Wednesday, April 28, 2010

The Greens and the ETS: it all seems so simple if you just close your eyes and dream

Yesterday I wrote about the Rudd Government's decision to shelve the ETS till “2013”. I also had a bit of a go at the Greens for being politically naive and also trying to remain politically pure. Tim Hollo, who is an advisor to Greens Senator Christine Milne, left a few comments – as did quite a few others (in fact it was a record number of comments for a blog post of mine. Hollo’s comments, as usual (he’s left some comments on other posts and he sometimes writes for Crikey), are reasoned and he makes some good points. Some I agree with, others I don’t. But he did write one thing that surprised me:

He wrote:

Your jibe at Christine Milne (disclaimer - yes, I am her adviser) is done in the bliss of complete ignorance. You weren't in the room in meetings with Senators outside Labor and the Greens who told us they would support our carbon levy proposal.

I take it from this that he means there were meetings with Liberal Party Senators (and possibly Xenaphon) who were willing to support the Green’s carbon levy proposal. If so, he is right, I am ignorant of such things, and it is very interesting that such a thing never made it to the press. It sounds wonderful, but of course there is a big difference between some Liberal Senators being willing to vote for a Greens’ proposal if it is approved by the shadow cabinet, and the shadow cabinet agreeing to it.

Crossing the floor is done when the vote doesn’t matter – cf Troeth and Boyce in February. This is massively different from Troeth and Boyce (and whoever) crossing the floor to pass an ETS that had not been agreed to even by Turnbull. Last night on Lateline Bob Brown seemed to suggest this was a possibility:

r191895_723618BOB BROWN: We think that with good faith negotiations with the other crossbenchers and some Liberals would have - would get through the Senate,

Over on New Matilda, this was also talked up by Ben Eltham:

With a policy that embraced reasonably strong emissions reductions targets, Labor could have won Green support, isolated the Opposition and applied the screws to the cross-benches. Xenophon could have been bribed with more money for the lower Murray. As it was, history records that three Liberals voted for the ETS anyway: Malcolm Turnbull in the House plus two Liberal Senators, Sue Boyce and Judith Troeth. Those two Liberal votes, plus the Greens, would have equaled victory. It’s the great "what if" of this term of government.

Eltham of course suggests that there would have been a possible ETS that the Greens would have voted for and so too would have Troeth and Boyce (he doesn’t seem to consider that the Greens could have voted for the one in February – I guess the Greens get a pass on that vote).

You see the Greens didn’t vote for the ETS because they thought it fundamentally flawed. And they are probably right. I have no qualms with people saying the Government's ETS was a bad Bill, but I am yet to be convinced that “some Liberals” would have crossed the floor had the Bill been good enough for the Greens.

Let’s step back a bit. Rudd negotiated the ETS with a Liberal leader who actually believed climate change is real. Even with this it was bloody hard to get them to agree to anything. The National Party was threatening to split; Joyce had gone completely troppo; the media was helping with plenty of bullshit stories about entire factories/mines closing down. And yet a deal was done. Then Abbott reneged and it was voted down. Troeth and Boyce voted for it because they thought the deal should be honoured, but they knew their votes wouldn’t change the result.

What the Greens suggest is that the ALP should have negotiated with the Greens, then got Xenophon on board (remember he voted against the ETS, even though he had been in step with Turnbull earlier in the piece), and then they had to convince either Troeth or Boyce to support the Bill even though their leadership didn’t and they knew supporting it will mean political suicide for them both.

Sorry, I don’t see that happening anywhere except in the dreams of the left. Give me one example where a Liberal Senator has crossed the floor to either ensure an ALP Bill has passed, or has crossed the floor to ensure a Liberal Bill does not pass? Some will cross the floor for “principled” reasons but to actually do something that counts?

r141094_486288Now look, I don’t blame the Greens for the ETS’s defeat. But I certainly don’t blame Rudd for playing the game as he did. The odds of the “Brown” situation occurring were next to zilch; getting the Libs to agree to a deal was hard enough – and yet he did succeed. So many forget this. Bernard Keane in today’s Crikey writes:

I said ages ago that if Julia Gillard had been running this issue -- because, as we all know, she has a lot of spare capacity -- we might have had a very different outcome.

Really? Julia is good, but I’d love to know how she would have struck a deal with the Libs – a deal which the Greens themselves say is so good for polluters that it made the ETS pointless (ie palatable to many in the Liberal Party) – and then not only do this, but also have ensured Turnbull’s leadership remained strong and thus Abbott would not have challenged, and if he did Turnbull would have walked out the winner, and thus the ETS would have passed.

Or is it that Julia would have been so good that she would have come up with a deal that the Libs were able to accept, and also the Greens thought was lovely?

Please. She’s good, but she isn’t that good.

The ETS died when Copenhagen was reported universally as a dud. From that moment any of those voters wavering on the ETS went over to the “let’s wait camp”. Yeah Turnbull made a lovely speech about the ETS, but he was preaching to the converted – he couldn’t even convert his own party. The political momentum was gone.

Many from the left have been calling Rudd a coward for putting it off till 2013, and not just saying he’ll work with the new Senate after the eleciton. The reason of course is that if Rudd were to say this, the Libs would run hard on the issue that the Greens will be the authors of the ETS and it’d be fear and scare time.r515945_2823926

This bring me to my main point of yesterday’s blog post, and what I still think is the great question of the political year – how will the Greens act after the election when they have the balance of power.

I actually think the Greens will be quite rational – they were very sensible in the economic stimulus vote – they got some concessions, but did not blackmail just because they could. But the Greens have to acknowledge that they have an image problem – they are not viewed as economically safe in the media, or in the electorate. I make no comment on whether or not they do actually come up with economically feasible policies. But they must acknowledge that when the ALP is seen to work with them on issues as controversial as an ETS – which is primarily an economic issue (yes it is about trying to reach an environmental outcome, but when you get down to brass tacks the media covers the issue as an economic one).

I recall the Greens saying they had some policies; I don’t recall them being accompanied with any business support. This is what I mean by politically pure. The Greens can come up with wonderful policies that the environmental lobby love, and which they can get Access Economics or the Gratten Institute to say won’t cost jobs, but are they prepared to come up with policies that have someone – say even the Australian Industry Group – stand next to them saying this is good economics.

My view is the Greens haven’t done it yet. Maybe it is because the AIG or others don’t want to talk to them, I;m sure the Greens would love to get business on side, but the fact is they haven’t go there yet. And when dealing with the ALP the Greens have to realise that at the end of the day the ALP is trying to win elections – and to do so they have to win over swinging voters – voters who swing from Liberal to Labor, and who care mostly about the economy and their job when they come to vote. The Greens on the other hand are trying to win voters who swing from Labor to the Greens – voters who are either at uni, or are highly educated and in secure jobs. Dealing with the Greens does not bring many benefits electorally for the ALP. At best they win some votes back from the Greens which would have ended up with them anyway, at worst they lose voters who view the Greens as radical lefties.

This is why I am interested to see how things work after the election. And not just how the Greens will act, but also how Rudd will work with them.

I have no problem with Rudd claiming the current Senate as to blame for many of the legislation being blocked. Sure Howard had to deal with the Democrats, Mal Colston and Brian Harradine. But the Democrats were a centrist party (plenty of swinging voters there), Colston had sold his soul anyway and was just after whatever he could get, and ditto Harradine and dopey stuff for Tasmania. They all had a price. Sure Xenophon has a price, but Fielding? The guy is a complete fool when it comes to climate change (and most other things). How the hell does anyone deal with him on this issue? Were the balance of power held by the Greens and Xenophon I would agree that Rudd should have tried to get them on board, and it is Australia’s great loss that this Senate is not made up like that – I believe the Rudd first term would have been truly great (excuse me while I sigh, close my eyes and live in that dream land).

Which brings us to after the election. Rudd (should he win – and I still believe he will – easily in fact) will no longer have that excuse. He will have to deal with the Greens, and the Greens will have to deal with him. This means Rudd needs to realise that the Greens have certain lines they can’t cross, and the Greens have to realise that dealing with the Greens is not always a good electoral outcome for the ALP; they also have to realise that the political climate on climate change is not what it was in 2007 (alas).

If Rudd is smart he will do deals and blame the Libs when he has to bend to the Greens’ will (much like the ALP got blamed by Howard and Costello for anytime they had to do deals with the Democrats). If he is dumb he will not do deals with the Greens and still blame the Liberal Party.

I am obviously not a Greens’ supporter – I have no problems with them winning seats in the Senate, but when they target people like Lindsay Tanner I put them in the same class as Ralph Nader in the 2000 Presidential election, and I treat them with the same contempt. Sure it’s democracy, and everyone is free to try and win election, but I cannot see how the Greens’ cause is helped by ousting Tanner on Liberal Party preferences to have one MP sitting in the House of Reps doing absolutely bugger all.

On that score the Greens are definitely not politically pure, they’ll try to win a seat even though it helps the Liberal Party – it also an example of what I wrote back in January:

What is it with the Left and absolutely imploding?

Groups on the left often don’t work well together – the right wing of politics just want to win, the left worry about “principles” and love the noble martyr. I worry about principles as well, but when I see someone like Tony Abbott who advocates bullshit climate change polices, regressive taxation policies disguised as paid parental leave and a cruel unemployment benefit scheme, I prefer my team to win.

I hope the ALP and the Greens see after the election that it can be a win-win if they both play it smart.

Tuesday, April 27, 2010

The ETS gets put in the pre-election sin bin

This morning news came that the Government was going to put the ETS legislation in a drawer till 2013. To the critics this was political cowardice; to the ALP supporters it was political reality. Tony Abbott and Greg Hunt (a man who could write a PhD Thesis on environmental political cowardice) criticised Rudd for dumping a scheme they had blocked and did everything in their power to kill (I hope you all enjoy the logic of that). Hunt says that the main reason Rudd was doing it was:r245519_1002002

"The Government is concerned about the financial impacts of their enormous impost on electricity and grocery prices and the Government is concerned about its impact on the budget."

Hunt is half right (a bit like some people are half-witty…). The Government is somewhat concerned about its impact on the Budget – because the fact is the ETS would COST the Government – making it the most perverse “Great big tax” in history – as it actually leaves the Government worse off. The financial impacts on electricity and grocery prices would be next to negligible, given the compensation associated with the ETS, but the fear campaign on the issue would have significant as the Liberal Party on this issue would have been very liberal with the truth, if not very Liberal in its economic outlook.

Rudd no doubt looked at the Senate numbers, admitted defeat, knowing that with Abbott in charge of the Liberal Party and climate change nitwit Steve Fielding holding the casting vote, there was absolutely zero chance of getting any ETS legislation passed prior to the election ,and thus putting the Bill up again would just be asking to be hit – something no sensible Government does prior to the election on an issue that hasn’t exactly grabbed the public’s imagination. The media and opposition can gloat about Rudd having to backtrack on “the greatest moral issue of out time”, but I’d love any in the media to tell me how any ETS legislation is to be passed in this Parliament.

Apparently Rudd needed to sell the climate change message so persuasively that he would make converts out of all and create such pressure that Abbott would be forced to pass it. You know, all Rudd needs to be is a mixture of JFK and Martin Luther King with a dash of Al Gore. As Kennedy said: “Mothers all want their sons to grow up to be President, but they don't want them to become politicians in the process.” Similarly with Rudd, people want him to be PM, and not a politician who has to worry about getting re-elected and also has to deal with a Senate made up of 39 Senators who will do anything to stop an ETS being passed.

They left does love a good martyr. They want him to fight the election on the ETS, when any reading of the polls makes it obvious that this is not the way for the ALP to win (at least with an increased majority). People who advocate such things think Rudd has a 54-46 lead in the polls so he “should use some of that popularity” to get an ETS through – ignoring that he is at 54-46 despite not getting an ETS through. Yes if Rudd had been making speeches all last year like Turnbull did in February maybe it would still be an election winner. But elections are won by dealing with reality, not with what might have been.

christine-milne Green’s Senator Christine Milne came out in response and said of the policy switch:

“Why does the Prime Minister prefer to have no price on carbon at all than to negotiate in good faith with the Greens?

This is quite possibly the most political ignorant thing you could say – and indicative that the Greens operate on a different political level to the ALP and the Liberal Party. Good faith with the Greens? To what purpose? To end up with 36 votes in the Senate? Whoopee.

But this brings me to the key point – and what I think is the big political question for 2010.

That question is not who will win the election – the ALP will (and if you don’t believe me ask yourself if there is anywhere near the same feeling in the air as there was in 2007 – changes of Government at the Federal level are almost visceral things – you just know something big is going to happen). Today’s Essential Media poll had the ALP in front for the third successive poll at 54-46. In other words, they’re doing it easy – it’s just a case of how big – and obviously Rudd wants it to be as big as possible.

No that is not the big question. The big question is what how will the Greens behave after the election when they have the balance of power in the Senate.

Let’s do the maths: here’s the current numbers of Senators (with the number won at the last election):

ALP: 32 (18)
LNP: 37 (18)
Greens: 5 (3)
Fielding: 1 (0)
Xenophon: 1 (1)

So let’s just say for argument's sake that the next Senate election replicates the 2007 one (not an absurd prediction – the polls haven’t moved that much, and if anything it is being kind to the LNP). Here’s what the Senate would be (remember there’s 76 Senators – so you need 39 to get a majority):

ALP: 34
LNP: 34
Greens: 6
Xenophon: 2

I’ve given Xenophon another friend, but in reality it could be anyone – even Fielding, it doesn't matter. Why doesn’t it matter? Because by this reckoning, ALP + the Greens = 40 votes. Which means Xenophon can put his feet up and forget any cares about having influence. Sorry mate, but those days are numbered. The only hope for Xenophon is for both the ALP and the Greens to get one seat less than they did in 2007 as then the score would be 33 + 5 which equals 38 and thus the Govt would need X’s vote. But given the polls at the moment this is highly unlikely.

If there is a Double Dissolution things can get a bit squirrely, but even then what is more likely is just that the odds of there being two independents would increase. Let’s say 3 get elected at the cost of one ALP senator – that would still be ALP 33 + 6 Greens which = 39. So that would just mean 3 irrelevant independents who can sit on the red benches with their legs up.

What I’m saying is that the Government’s vote would need to really collapse for the Greens not to have the balance of power. And this is a big thing.

As we have seen in Tasmania, balance of power brings a much different focus on a party. Obviously the scenario at the Federal level will be completely different (the ALP won’t need the Greens to govern), but when it comes to the Senate we’re in new and dangerous territory for both the ALP and the Greens.

Up till now the Greens have been able to stay politically pure. They have railed against the ALP’s ETS and said the Government should do a deal with them – though not explaining how doing a deal with them would get any legislation passed the Senate. The rude fact is the Government did a deal with the Liberal Party last year and not the Greens because doing a deal with the Greens would have ensured defeat – the Liberal Party would never have touched any legislation that had the Greens’ fingerprints on it. 

It’s easy for the media to say Rudd has dumped the “great moral issue of our time”, but never ever forget he did what many in the media thought was next impossible – getting an agreement with the LNP. It is not Rudd’s fault that Abbott out played both Hockey and Turnbull.

But that is the past. After the election Rudd will have to deal with the Greens. How will they act? Will they wish to stay politically pure? If so they will continue to be an environmental lobby group rather than a mature political party. The dumb play would be to say the ETS means that much to them that they would vote against the Government's budget unless an ETS to their liking is included.

I doubt they would go this route – because if they did, Rudd would have zero qualms in playing the game as it has been thus far – getting nowhere and blaming the Liberal Party for not passing legislation, or even worse – negotiating with the Liberal Party on key legislation to end up with pathetic pap that is hardly worth the point passing.

The Greens need to not only grow up politically by realising that while they do have some power, they can’t be too over-the-top, and they can’t block things just because they’re not perfect. They also need to acknowledge the political reality that the media views them as economic lightweights. They can come up with all the wonderful schemes they can think of, and yeah a uni professor or economic think tank might say they’ll create masses of jobs, but unless they can get a business group thinking they’re plausible they will be treated with scorn by the main media.

Just look at how dumb the media (and yes I’m talking The Australian and Matthew Franklin) has been about the Henry Tax Review. There has been word about a resource tax on mining companies. So what do we get? Try

Mining tax `will kill industry'

With quotes from the Mineral Council of Australia: "There are $108bn worth of projects being studied or awaiting a final investment decision. A 40 per cent resource rent tax would influence those investment decisions”

Now here’s my big tip – the only thing that will kill the mining industry will be when they run out of things in the ground to dig up and sell. But nonetheless the Government will need to counter this message. One of the ways they countered such hyperbole with their IR legislation was to work with business groups (such as the Australian Industry Group) to be able to sell themselves as economically responsible.

Now I would be the first to say the Government could be better salespeople. They did not sell the ETS very well, the didn’t even sell their economic stimulus well – it only became a winner once it was shown we weren’t going to go into recession. They (and I do mean Rudd) have been shaky when it comes to arguing the hard policy. This will become an even bigger issue come the Henry Tax Review.

lucyCharlieFootballSo yes while Rudd needs to stand up and argue the hard point, but this needs to be noted by the Greens as well. They can’t just say Rudd needs to work harder. The Greens will not be helping their cause if they are coming up with policies that the Government is continually having to push up hill against the business community and the media to sell. Rudd and the ALP may have an image problem at the moment that squib the hard issues, but the Greens have to acknowledge that they too have an image problem – that they are weak on economics. 

The problem for both the ALP and the Greens however is, as Tim Dunlop likes to say, Lucy always pulls the football away. CharlieBrownLucyFootball

No matter how hard the ALP tries to be conservative on issues like asylum seekers, the media will always find ways to criticise them for either being initially too soft or then too hard and thus guilty of betraying their own supporters (or breaking election promises).  The Greens will get this treatment as well should they be seen to bend too far on environmental matters to align with business and the ALP (they will be reported to have sold out their core supporters).

It is a tough business, and I don’t envy the Greens their post-election position. They will get what they have always wished. It will be interesting to see if they come to regret it.


Yesterday in his his Liberal Party talking points article in The Oz, Glen Milne said the Liberal Party would start attacking Rudd’s character – gloves off as it were. They are doing this because they know they will get slaughtered in a policy debate because Abbott’s image is of a policy light weight (this is helped by his own policy efforts on climate change, paid parental leave and unemployment benefits for those under 30). Well the Libs haven’t wasted any time. Greg Hunt today called Rudd “a creep” for not apologising to the parents of one of the workers killed while installing insulation. I wonder if Hunt thinks the guy’s boss who had him working unsupervised is a creep as well. Expect more of this. The Liberal Party hates Rudd, and without the calming influence of Howard (yes calming) expect the Libs to go feral this election campaign.


I have to say Rudd has not done himself any favours by reneging on the election commitment to introduce an Election Debates Commission. It’s a dumb decision, if only because Rudd’s policy should be to give Abbott as much rope as possible to hang himself with. It also is just a good idea – one of those things that once in place would be something we wouldn’t believe we ever did without. The Press Gallery probably isn’t helping itself in its negotiations with the Government by having Philip Hudson (national affairs editor of the Herald Sun) as it President – Hudson of late has been putting out so many anti-Rudd articles that you’d swear he was angling for a job with The Australian. And while it won’t cost any votes, you do sometimes just want to tell Rudd to grow a pair and do it because he promised he would do it.

Monday, April 26, 2010

AFL Power Ranking Round 5 (or handball at your own peril)

I noticed this week that has started doing power rankings as well. Ah well, bugger ‘em.

If all the matches of this week highlighted one thing, it was that sides will lose matches through dumb handballs – handballs to players standing still, handballs to players surrounded by 3 opponents, handballs to players behind them. And what is worse is the excruciating number of players who are unable to hit a team mates with a handpass.

The Crows of course are the worst at all facets of this – and it is the number one reason why they are 0-5.

Brisbane, Saints and Geelong all had a chance to stamp themselves as the best team going around, instead working out who is best is a bit of a throw the names up in the air and see who comes down last effort.

Next week will reveal a good deal more – Saint-Bulldogs; Brisbane-Sydney; Carlton-Collingwood will do some serious sorting out.  

Oh and my final word on the Anzac Day clash – if Essendon and Collingwood are serious about the match really being about honouring the memory of war veterans then both clubs should have  no problems with the match being played by the two teams from the previous year’s Grand Final, because they would know that Anzac Day is bigger than the two clubs, and the match is of such significance that you should earn the right to play it. If they do have a problem with it, then it’s obvious it is just a money spinning operation for them. Today at the MCG 70,000 saw Geelong play Carlton, they would have easily got close to 90,000 had it been the Anzac Day clash (as that game gets a lot of neutral supporters – I know of 4 people who went to the Anzac Day game just because it was the Anzac Day game – they have no care about Collingwood or Essendon).

The only reason it hasn’t happened is that Andrew Demetriou is too gutless to take on Eddie McGuire.

My final word: if it really is about honouring the vets, get the RSL to send out a poll to all RSL members asking if they would prefer the Anzac Day game to be between Collingwood and Essendon or between whoever played the previous year’s Grand Final. I have a suspicion that contrary to what Eddie would like to believe, not all who served in wars were Pies and Bombers fans…









St Kilda


The Saints were missing their best big man – and Kochitske is definitely no Reiwoldt. Now they face a rested Bulldogs (coming off the “Crows-bye”).






The Pies beat a pretty hopeless Essendon side in a game that meant absolutely no more than does any other game worth 4 points. 






The Dockers started slow, but it was poor kicking that really cost them (4.12 at half time!). They won easily, and should account for the Eagles in the derby.






The Lions were made to look ordinary by the Demons – Brown looked half paced, and Fev lazy (Carlton fans would be nodding their heads wisely at that).






A strong win over the Eagles. The Swans are looking good for another finals campaign. A huge game against the Lions this week.






A big win for the Blues – if only you could count on them being this good, I would rate them much higher.






The Cats were sloppy, wasteful and looked lost in the forward lines, now at least they get to play the Tigers at home.






The Dogs got a much needed win, but  next week they play the Saints, which compared to the Crows is like going from kindergarten to university in a week.






The Demons were fast, hard and skilful. The self belief was obvious, and they should account for North this week with ease.




Port Adelaide


The game was ugly, and suited Port. They will now fancy themselves to flog a demoralised Crows outfit.




North Melbourne


The Roos score a typical “Shinboner spirit” win. They now face Melbourne who are playing like they think they can beat anybody.






Yeah the Hawks have had some injuries. But the cold hard reality is they’re one win above Richmond.






Essendon saw 90,000 in the crowd, thought it was a final and played accordingly – ie they got flogged.




West Coast


Not good enough - will struggle against the Dockers this week (and bloody Naitanui only scored me a lousy 55 Dream Team points! $#@!#)






Will never win a game when they think handballs to people standing still are a good strategy.






A great first quarter. A terrible last three quarters. Says it all really. (Oh and now they have to play Geelong in Geelong)

Friday, April 23, 2010

Corporal Tony wants to go the War

Tony Abbott today gave a speech to the Lowy Institute on “National Security Fundamentals”. Of course the speech included talk about asylum seekers – because of course when you’re talking about Australia’s national security you have to make sure we’re protected from the helpless and needy. Aboott suggested that should he win Government:

that one major acquisition, as soon as possible, would be three unmanned Global Hawk Surveillance Aircraft. In a day, a Global Hawk can keep under surveillance 40,000 square nautical miles. These aircraft would help to protect the vast oil and gas projects now progressing on the North West Shelf. Real time surveillance and their vast area of coverage should allow much earlier detection and interception of illegal boat arrivals. Improved intelligence would also make it easier to track and help boats in danger of sinking.418469-global-hawk

These cost as cool $100 million each, so Abbott’s anti-asylum seeker policy (forget the bullshit about protecting our vast oil and gas projects) is to buy three high tech planes to detect slow moving boats carrying asylum seekers to this country. This is to “protect our borders” – despite the fact none of these slow moving boats has actually made it to the mainland under the Rudd Government.

But here’s the thing: why are the boats coming? Abbott has spent the last 5 months telling everyone that the reason the boats are coming is the Rudd is soft on asylum seekers, and that if he was PM, he’d bring back the tough Howard Government policies that would stop the boats. So if his policies will stop the boats why spend $300 million on planes to find boats that won’t be coming?

Riddle me the answer to that one readers.

Abbott also said this about Australia’s commitment to the war in Afghanistan:

The extent of our commitment to Afghanistan is once more in question now that the Dutch, who currently take the lead in Oruzgan province, are preparing to withdraw their 1,900 troops, as well as their F16s fighter-bombers, helicopters, tanks and hospital later this year.

The Rudd Government has said that it is unwilling and unable to take command in the province and to increase our commitment even to approach the current Dutch contribution. It would be a poor reflection on our defence capabilities and value as an ally if we are truly unable to help. Certainly, General Jim Molan, the Australian former chief of operations for the multinational force in Iraq, says that we could and should take the lead in Oruzgan province.

It’s no secret that the Americans would like additional Australian forces in Afghanistan and have refrained from making a formal request only because they have been told that it would be unwelcome. … If satisfied that the role made strategic sense and was compatible with our other military commitments, a Coalition government would be prepared to consider doing more.

Should it be made, a commitment to do more in Afghanistan would be one sign that Australia is entirely serious about its overseas responsibilities. It would build on the reputation Australia established during the Howard years as a power that well and truly “punched to its weight”.

Excuse me while I throw up.

r326559_1464478 You see, for Abbott sending Australian to war is all about reputation and – like it’s some sort of global Olympics – to show that Australia is punching its weight (you get the feeling he’d like us to be punching above our weight).

Is this guy serious?

So his major foreign affairs policy if elected is to send more troops to Afghanistan (because you sure as hell know America will ask, now that Abbott has said he wants to send them). What an utter fool.

Sending Australian to war is not to be done just so the PM can feel like a big man. What an utter disgrace. And also stupid. As Vera on Poll Bludger pointed out, on the ABC page covering the story, in the “related stories” list it has an article on General Cosgrove giving a speech at Abbott’s February mini-2020 summit. That story is headed:

No support for expanded role in Afghanistan: Cosgrove

In the speech Cosgrove said this:

"In my view the weight of policy value and political risk are against an expanded and thus extended Australian role and military presence in Afghanistan. 

Taking on greater responsibility in the conflict is "marginally viable from a resources point of view" and would "create policy difficulties and certainly some political downside".

Australia has tested what was traditionally a strong sense of limitation on engaging in "wars of choice well beyond arm's reach" in recent years.

"In a policy sense, in terms of demonstrating our willingness to test the boundary of that part of our policy, Australia would hardly have done more over the last decade."

And yet Tony wants to go to war… but just look at what Cosgrove said: increasing our support in Afghanistan is "marginally viable from a resources point of view" – ie we don’t have the resources (manpower and equipment) to do it. But you see this all feeds into my suspicions of what Abbott would secretly like to do. You see thins week it started with denying the dole to people under 30, he wants to send young people away from their homes to get work, and now he wants to increase Australia commitment in Afghanistan despite us not having the resources to do it. So how to fill that deficit of resources? How to ensure those under 30 unemployed leave home and get a job… well it all fits nicely doesn’t it – bring back national service!

Will he announce it? Of course not (well I would say of course not, but given his thought bubbles, we shouldn’t rule anything out) but you just know, deep down he would love it.

Thursday, April 22, 2010

Stewart takes on Fox and the decimal system

After such a long, dry post on childcare and insulation, have a laugh with this clip from John Stewart – it’s a week old, but it’s still brilliant.

The Daily Show With Jon Stewart Mon - Thurs 11p / 10c
A Farewell to Arms
Daily Show Full Episodes Political Humor Tea Party

Insulate the damage, and hope the storm blows over.

Today was I think the worst day politically speaking of the Rudd Government. First Greg Combet announced the cancellation of the Home Insulation Program Mark II, then Kate Ellis announce the Government was reneging on its 2007 election promise to build 260 childcare centres, and instead was only going to build 38.

Two big news stories.

And then the NRL announced that the Melbourne Storm was to stripped of two Premierships, fined $1.7m and unable to win any points this season due to salary cap breaches.

Suddenly the front page for tomorrow is not all about the Government, instead it’s the biggest sports story in this country for over a decade.

But let’s stick with politics, and firstly the childcare broken promise.

Ellis defended the decision saying a report done into childcare places concluded that:kate_ellis_wideweb__470x401,0

"An injection of more centres would threaten the viability of existing services and potentially cause disruption for Australian families, just as the market is finally settling after the ABC Learning collapse,"

and that:

They say 30 per cent of long day care places are not being used. Comparisons between the September quarter 2005 and 2009 show more children are using child care and there are more childcare places. Child care is also described as cheaper now.

But the reports also say the proportion of childcare places being used has fallen from 77 to 75 per cent.

"This evidence we have released today, we have committed to continuing to release evidence so that we can make the best decisions for the stability of child care in Australia, said Ellis

All of which may be true. For example the report does say:

Child care utilisation shows the proportion of available child care hours that are actually being used.
The proportion of child care hours being used was 75 per cent in September 2009, compared to 77 per cent in September 2005.
One quarter of available child care is not being utilised. Taken with the vacancy data, this suggests that on aggregate there is child care available.

Bu if we look at the graph produced beneath that line we see that there were actually more spaces available in 2007:


So what we have is not so much an improvement of vacancies, but pretty much a static level – essentially an admission that there wasn’t that big a problem to begin with.

Not a good look.

There is good news for the Government on the costs of child care:

From 1 July 2008, the Child Care Rebate increased from 30 per cent to 50 per cent of all approved out‐of‐pocket child care costs up to a maximum of $7,500 per child, which was indexed on 1 July 2009 up to a maximum of $7,778 per child.

ABS data shows that this increase contributed to the reduction in the net costs of child care to parents by more than 20 per cent in the June to September quarter 2008.

In 2004‐05 the Government provided $1.5 billion to parents to help with the costs of approved child care through the Child Care Benefit. By 2008‐09 Government support for parents had increased to $3.3 billion covering both the Child Care Benefit and the Child Care Rebate.

But that ain’t going to wash – especially as people always know of someone who is tr5ying to get their kid into day care. Yes that person might be trying to get into the best day care in their area, but that won’t matter – that childcare centre will be full, so therefore people will think that all childcare centres are full.

So why did the Government announce this back down? (And I don’t mean today – because I doubt the NRL would have let the Government know what it was about to do with the Strom – why would they? There’s no Government issues at play) Why announce this now prior to the election? If you want to be cynical the Government could have let it slide – say they’re in the process of building them etc etc, and then dump it after the election – breaking a promise of a previous election is not going to hurt as much as breaking a promise of the most recent one.

I’m glad the Government did announce it today – it is the honest thing to do, but why today? My thoughts are that the savings from this will be used in the Budget, and the Government wants to get this out as early as possible before calling the election.

And yeah, that may be a good strategy, but they will take a hit on this. It was a big policy – not as big as the 50% childcare rebate – which they has introduced and has been fantastic – but it is still a big one, and Abbott will make lots of hay with this (and so will Liberal Party election adverts). The Government obviously knows this, and so would have made the decision with much loathing, it will be interesting to see if the political cost is worth it.


r553314_3290206 Of less political cost is the cancellation of the insulation scheme. The decision was made on the basis of the report into the Home Insulation Plan (HIP) undertaken by Allan Hawke. Before reading the Report I was thinking that it was going to absolutely bucket the Government. Instead it actually gives a pretty solid report for the Government:

It summarises its conclusion:

Any objective assessment of the HIP will conclude that, despite the safety, quality and compliance concerns, there were solid achievements against the program objectives. At the time the program closed on 19 February 2010, over one million homes had been insulated. Many low income households participated, with the prospect of significant savings on energy bills in years to come.

A very good outcome.

It deals with concerns about worker safety:

At its peak (in November 2009), the program had registered over 10,000 installers employing thousands of largely low-skilled workers.  For the first time there was a national focus on safety standards in the industry and quality standards for materials and their installation. In line with concerns expressed by industry and state and territory authorities at the start of the program, the installer register required minimum standards from installers and the guidelines required that insulation be installed appropriately.

A national training program for ceiling insulation installers was in place and had provided training to over 3700 people. Installers on the register were provided with safety information and warnings during the program, including in the original training materials.

Innovative, cross-government approaches were adopted. The partnership with Medicare has proved highly successful and can be a model for the future where government programs have a similar need for high transaction turnover and speedy and effective delivery.

Which to be honest sounds pretty damn good to me.

The issue of dodgy insulators also finds very little blame place don the Government:

There were concerns regarding poor quality workmanship and materials and disturbing claims about the high level of fraud perpetrated by unscrupulous operators. Despite some safeguards against fraud, no one foresaw the possible extent of potential malfeasance which was simply alarming – a classic example of why governments need to regulate markets to ensure their proper functioning.

The associated political wrangling has overshadowed the duty of care of employers, which, put simply, is a requirement that they do everything reasonably practicable to ensure a safe working environment. While determining the causes of deaths and serious safety hazards and any liability for these is a matter for coroners and work safety agencies, clearly there would seem to have been some unsafe work practices by employers operating under the HIP.

That is forget the media hype, if you look at the facts, the reason for unsafe practices is the fault of the employers not the HIP guidelines or the program itself, but it does highlight that Government should regulate industries (and this was one industry that was not regulated prior to the HIP coming into place – in fact it is now regulated because of the HIP).

That’s not to say it’s all roses, it does suggest the Department could have monitored compliance better – saying it lagged behind the program and pointed out that far too few audit checks were undertaken in the early months.

With regards the overriding aim of the HIP – namely to provide economic stimulus, the report had this to say:

There is little doubt that the stimulus component had the desired effect. Of the $2.45 billion dedicated to the HIP, $1.5 billion has been spent and claims in the order of $100 million may still be outstanding.

It then has a bit of a dig at the media:

It may be a peculiar Australian trait to bank or play down good news while examining the entrails of shortcomings in minute detail. Such is the case here, as the success of measures to deal with the global financial crisis risk having some shine taken off them by the so called HIP bungle. Bungle is actually a furphy because the many positive outcomes (already and potentially) flowing from the HIP serve to address long standing problems besetting the industry. The lessons learned from the fires and tragedy of the four deaths should lead to much safer work practices across Australia. The program has highlighted considerable gaps in the regulatory framework and an Australian regulatory system for the insulation industry building on the South Australian model will also represent a significant way forward.

On the issue of if the Department were concerned about fires, the Report found (and this is something I haven’t seen reported anywhere):

DEWHA worked closely with state and territory emergency services where a fire was confirmed to be at the same address as an installation claimed under HIP. In these cases DEWHA took immediate action to de-register the installer, unless the installer could ‘show cause’. Responsibility for investigation of causes of fires, and any action following the outcomes of investigations, remains with state and territory agencies. Typically, these investigations take a number of weeks or months, and the results are not particularly timely. DEWHA remained in contact with emergency services if there was further follow up action required against an installer (e.g. where an installer had been able to show cause, and had stayed on the register, but where the subsequent fire services investigation had revealed further evidence that was actionable by DEWHA through de-registration).

So the Department was taking action to get rid of dodgy companies, and was working with fire authorities. Interesting don’t you think?

How about complaints to the Department?

DEWHA kept records of complaints (and compliments) made through their call centres or via correspondence. Up to the end of February 2010, DEWHA had received 8290 complaints, which out of over 1.2 million installations carried out, represents a rate of only 0.68 per cent. This is a slight increase from earlier in the program, with, for example, complaints at less than 0.5 per cent in September 2009.

You would have to be an absurdly hard taskmaster to suggest that 0.68% was a high figure of complaints. But of course the media and the Opposition focuses on the raw figure of 8,290 – that’s a lot of complaints, but not of course if you consider it within the 1.2 million instillations – but of course that would require maths to do that. Far easier just to say 8,290 complaints – why that’s over a thousand a month!

Now to the issue of fraud, how did the scheme go there?

Complaints, compliance and audit processes were able to identify many potential fraud issues as they arose. In particular, the letters sent to households after installers made claims were able to identify cases of “phantom installations” where an installer had claimed for a non-existent house or work not carried out. While media reports made much of these instances, the fact that they were identified shows that the compliance mechanisms were having some impact. Where such cases were identified, targeted audits of the relevant installers work could then be carried out to determine if there was a pattern of inappropriate behaviour. Overall, only 0.5 per cent of roof inspections (including these targeted roof inspections) found evidence suggesting fraudulent behaviour, which was subject to further investigation and action by DEWHA.

0.5% – again less than 1 percent, hardly damming.  

Again it wasn't all roses, on the issue of inspection of rooves and quality of workmanship the report found:

Over 14,600 roof inspections have been undertaken, and 1000 targeted audits of electrical safety issues in Queensland have also been carried out as at the end of the program.

The results of roof inspections have shown significant levels of work that did not fully meet quality and safety standards (16 per cent of inspections revealing quality issues and 7.6 per cent of inspections revealing safety issues). Values for targeted inspections were higher as these were based on installers who had issues revealed through other intelligence.

Now 7.6 per cent sound bad, but the Report has a word of warning to those ready to jump to conclusions:

While the figures are alarming, some perspective needs to be borne in mind, in that the figures represent all installations that failed to meet any of the criteria. For example, in relation to quality, this could include small gaps in coverage of insulation.

So it does NOT mean that 7.6 per cent of the rooves were going to catch fire, just that they did not meet the quality criteria which only exists because it was introduced by the Government (remember no such national quality standards existed prior to this program)

With regard the issue of fires, the Report found this:

Of the 1000 targeted inspections of foil insulation in Queensland, 3 per cent of installations showed an electrical safety risk related to insulation.

Three percent? Geez, three percent of insulation is due to dodgy work done by workers under this scheme!! Err no, not quite:

Significant numbers of these households were found to have pre-existing electrical safety issues. The identification (and highlighting) of pre-existing electrical safety issues in roofs has been one (however unfortunate) positive outcome of the HIP. Initiatives to install electrical safety switches (which was already a focus of the Queensland Government), including as one of the options for householders with foil insulation, should result in improved electrical safety.

A bit of an “every cloud has a silver lining”, as the sheer numbers of the instillations under this scheme highlighted that much of the electrical work in QLD rooves was sub-par. Interestingly this was one thing noted back in March by Possum at Crikey:

With all the outrage against the insulation program causing electrocutions and fires, something that seems to have been missed in all the hoo har is that nearly all of these problems appear to be originating from poor, sub-standard and pre-existing electrical work. Afterall, insulation doesn’t spontaneously combust.

So given all this, why did the Government scrap the scheme? As far as I can gather, it was purely political, and the hint is in the report conclusion:

A stronger management structure, earlier implementation of the audit and compliance program, and better targeting of compliance effort early in the program could have mitigated the risks to more acceptable levels, but never to zero.

The only way the Government could guarantee zero risk was to scrap the scheme, and knowing the media and opposition has no care of mathematics and percentages, they took the only political option and scrapped the scheme.

There is also an ironic side effect of the increased safety and compliance procedures now in place:

There is now a much lower number of people and businesses capable of providing assurances that they can operate safely and with integrity in the insulation industry. Given the size of the inspection and rectification program that the Government has embarked on, many of the reputable players will be required to implement inspection and rectification measures.

That is because the Government has introduced such stringent regulations of the industry, there now aren't enough companies around to roll out the insulation in the time the Government wants it done.

Thus in a very real sense, the Government ensured the industry was too safe to carry out its own program.

Wednesday, April 21, 2010

Off to the mines with you Work’us: Abbott goes Dickens

Today, Tony Abbott, fresh from having fallen completely off the news radar over the last week, found himself in the midst of another of his great policy thought bubbles. An excellent story in The Australian by Andrew Burrell reported that:

TONY Abbott has proposed banning the dole for people under 30 in a bid to entice the unemployed to head west and fill massive skill shortages in the booming resources sector.

The Opposition Leader made the controversial remarks during a two-hour meeting with about 15 senior resources industry leaders in Perth on Monday night. Mr Abbott told the roundtable briefing he believed stopping dole payments to able-bodied young people would take pressure off the welfare system and reduce the need to bring in large numbers of skilled migrants to staff mining projects.

Six of the attendees confirmed yesterday that Mr Abbott had raised the idea of banning welfare payments for young people to encourage them to fill the thousands of jobs emerging in states such as Western Australia and Queensland.

"He said he was thinking more and more about it, with a view to formulating something on it," said one of the participants, who asked not to be named.

Another recalled: "He definitely said it was something he was considering as a policy."

A third executive said: "It certainly wasn't a throwaway line. He brought up the issue twice during the meeting."

Did he deny the story? Hell no. In fact he said this morning:

I had a very free-ranging discussion with people who were complaining bitterly about the difficulty of getting people to work. I'm all in favour of a fair system but I'm also in favour of a system where people have a go, where people pull their weight, and we'll be making announcements in due course.

Yes you see life it far too easy for those unemployed under 30s – so time to up sticks an head down pit. As Jason Wilson said on twitter today -

If only WA had salt mines, it would all be perfect.

There are two aspects to the policy that are completely daft – the first is cutting all dole for people under 30: this suggests that anyone of that age who loses their job or is out of work for a period (say after leaving school or university) is a bludger. Sorry but that is complete bollocks. The second aspect is that unemployed people should be “encouraged” (and by encouraged, Abbott means given no choice) to move across the country and work in the mines is perhaps the dumbest thing I’ve heard in a very long time (ok not that long, but at least since Abbott’s paid parental leave plan).

It is typical of Abbott that this is how policy comes out – completely half baked and lacking any logic. It wasn’t just the unions who were criticising Abbott (AWU National Secretary came up with the great line of calling it Abbott’s “Sarah Palin moment”) , the miners also weren’t exactly brimming with enthusiasm. Here’s Queensland Resources Council director Michael Roche:oliver-reed

"If he thinks you can translate an unemployed young man or woman from Townsville or Cairns or wherever overnight into the resources sector, then clearly we need to give Mr Abbott a good briefing on the workforce's needs and the fact that we need skilled people that have done some training,"

Tony Abbott's idea of welfare is obviously about half a step up from a work house for orphans and off to the blacking factory for the rest. As blogger MacYourselfhome tweeted:

Has Tony Abbott been reading Charles Dickens?

Yep Abbott as Fagin (or perhaps Bill Sikes). I see Joe Hockey as Mr Bumble.

oliver!3 Just imagine the poor young skinny 21 year old from Melbourne having to leave his friends and family, perhaps his girlfriend, and head off to the mines at Paraburdoo. He has no skills in mining or engineering, he couldn’t fit or turn a spanner if he tried. But off he goes, because there’s work there, and after all if he stays and tries to find work in his area – he may have just graduated from uni and wants for some bizarre reason to try and get a job in his field – then he will have no money to survive on, and will be dependent on his parents. Perhaps Abbott thinks that just like Oliver Twist everyone really does have rich long lost grandparents?

How do you think that kid will go? Do you think the mining company will be happy to see this kid? Do you think mining companies are crying out for workers, or are they crying out for skilled workers?

Abbott said this as well:

safety mechanisms would be needed under such a scheme to protect disabled people or those with mental health problems.

Now that’s fair enough, but will young men admit to mental health problems? Will they keep quiet for fear of the shame that is associated with mental health – Hey Johnno, why didn’t you have to go off to the mines? – Err well, I get panic attacks.

Yep I can see that working. My prediction, if this policy really is put into place, there would be a fairly obvious rise in suicides among men under 30 (not to mention crime from those under 30 who are without the dole).

Abbott also said this:

And he raised the possibility that employers would need to be given funding to train the unemployed, according to those present.

Well now we’re getting down to a more level headed policy, but also to the real failure of the policy. It would mean sending untrained workers to places they don’t want to go, and paying mining companies to train these people, who let’s be honest, will then stay as short as time as humanly possible before buggering off back home.

Yep, sounds a winner.

When I left uni back in 1994, I was unemployed on and off for over a year. I did get some work as a courier, but that was a non-ongoing, casual job. I had an Honours Degree in Economics, un-surprisingly this meant when I went for job interviews to work as a bank teller they didn’t want me as I was way over qualified (spare me the bullshit about businesses employing people to work from the bottom up). Ditto the jobs I went for as a kitchen hand. And getting a job in the banking/economics world? Well I got down to the last 2 a few times, but could never score the win – I once even got flown to Melbourne for an interview, so it wasn’t like was completely without a chance. I lived in Adelaide, and would loved to have moved to Sydney or Melbourne where the jobs were, but I couldn’t afford it and knew no one there with whom I could have stayed.

Eventually I moved from Adelaide to Cairns (personal reasons) and got a job working there in the casino. And I hated every single second of it, but I did it because it was a job (despite the fact it nearly drove me to the edge). The only thing that kept me sane during the years I worked there was that I was with my girlfriend. Had I had to go to work in a mine away from her, I seriously doubt whether I would have coped. 

Abbott must think going off to work in a mine would be a big adventure – after all I’m guessing he thinks that he left home and went off to Oxford when he was in his 20s, and he loved that, so what’s the problem?

The problem is that type of thinking leads nicely to what I wouldn’t be surprised is his next thought bubble – national service. After all surely the young people of today could do with a bit of discipline, learn a trade, then go off to Afghanistan and die.

This policy is typical Abbott – thought up for the audience of Alan Jones, and doing nothing to actually solve the problem he is hoping to fix.

It’s also dumb politics. It will not win him one vote, because those who think it’s a great idea are already well and truly on the Liberal Party side. But worse than that, it’s also a vote loser. If you are a mid-40s, 50s parent of a 20 year old, are you going to be thrilled about the thought that your son might have to leave home for the mines should he not be able to get a job? Are you thrilled about the thought that if your son’s or daughter’s company goes under that they will get no dole purely because they are too young? Let’s say they work in a restaurant as chefs. Ever heard of restaurants closing down? Think it is easy for chefs to get work straight away? I guess they should get a job a McDonalds and quit whining. Now I know chefs move around the country to get work, but have we become such a mean society that we deny people the chance to try and get work in their field and in their town?

I said last week that “Rudd wants to wait because he is betting Abbott will shoot himself in the foot the more time he has prior to an election”. It took a whole seven days for him to do it again. I think Rudd will call a Double Dissolution election very soon after July 1. He will use the private health means test bill as the trigger, and make the election all about the health policy (he has specifically linked the two already).

I think he’ll do this because

a) he sees it as the best issue on which to beat Abbott,
b) the Double Dissolution will get rid of this Senate straight away and not till June 30 next year
c) he will be able to call the election quite soon after Obama and family have been in Australia for a nice visit (a happy coincidence that Rudd will use), and
d) because Abbott and the Liberal Party are woefully unready to fight an election – eg the dumping of the Liberal Party deputy in charge of their marginal seat campaign. .

All that, I think adds up to a soon-after-July 1 election, and I think this policy itself will help the ALP win it with an increased majority.

Tuesday, April 20, 2010

Newspoll ALP 54 – LNP 44 (or Health, Stimulus and the English Language)

Today’s Newspoll was for the first time in a while announced on last night’s Lateline. Dennis Shanahan even made an appearance to discus it. When news of this broke I was sure the results would be bad for Labor. But I must say that we can bury that conspiracy theory for now. The results came in at the rather unexciting two party preferred of ALP 54%, LNP 44%. This was a drop (as expected) from the pretty roguish poll of 56-44 last time. No one really expected the ALP to improve from that position. No one except Dennis Shanahan of course. Here he was last night on Lateline:

I think the important thing out of that is that we haven't seen a continuation of the drop which the Coalition experienced three weeks ago after the debate and after the paid parental leave announcement. So, the losing of the ground from the Coalition hasn't continued. That's an important thing for Tony Abbott.

Though he did admit:

Labor's still well in front, of course.

To be honest, Shanahan was pretty reasoned and objective on Lateline. Would that translate into reasonable and objective articles in today’s Australian? Did you really need to ask?

Asylum policy scuttles Labor

Labor whacked on boatpeople in Newspoll

The horror!! Just looking at those headlines you’d think the ALP was dead. But you would be wrong, because you see, “Scuttled” in political terms now apparently means winning an election with a 47 seat majority. I do like it when The Australian enhances the English language to give it a much more rich and indeterminate meaning. Yes, apparently Labor has been “scuttled”. Given that scuttled generally means to sink something on purpose, it seems according to The Oz that Labor has intentionally sunk its own election hopes and resulted in it winning an election with increased margin. Riddle me that one folks.

Of course the reason behind these two headlines is that the Newspoll asked who was best to handle asylum seekers. The LNP was in front 44 to the ALP 26. This was a big change since it was last asked back in November, when the LNP was in front 23 to 20. But big deal. So the LNP is massively favoured to handle asylum seekers: is it an election changing issue? Nope. How do I know? Look at the Two Party Preferred – 54-46. If there was any link between the two you would think a jump in the LNP of over 20% would result in some increase in the LNP’s 2PP. But no. People might not like asylum seekers, and they might like the way the LNP says it will handle them, but not enough for them to want to change the Government over it.

This election – as every other one in history – will be about the economy, health, education and the economy. construction work done3

Which brings me to the stimulus and episode 427 in Michael Stutcbhury’s campaign to say the stimulus spending should be stopped. Today his argument was that the recession is over, so the spending on education stimulus should stop:

The program may have had some credibility in February last year, less than five months after the Wall Street financial crisis hit, when the government announced a $42bn "nation building" stimulus that included free ceiling insulation for 2.7 million Australian homes and "large-scale infrastructure" in every primary school.

Note the “may” – he still ignores all evidence that the stimulus held up employment in the building sector – employment which otherwise would have gone through the floor. Here’s his reasoning, and dismissal of the Global Financial Crisis:

But 14 months later it makes no economic sense at all, given we now know that the global financial crisis was then downsizing into what the Reserve Bank of Australia calls a North Atlantic financial crisis and the Australian economy was about to get a booster shot of export demand from China.

The line about the GFC being a “North Atlantic” crisis has got a bit of a run of late from the conservative side, but they are all invariably quoting Reserve Banks Governor Glenn Stevens massively out of context.

Stevens said the line in February at the Standing Committee on Economics. He was being asked specifically about the capital adequacy of banks liquidity. Liberal MP, Bruce Billson asked him about Australia’s banks having to sign up to an international agreement that was focussed on American and European banks saying:

Mr BILLSON— That sounds like a very North Atlantic solution to a problem that does not exist here.

Billson was not suggesting the Global Financial Crisis was just a North Atlantic thing, but that North Atlantic banks are under different regulations to and were facing different liquidity pressures to Australian banks (he’s right). Here was Glenn Stevens’ response:

Mr Stevens—….It is a very good phrase: the whole crisis actually was very much a North Atlantic crisis. It was really only a global crisis for six or eight weeks, I think. The rest of it is mainly a North Atlantic story. There is a problem with liquidity and the problem was that institutions relied on the assumption that wholesale markets would always be open at a reasonable price and they just were not open, and those people came into serious problems. So there does need to be, I think, a genuine effort on the part of financial institutions to think more about liquidity risk.

837826-dtthumb-glenn-stevens So when Stevens was saying a "North Atlantic crisis” he was SPECIFICALLY referring to the liquidity risk of banks. But Stutchbury has no problems saying the Stevens actually was referring to the entire Global Financial Crisis. I don’t know about you, but to me that is pretty dishonest reporting (or is it just incompetence).

Stutchbury then went on to suggest:

But there is virtually no chance that halting the uncontracted BER billions would plunge the economy into recession.

The government's line that the economy would have gone backwards in three quarters last year without the overall stimulus is not backed by revised national accounts estimates. There are more unemployed now than just before the crisis hit, but that was when the economy was overheating and the Reserve Bank's cash rate was 7.25 per cent, rather than 4.25 per cent.

Non-dwelling construction would not collapse if non-contracted BER spending were halted.

Yes you see employment was high prior to the crisis (remember that crisis which was apparently only a North Atlantic thing) because the the economy was overheating – so I guess Stutchbury now thinks the GFC was the recession we had to have… And as for his suggestion about the strength of the building sector? Well luckily we can go to Stutchbury’s favourite economic analyst, Glenn Stevens, for a view on that, as today the Minutes of the last Reserve Bank board meeting were released. Here’s what it said about non-dwelling construction:

The business surveys suggested that business conditions and confidence were both at above-average levels. However, there was some variation across sectors, and some caution in spending plans outside the mining sector. The non-residential building sector remained subdued and, abstracting from the surge in construction of educational facilities, new approvals were at relatively low levels.

Yep booming…


The other news of the day of course was the Health deal brokered at the COAG. Was it “historic” as suggested by Rudd? Well yes and no. Colin Barnett from WA held out on giving away 30% of his share of the GST, meaning he wants the Commonwealth to give him the GST and he’ll give them back 30% (or something like that). r552293_3276399It all sounds (to quote Kevin Rudd from the 7:30 Report) like an accounting measure, but Barnett couldn’t really back down as he had said all along he wasn't going to give up the GST. Western Australia is always a bit tetchy over the GST carve up – believing it gets ripped off as it is. This will play ok in WA, but I wouldn’t be surprised if a deal is done out of the glare of COAG.

Most of all the COAG deal skewers Abbott. His big complaint has been (as he said in his opening address in the Health debate):

Mr Rudd's scheme won't provide an extra bed, an extra doctor, an extra nurse or even an extra dollar before 2014 at the earliest.

Today Rudd announced:

From July 1 this year the Australian Government will start delivering $5.3 billion in additional funding over the next four years to provide:

  • 1,300 new sub-acute hospital beds;
  • Over 6000 new doctors;
  • An additional 2500 aged care beds;
  • Emergency department waiting times capped at four hours;
  • Elective surgery delivered on time for 95 per cent of Australians;
  • An historic agreement to reshape mental health services and help 20,000 extra young people get access to mental health services;
  • More coordinated care for patients with diabetes in general practice;
  • A Commonwealth takeover of primary care; and
  • A Commonwealth takeover of aged care.

In other words – lots of extra beds, doctors and nurses before 2014, meaning Abbott was left to say that because WA hadn’t signed on, it wasn’t really a national deal and thus Rudd had failed, and the bureaucracy will be bigger, and where’s the money coming from etc. sinking_ship

Well now. Good luck with that, and good luck explaining how the extra money going in to hospitals and the creation of local networks is no good (especially when it is so close to what Abbott himself wants to do). That said Rudd and Swan will need to show where the money comes from, but I’m guessing they went into the COAG knowing how much they could afford to spend; if not, the Budget will be interesting. 

Abbott wanted to be able to go to the election saying Rudd had broken the promise on fixing the health system. With this deal and the money starting from July 1, that ain’t going to fly. But all is not lost for Tony, perhaps he can hope the Health deal will “scuttle” Rudd, though if we go by The Australian's understanding of the word, that might see the next poll Rudd in front 56-44.