor’s campaign and supposedly to stop a return to WorkChoices.

The peak body for Australian unions will today vote on a levy to fund a series of advertisements to highlight concerns of a possible return of the controversial WorkChoices industrial relations policy under a Tony Abbott-led government.

If the unions agree, the Australian Council of Trade Unions would raise $1.8 million with members paying a one-off $1 fee.

Leaving aside Tony Abbott’s firm commitment, there is absolutely no realistic chance of any aspect of WorkChoices making its way back onto the statute book any time soon because a Coalition government will not have a majority in the Senate.

This is a tragedy for marginal workers and businesses as they come to grips with the limitations of a tightly re-regulated labour market. Read more »

We all know about the Dutch disease: an increase in the flow of foreign currency because of a newly found resource deposit and/or an increase in the price that the deposit can be sold for.  The real appreciation in the real exchange rate makes life difficult for other industries in the traded-goods sector – manufacturing is typically nominated, but we can throw in international education and tourism – while the non-traded goods sector benefits because of the rise in national income.

When the good fortune ceases – because the deposit runs out or the price of the resource drops significantly – only a wasteland of de-industrialisation remains.  Because of the rapid technological change that affects manufacturing – so the assumption goes – it takes some time to crank up and rejuvenate manufacturing.  (Can we hear the siren sound of European labour in this message?) Read more »

Today’s Australian has an article about the seat of Griffith – Kevin Rudd’s seat which states:

THE Liberal National Party is poised to announce a new candidate to contest Kevin Rudd’s seat of Griffith. But with a caveat that if the former prime minister decides not to run again, they will put up someone better.

Don’t the voters of Griffith deserve the ‘someone better’ anyhow? Isn’t this treating the voters like mugs?

Anyone here who drinks wine would know that something like 5% of bottles under cork are tainted with 2,4,6-trichloroanisole (TCA) which gives the wine a mouldy taste. I am very sensitive to this – and to most other mould smells and tastes. They say that a higher percentage of bottles affected by low levels of TCA are “flattened” with much of the wine aroma and flavour gone. I can’t say that I can pick this.

Following a very bad batch of corked wine, the Clare producers, lead by Jeffrey Grosset, adopted screw caps firstly for their riesling then for most of their products. And screw caps have spread pretty widely around the Australian wine industry. CSIRO work (sorry, can’t find a link) suggests that even aged reds are not effected by use of screw tops, except insofar a TCA is avoided.

The French wine industry by and large is staying with cork though a sommelier in a Paris restaurant told me that the 5% figure matched his experience. He said that he made sure bad bottles never reached the table. Read more »

Dennis Glover writing in the Australian is being hoist on the petard of inconsistency.

The issue of refugee boat arrivals is clearly the toughest example of this political challenge. The Prime Minister has been criticised on the Left for welcoming a debate and refusing to equate popular unease over refugee boat arrivals with racism. She has also been criticised from the Right for not making it a debate about the supposed inability of some cultures to adapt to Australian society. The latter debate has the unmistakable whiff of racism about it, and she has wisely ignored it. But she is correct to welcome a public discussion, because, viewed from a wider perspective, the refugee issue is not necessarily about race, although racists will try to exploit it. Read more »

The ALP message on a sustainable not a big Australia is a bit confused. How exactly is this going to work? Yesterday we saw Tony Burke on Insiders saying some strange stuff.

And essentially when you want a sustainable Australia you want to make sure in the years to come issues like making sure that you do have a low pollution economy, making sure that there’s urban planning and planning that allows there to be reasonable amounts of parkland that you don’t have hours of your day robbed through traffic jams.

That is just rubbish. Restricting population growth to fit into incompetent urban planning is not what I would think ‘sustainable’ should be.

They should be wary of political attempts to conflate poor urban planning and insufficient infrastructure investment with what they’re told are unsustainable immigration levels. Read more »

There was an article by Peter Beattie (don’t you get the impression that he is very pleased to be home) in the Weekend Australia citing the results of a survey of  US scholars which shows that  Franklin Delano Roosevelt is the America’s greatest president, and Andrew Johnson, the president who succeeded Lincoln, the worst.  (FDR has been top of the pops in virtually every survey taken.)

While I want to talk about the choice of FDR, it is worth mentioning Beattie’s choice of Australia’s top three PMs: Hawke, Keating and Howard.   Curtin is ditched because he was too subservient to Blamey and Macarthur, even though he stood up to Churchill and brought home the Australian troops. Our longest serving PM, Menzies, is not rated by Beattie because he was too close to the UK and did not forsee Australia’s role in the Asia-Pacific region.  He does get some brownie points for his position on education. Read more »

The Gillard-government have made their first policy announcement. A re-elected ALP government will build 15,000 houses in regional cities at a total cost of $200 million. A couple of points to make. First the ALP policy does not identify any matching spending cuts. Gillard had promised that her election spend would not add a single cent to the budget bottom-line, so we already have one broken promise.

Second it looks like they have over-promised.

The Gillard Labor Government will invest $200 million to help build up to 15,000 more affordable homes in regional cities over three years and relieve pressure on our major capital cities, so that Australia can grow sustainably.
This program will give participating councils new funding to invest in local infrastructure projects that support new housing developments, such as connecting roads, extensions to drains and sewerage pipes, and community infrastructure such as parks and community centres. Read more »

Courtesy of the Econolib newsletter, a nice piece on the generally favourable outcomes of liberal reforms in the last few decades.

He points out that the plus side is in economic growth but the reduction of government spending has not happened because the gains have been swallowed in transfers.

Singapore seems to have that problem covered by making people take appropriate insurance. It is a pity that this has to be mandated but it looks like the lesser of evils. Read more »

From the SMH

Urged on by financial-side economists, governments in Europe are seeking to stave off a possible loss of financial market confidence in those governments’ ability to repay their debts by slashing their spending and raising taxes, even while their economies are weak and the austerity programs will make them weaker.

But Keynesian macro-economists are appalled by this and locked in a furious debate with the financial economists. The financial guys are saying it’s stocks (of public debt) that matter most and they must be cut at whatever cost; the macro guys are saying it’s flows of spending and production that matter most, and to cut them now is madness.

Thankfully, our Liberal Party’s obsession with budget deficits and debts has left us in the clear.

That’s about right. Australians have an intuitive understanding that government debt and deficit is bad for the economy. The person most responsible for that is Peter Costello.
(HT: Noodle)

Julia Gillard said at the National Press Club on 15 July 2010:

all our policies will be submitted to Treasury and Finance for independent costing under the Charter of Budget Honesty

The National Broadband Network is a Labor policy and hasn’t been costed. Therefore, the Coalition should request that Gillard submit the NBN to Treasury and Finance for independent costing.

(Thanks: Noodle).

I don’t think that Peter Coleman was even on the list when Robert Manne was voted our Number One public intellectual. However when you have a look at PC’s track record over a period of half a century it is very impressive. Robert Manne is not in the same class, certainly not when you contemplate his post-Quadrant career.

He has played many roles: editor of magazines and books, journalist, elected Parliamentary representative, writer of memoires and biographies (his own, Barry Mackenzie, whoops, I mean Barry Humphries, Bruce Beresford and James McAuley),  and a prolific reviewer and commentator.

The books. The list on Wikipedia is very incomplete.

1974 (reprinted in 2000) Obscenity, blasphemy, sedition: censorship in Australia. Brisbane: Jacaranda Press. 211 pages. 

1978 with Les Tanner  Cartoons of Australian history. West Melbourne: Thomas Nelson. Read more »

I made a contribution to the excellent website Agitate! arguing that the people who instigated the coup against Rudd should not benefit from their ‘public service’.

The ABC are reporting that Prime Minster Gillard will call an election for 28 August. Writs will be issued on Wednesday.

Centrebet odds are $1.22 for an ALP victory and $4.10 for a coalition victory.

Some years ago when I was a research officer in the Health Commission of New South Wales a memo came down the line that we were to participate in a  process called corporate planning. All government agencies had to prepare a long-term Corporate Plan  and report on the progress each year for scrutiny by a Parliamentary Standing Committee.

The plan had to cover all activities in the agency and so in Health Services Research and Planning we had to contribute our sub-corporate plan. There were probably three horizons, one, three and five years. There were essentially three columns to fill in: one was objectives, one was strategies and the third was something like “problems” or “difficulties likely to be encountered”.

I don’t think the Plan had to be very large. This was before word processing and it was a time when Ministers of the crown had a secretary: no office full of advisors, strategists and head kickers to stand over the departments and give instructions.

It looked like a good idea but we only got to do about one plan before the election brought Neville Wran into office. Read more »

BP is on the nose in the US. So an industrial accident and various blunders have caused a massive oil leak. Okay. So rather than have a full inquiry into the causes of the accident, including US government policy choices that lead to deep oil drilling, a group of Democrat Senators rehash an old allegation.

BP is under renewed pressure from the US over claims it lobbied the British Government for the release of the Lockerbie bomber.

US Secretary of State Hillary Clinton said she would look into the allegations made by a group of Democrat senators.

In a letter to Mrs Clinton the senators questioned whether BP was prepared to “trade justice … for oil profits” over the 1988 bombing of Pan Am Flight 103 in which 270 people died. Read more »

Stephen Kirchner has an excellent op-ed in the Australian.

The terms of trade boom has led to an exaggerated sense of the importance of commodities to the economy. When commodity prices slumped in the late 1990s, the economy still grew strongly and there is no reason why we shouldn’t weather future commodity price slumps just as well.

The mining sector’s share of GDP is still small relative to other sectors, such as services.

The boost to Australia’s income through the terms of trade is attributable not only to higher commodity prices, but also to the benefits of cheap foreign imports.

While upward pressure on the exchange rate places increased competitive pressure on export and import-competing industries, it is unlikely warehousing government revenue in a foreign currency-denominated fund, as some have suggested, would take significant pressure off the exchange rate. Read more »

By popular demand another post on the various enquiries into ClimateGate. Clive Crook at The Atlantic gives them both barrels. Read more »

Julia Gillard made an interesting comment in her speech to the Press Club.

When the global crisis struck, the Government did what we had to do, and Australia avoided the recession that hit most advanced economies.

A bit of historical revisionism is at work there. In their book Shitstorm Lenore Taylor and David Uren tell a somewhat different story.

When the government’s inner circle met that weekend of 11 and 12 October, Kevin Rudd, Wayne Swan and Ken Henry had already been discussing how they might spend $10 billion to buttress Australia against the crisis for two months.
This was extraordinarily early planning compared with other governments around the world. It was also extraordinary because nobody else knew. Not the Cabinet. Not even Gillard and Tanner, the other two members of the supposed ‘inner circle’ gang of four. Read more »

The recently released OECD’s Employment Outlook can be a useful document.  But it should really carry a warning to readers to the effect that the comments contained in this report reflect the political positions of the member countries, rather than being the outcome of objective analysis.

Take for instance the view expressed in the report that Australia’s labour market performance is not really exceptional because of the high incidence of part-time work and the extent of underemployment. The OECD, it would seem, prefers a high rate of unemployment as long as the few jobs that exist are full-time and permanent.  Indeed, this view reflects the long-held antipathy of the European member countries to what they term temporary employment, but what is referred to in Australia as casual employment. Read more »

I once went to the finance director and asked what next year’s profit would be. “What number do you want?” he said.

I have to suspect that something like this happened in preparation of the figures just released by Swan.

Anyone who has worked in business knows that forecasts more than a few months out are a bit, but not much, better than guesswork. In most businesses I was involved in forecasts were not treated as fact but as something to trigger actions if reality was turning out too far from the forecast.

We also learned that forecasts of sales and costs should not change much in the short term unless there was a big event – earthquake, factory burning down or somesuch. You don’t get significant new information over a period of a few months. What you do get is swings between optimism and pessimism which is a dangerous way of running a business.

The change in the latest figures from the budget nine weeks ago seems to be the result of changes in forecasts of commodity prices over the next few years. Read more »

A few years back, Andrew Norton developed the theory that there is in fact two Ross Gittins writing for Fairfax.

“the Saturday Ross Gittins whose column in the paper’s business section is often an easily-understood explanation of economic ideas and behaviour, and the Wednesday Ross Gittins whose column on the opinion page is regularly a Clive Hamiltonesque critique of modern society.” (Andrew Norton, 05/03/2007)

It seems that the ‘Wednesday’  Ross Gittins is out in force today, with an article claiming Gillard has no ticker and wrapping up with these choice words.

“Far from spending the next three years chatting about whether to get serious about combating climate change, we need to debate our unquestioned commitment to unlimited economic growth. Read more »

In January I posted this graph from the CBO.

Look at the revenue projections – they are expected to rise well above the historical average. Look now at the outlays – they are not expected to come down. Brian Riedl has an op-ed in the WSJ talking about US deficit myths. Read more »

Interesting to read the bland and generally favourable comments on the story of Mark Aarons and his family.

I wonder what sort of reaction you would get in the ABC for the memoire of a lifelong supporter of Nazi Germany?

“Mark Aarons was born on 25 December 1951, only a few short months after the then Prime Minister, Robert Menzies, tried to outlaw the Australian Communist Party.”

This was only a few short years after the communists actively sabotaged the war effort in the period before Hitler tore  up his non-aggression pact with Stalin. I have an idea that episode was strangely air-brushed out of the history of the communist movement by one of our leading historians (and curriculum designers) Stuart Macintyre.

The CIS had Robert Carling, Alex Robson and myself speaking at a Tax Forum in May this year. My talk is now out of date but Robert and Alex are still pretty good.

Russell Roberts on the roots of the financial crisis. Thanks to Michael Warby, a link to a pdf file.

The executive summary.

Beginning in the mid-1990s, home prices in many American cities began a decade-long climb that proved to be an irresistible opportunity for investors. Along the way, a lot of people made a great deal of money. But by the end of the first decade of the twenty- first century, too many of these investments turned out to be much riskier than many people had thought. Homeowners lost their houses, financial institutions imploded, and the entire financial system was in turmoil.

How did this happen? Whose fault was it? Some blame capitalism for being inherently unstable. Some blame Wall Street for its greed, hubris, and stupidity. But greed, hubris, and stupidity are always with us. What changed in recent years that created such a destructive set of decisions that culminated in the collapse of the housing market and the financial system? Read more »

The following is from the letters page of today’s Wall Street Journal published under the title, “Australia has Lessons for President Obama”. No irony was intended by anyone:

Australia’s new Prime Minister, Julia Gillard, was savvy enought to realize that former Prime Minister Kevin Rudd’s increasing taxes on mining companies would not instill prosperity and economic stability.

Uncertainty, exacerbated by high taxes and runaway spending, stifles private investing and hiring. Business owners need to be certain that their government will not tax them to oblivion before they invest, expand and hire. Australian leaders understand as much; unfortunately, we cannot say the same for our leaders.

In the 1980s, President Ronald Reagan and British Prime Minister Margaret Thatcher instituted a series of tax cuts, while controlling spending. The strategy resulted in private investing, expansion of business and increased hiring in both countries. Read more »

From the WSJ

A 2008 Urban Institute study found that “On average, high school students taught by TFA corps members performed significantly better on state-required end-of-course exams, especially in math and science, than peers taught by far more experienced instructors. The TFA teachers’ effect on student achievement in core classroom subjects was nearly three times the effect of teachers with three or more years of experience.” A new study from the University of North Carolina found that middle school math students taught by TFA teachers received the equivalent of an extra half-year of learning.
…
Oddly, the other obstacle is finding districts that will take the teachers. Why wouldn’t any superintendent trip over himself to hire young people with these qualifications? Read more »

There is an interesting article in the the Weekend Australian by David Uren about Ken Henry’s role in the government, as well as his future.  The article is entitled, “Henry may be facing his own review”.

While I had been aware of Ken Henry categorically denying that the mining industry had made any contribution to keeping Australia out of recession, I had not been aware of the fatuous analysis that Treasury had undertaken to make the point.

“Had every industry in Australia behaved in the same way, our unemployment rate would have increased from 4.6 per cent to 19 per cent in six months”.

Gosh, but why wouldn’t the Treasury gross up the job losses sustained in other industries to make a similar point? Why confine it to mining? And dare I mention that it was Treasury that forecast that unemployment would increase to 8.5 per cent, even in the face of evidence that the rate of unemployment would peak below 6 per cent. Read more »

Jorg Guido Hulsmann, professor of economics at the University of Angiers in France has written a magesterial biography of Ludwig von Mises, running over 1100 pages. This allows sufficient space to permit generous coverage of  the historical and intellectual background with close attention to his major works and the salient features of his life and social relations.

Closer to home, you can read about Mises in 100 Great Books of Liberty where Sinc has contributions on aspects of Mises.

Mises (1881-1973) is one of the sleeping giants of the 20th century. For many decades he was the leader of the “Austrian school” of economics and social thought but he is scarcely a household name, even among economists and classical liberals where he should be well known and appreciated.

It is appropriate that he lived almost from the time that Carl Menger published the book that launched the Austrian school  to the year before the conference at Royalton in the US that signaled the revival of the tradition.  Read more »