Johannesburg’s libertarian mayor a cause for optimism

With the spectre of anti-market populism a threat all over the world, Johannesburg’s libertarian mayor, Herman Mashaba, is a refreshing cause for optimism.

In May, South Africa fell into recession and experienced a 14 year high in unemployment. Johannesburg has long been wracked by poverty and crime.

Taking office late last year, Mashaba’s first budget came into effect at the start of this month. As a free market libertarian, Mashaba believes it is free individuals, communities and entrepreneurs who will solve these problems. This is a message other developing world leaders, indeed political leaders everywhere, would do well to heed.

Take housing, for example. The chronic shortfall of government housing has been the cause of public disorder in various poor communities in the city in recent months.

But as Mashaba points out, 300,000 housing units are required to meet the backlog, with the government only able to deliver 3,500 units per year. It will take the government 85 years to get this done.

Clearly, the only way all citizens of Johannesburg will access adequate housing is not through government at all, but via a vibrant market economy and dynamic construction sector.

Mashaba recognises this, which is why he aims to turn Johannesburg “into a construction site” by easing the regulatory burden on business.

Indeed, Mashaba’s most startling achievement so far has been to clamp down on corruption. His council has uncovered R10 Billion in fraud and corruption with 314 people (including city employees) arrested, 100 employees suspended and 12 officials resigning as a result of investigation. Talk about draining the swamp.

Clearly, having faith in the government to solve every problem in Johannesburg is naïve, when simply not stealing from the citizens is rightly considered a giant step forward.

Most importantly, at the core of most of the problems besetting Johannesburg (and many other parts of the world) is poverty and unemployment. There are 862,000 unemployed people in Johannesburg, at an unemployment rate of over 30%. That jumps to over 50% for young people. Unemployment doesn’t just have economic consequences for individuals but denies people what Mashaba rightly calls “the dignity of work”.

If governments could just draw forth jobs and economic well-being from the ether, all South Africans would be very wealthy by now.

But despite claims around the world to the contrary, economics hasn’t changed. It is individuals, entrepreneurs and businesses that can get Johannesburg’s enormous economic engine humming. Mashaba realises this and that’s why he’s reducing government interference by removing regulation and fighting corruption.

It’s also why his administration is ramping up the processing of title deeds for the multitude of citizens living in dwellings without a title – a hangover from the Apartheid era when black South Africans were often prevented from owning property. In the 2013/14 financial year the previous ANC administration failed to hand out a single title deed. The new council has processed 4000 since their election ten months ago.

Property rights give people economic security, the ability to pass wealth down the generations and the possibility of using their asset as collateral to acquire credit to start enterprises. Not to mention the intangible impact of many families experiencing the dignity of owning property for the first time.

Of course, there are definitely some things that government ought to be doing, such as upholding the rule of law. Here, Mashaba aims to make further progress tackling drug gangs and slumlords. Johannesburg is one of the most dangerous places on earth and addressing these issues will be good for the economy and the daily lives of citizens.

An important area where Mashaba must distinguish between law and order and economic freedom is with regards to Johannesburg’s enormous informal sector. The previous ANC council launched Operation Clean Sweep in 2013 which saw the often brutal removal of 8,000 street traders from their places of work.

These small entrepreneurs have the right to pursue a better life for themselves and their family and the City must make it as easy as possible for them to do business and enter the formal economy.

Apartheid was an inherently evil regime that deprived people of their basic rights. A core part of this was its system of economic repression. Whilst the ANC deserves credit for removing many of Apartheid’s restrictions it is, at its core, a socialist party with an unyielding faith in government to create a better world. That is an idea that has had its day.

Of course, expectations must be kept in check. Johannesburg’s problems are entrenched and won’t be fixed overnight. Furthermore, Mashaba is only major of Johannesburg – not the President of the country. All governments and political leaders have the potential to turn bad and the needle is yet to move on any of the key indicators pointing to significant economic improvement in the city.

But an overtly libertarian, free market political leader, particularly in the developing world, is sadly a rarity. Ultimately the most important ramifications of Mashaba’s success may be the example it provides to others around the world.

It is individuals, communities, entrepreneurs and businesses that will lead Johannesburg and South Africa into a brighter tomorrow. Mashaba’s faith in the people of Johannesburg to take control of their own destiny is a very good thing.

Peter Gregory is a Research Fellow at the Institute of Public Affairs.

The new Royal Adelaide Hospital: a case study in blow-outs, red tape and union influence

Did you know that the seventh most expensive building in the world is being built right here in Australia? No, it’s not a giant apartment block on the Gold Coast. It’s not a flashy new casino. It’s not even the recently announced hotel and apartment complex that will be attached to MoNA in Hobart.

It’s the new Royal Adelaide Hospital (nRAH)—a project that is 18 months behind schedule and $640 million over budget. This makes the 800-bed hospital—a public-private partnership—the most expensive building in Australia and the largest capital investment project in South Australian history.

But why has this project blown-out? Aside from the optimistic assumptions, project scope changes, ignorance of the technical demand and safety concerns, the nRAH has gone through legal action between the SA government and the builders and unlawful industrial action and anti-competitive behaviour by the CFMEU. In this way the nRAH is a contemporary example of why desperate reform is needed in the delivery of state-based major projects.

Coming soon – the seventh most expensive building in the world!

Construction of the new hospital began on February 2011 and it was anticipated that completion would be completed in April 2016. But the SA government failed to finalise the hospital project on time and missed an additional two set completion dates in May 2016 and June 2017. And recently SA Health announced dates for public tours of the nRAH in July.

Globally the nRAH is the seventh costliest building—ballooning to a cost of $2.3bn. Compared to the final cost, the original estimate of $1.7bn places the cost overrun of the nRAH at 35 per cent of the initial projected cost in real terms.

The world’s most expensive buildings

Source: Emporis

Where did it go wrong? Since the beginning of the nRAH’s construction, every design flaw, delay and mistake has pushed back deadlines. Construction costs alone doubled from $244.7m to more than $417m. These included the unforeseen remediation costs from contamination claims ($69m), site modifications and defects with building specifications ($34.3m), the setup of a transition team (February 2017) to deliver a long-delayed move from the current RAH ($180k per day), the poorly thought out plan for the emergency section with sick patients faced with dozens less overnight beds available, and outpatient facilities not fit for purpose to meet expected demand with almost 40,000 appointments not being accommodated per year.

There were concerns over the $422m rollout of the electronic patient record system not being ready when the paperless hospital opens. As the ward floors were not sufficient for storage, there were temporarily storing those records in the hospital’s basement car park. In the end, most were being housed off-site which could become a serious patient safety issue with long waits anticipated for records to arrive directly to medical personnel.

Missing the completion deadline of April 2016 triggered the state government to issue a default notice against the construction consortium and withheld service payments of approximately $1m per day to the hospital’s builders. A legal conflict between the South Australian government and its builders ensued over the construction defects that transpired with the builder seeking more than $500m in compensation for the delays. On February 2017, both the state government and builders reached a settlement to conclude legal action.

Union threats and non-compliance by the CFMEU

According to the Office of the Chief Economist, 8.1 per cent of Australia’s GDP stems from the construction industry which employs hundreds of thousands of people.

The contemptible costs of building in Australia has been beset by the influence the CFMEU. The CFMEU has played a pivotal role in driving up the labour costs of building the nRAH and decreasing the overall productivity of its construction.

The CFMEU through their anti-competitive practices of complicity, pattern bargaining and price fixing has instrumented EBAs which are characteristically above award rates. Moreover, the CFMEU has instituted pay premiums for semi-skilled workers and submitted atypically a high number of additional payments in their payroll costs.

Notwithstanding the building costs and delays of the nRAH was the “Armageddon” threats from the CFMEU to disrupt its construction. The CFMEU were fined $57,500 by the Federal Court for making threats to sway the head contractor from enforcing a Fair Work Commission order requiring employees on the nRAH project not to take industrial action.

The two senior CFMEU officials involved were alleged to have stated: “If you try anything there will be Armageddon” and “all hell will break loose and we will take this national.”

Australian Building and Construction Commission (ABCC) Commissioner Nigel Hadgkiss conveyed disappointment in the CFMEU’s conduct and imposed $1.1bn in penalties against the CFMEU and its representatives. He expressed: “unfortunately, the conduct we’ve seen in this case is not isolated, but instead reflects a widespread contempt for the rule of law that pervades the industry.”

The implementation of EBAs by the CFMEU have undoubtedly initiated higher labour costs into the development of the nRAH. The aforementioned workplace disputes and illegal practices by a minority have placed the nRAH project to not only encounter a substantial benefits shortfall but also it is the public, particularly the Australian taxpayer, that loses out.

Recommendations

The mismanagement of the nRAH project represents a clear failure by the state government to control financial costs, risks and uncertainty in project delivery. The major issues presented emphasise the SA government’s ineptitude to design a fit for purpose hospital to cater for patient needs sufficiently, to effectively manage workplace relations, and uncooperative union influence. The result is an expense bill with limited accountability for a poorly executed project.

We must reform how the state government undertakes a large-scale project. They need to:

  1. Provide greater transparency and oversight throughout the project life-cycle by offering regular status reporting and ongoing performance monitoring available to the public, including key performance indicators and project figures.
  2. Ensure that internal management of projects utilises continuous improvement for better risk management and contingency practices.
  3. Enhance collaboration between departments for best practices and lessons learnt to encourage more informed decision making and communications amongst stakeholders.
  4. Curtail inefficient and any unlawful influence of unions and uncompetitive union-inflated EBAs by increasing the maximum penalties under the ABCC legislation.
  5. Introduce guiding principles through a Code of Practice in tender decisions to ensure the tender process is open, transparent and accountable.
  6. Institute penalties for bureaucrats involved in contact administration that act in an unethical manner in awarding tenders and fail to conduct a high standard of due diligence in the competitive bid process.

Only by adopting these recommendations will we lower building costs, keep projects within scope, and prevent significant delays to project delivery.

John Varano is a contributor to the IPA’s Freedomwatch

John Varano is an experienced management consultant and researcher. His area of expertise is in strategy, organisation design, change management, and transformation programme and project management. He has acted as a consultant to international organisations, ASX listed companies, and federal and state departments. As a researcher, his research focuses on the challenges of managing projects, specifically in change management, capital projects and project management. John’s professional experience extends across multiple geographies, including Australia, the US, UK, and Europe.

He is a Graduate Member of the Australian Institute of Company Directors and an Associate Fellow of the Australian Institute of Management.

John is currently an MSc candidate at the University of Oxford in Major Programme Management. He holds an MBA in Finance from The Johns Hopkins University and an MA (Research) in International Political Economy with first class honours from The University of Melbourne. He completed his undergraduate studies with honours at Monash University.

John has been published in The Conversation, Yahoo! News and The Spectator.

Uranium: The fuel that must not be named

The lengths to which some policy makers go in a democratic society to ensure that other points of view aren’t even allowed a look-in, is as unbelievable as it is offensive.

This practice is common in mainstream debates such as climate change (the science is settled), and freedom of speech (if you disagree with me you’re a racist), but the debate on uranium mining, nuclear power and waste processing is another great example.

Proposed new legislation to discourage parliamentarians in South Australia from advocating a nuclear waste facility is a case in point.

While South Australia’s Weatherill Government has deservedly copped criticism for its renewables policies and back-of-the-envelope bank tax, it deserves credit for its recent attempts to get some sort of nuclear energy industry off the ground in South Australia.

In particular, It established a Nuclear Fuel Cycle Royal Commission to look at “the potential for increasing South Australia’s participation in the nuclear fuel cycle” and actively considered (while not formally supporting) the establishment of a nuclear waste storage facility.

When its so-called Citizen’s Jury came out against the idea, the government persisted, even after the State Opposition decided to oppose it before it was apparently abandoned in June 2017.

However, many people don’t realise that the South Australian Government had to change the law just to ask the public if it wanted a nuclear waste storage facility.

Section 13 of South Australia’s Nuclear Waste Storage Facility (Prohibition) Act 2000, brought in by the former Liberal Government, stated that:

“Despite any other Act or law to the contrary, no public money may be appropriated, expended or advanced to any person for the purpose of encouraging or financing any activity associated with the construction or operation of a nuclear waste storage facility in this State.”

In March 2016, prior to the Royal Commission’s Final Report being handed down, the Weatherill Government attempted to have this section removed but the South Australian Greens objected, and the legislation was instead amended to add that the previous clause:

“…does not prohibit the appropriation, expenditure or advancement to a person of public money for the purpose of encouraging or financing community consultation or debate on the desirability or otherwise of constructing or operating a nuclear waste storage facility in this State.”

Now, even though they ‘won’ the debate under the amended law, the South Australian Greens have introduced new legislation into the Parliament to repeal this extra clause so that there is once more a legal question hanging over government advocacy for a change in policy.

In fact, this Act of Parliament should be removed in its entirety.

While it is of course appropriate that procedures are in place to safely manage radioactive material, it is incomprehensible that in the 21st century, state and federal laws make it a crime to talk about, look for or develop what over 30 countries consider to be a commercial energy product and 55 countries use for research.

Two separate pieces of Commonwealth legislation (the Environment Protection and Biodiversity Conservation Act (EPBCA) and the Australian Radiation Protection and Nuclear Safety Act) specifically prohibit nuclear fuel fabrication, power, enrichment and reprocessing facilities.

The EPBCA also includes a special section for approvals of uranium mines and nuclear facilities, ominously titled “Protection of the environment from nuclear actions.”

State legislation has banned uranium mining in New South Wales since 1986 and a ban on mining was re-introduced via regulation in Queensland in 2015, though nonsensically both states claim to allow companies to explore for uranium.

The newly elected government in Western Australia last month implemented its election promise to also ban new uranium mines and in Victoria a 34-year old Act of Parliament prohibits even exploration.

And for any company lucky enough to find a commercial uranium resource, establish a mine and secure an overseas market, it must still obtain the Federal Resources Minister’s permission to export, and deal with the fact that only South Australia and the Northern Territory allow the use of local ports.

In the wake of the Finkel Review, if policy makers insist on weighing up how best to guarantee a reliable source of electricity that also helps Australia to achieve self-imposed emissions reduction targets, it makes no sense that the law of the land does everything it can to lock out the only energy fuel source that could do both.

If uranium mining and processing or nuclear power turn out to be uncommercial in Australia or unable to compete with gas, coal and other fuels, then the resources won’t be developed and the infrastructure not built.

But the legal system should not be used as a tool to suppress debate, delay the development of new sources of energy, and prevent the creation of new markets.

Brett Hogan is the Director of Research at the Institute of Public Affairs. Twitter: @brettahogan

Melbourne, Adelaide, Brockway, Ogdenville and North Haverbrook

Last week it was Elon Musk in South Australia and this week it is former US Vice President Al Gore visiting Victoria for the 2017 EcoCity World Summit, predictably to talk about climate change, the so-called evils of coal and need for more renewables.

Two different weeks, and two different states – but the same embarrassing spectacle of star struck governments using taxpayer money to curry favour with celebrities.

Today the Victorian Energy Minister hopped on a tram with Mr Gore to announce a $146 million Renewable Energy Plan to fund the purchase of Renewable Energy Certificates (basically the State Government guaranteeing to buy the output of solar and wind farms), batteries and computer software to try to improve the integration of renewables into the electricity grid.

It is interesting how technologies already supposedly cheaper than fossil fuels are always needing some kind of support!

Hopefully nobody on the tram tried to take pictures as the Herald Sun is reporting that a number of people attending the conference were “physically stopped by security staff from taking mobile phone pictures of Mr Gore” or recording his speech, though this rule obviously didn’t apply to Premier Andrews who posted this happy snap on Twitter.

Given the 100% electricity price rises between 2006 and 2016 (and 20% rises on 1 July with more to come) the last thing Australians need is a lecture by comfortable celebrities like Mr Gore, especially when the end result is higher power prices and workers losing their jobs.

After the forced closure of Hazelwood in March, the only things Victoria’s Andrews Government should be focusing on are reducing electricity prices and preventing summer blackouts.

Perhaps the Energy Minister should take Mr Gore out to the Latrobe Valley and make him explain to the former Hazelwood workers why they lost their jobs because of the climate policies he advocates.

$150 Million For 6 Minutes Of Work – Why Not?

Less than a day after the news that shares in Elon Musk’s Tesla Motors are down 20% on their peak as questions start to mount about the company’s ability to successfully deliver quality products (including here, here, here, here and here ) comes the news that Tesla, already the beneficiary of $5 billion of taxpayer subsidies has now won the right to build 100 megawatts (*or 129 megawatt hours, see note below) of battery storage in South Australia.

Predictably, the media is all over it, and is happily running the government and the company’s lines – including that it is about “securing power,” shoring up the grid, and pushing that wicked coal and gas further to the sidelines. How lucky South Australia is that  Tesla has come to save the day!

But let’s do the journos’ job for them and ask a few questions:

  • How Much Will It Cost?

No idea.  After scouring available news sources it doesn’t appear that the South Australian Government has revealed how much of its long-suffering taxpayers’ money is being spent. But it’s probably most of the $150 million set aside for battery storage by the SA Government earlier this year. This is quite a lot – and much more than the $8 million per year that it would have cost to have kept South Australia’s last coal-fired power station open a little longer.

  • Batteries Are the Solution to Our Problems, Right?

No – electricity batteries are not Duracell. They don’t come with stored power and still rely on the electricity that somebody else needs to generate. If renewables were able to generate all of the electricity that households and businesses need in the first place then we wouldn’t need batteries!

  • Isn’t 129 Megawatt Hours Big?

While 129 megawatt hours certainly sounds like a lot of battery space, it actually isn’t

According to an official Australian Energy Market Operator report into South Australia of last year, SA electricity consumption in 2015-16 was 12,934 gigawatt hours or 12,934,000 megawatt hours. This equals an average of 35,435 megawatt hours a day or 1,476 megawatt hours an hour or 24.6 megawatt hours a minute.

So yes – if your maths is OK you will realise that this $150 million ‘mega-battery’ will only provide 6 minutes worth of South Australian electricity.

  • But It Can Help Stabilise the System, Right?

Yes, renewables when coupled with batteries can help to solve some of the problems that renewables themselves have created over the last 10 years but at what cost? Because traditional coal and gas generators are able to be controlled at will, they have been able to provide the so-called “grid stabilization” measures that the network needs to function. As gas and coal are pushed out of the market by government-subsidised renewables that cannot be controlled because their performance depends on the sun or wind at the time, authorities have to apply various band-aids which may very well include a bunch of expensive batteries ready to be used if needed. Stealing food scraps from bins may satisfy your hunger, but a good meal is much better.

  • What Could it Really Be About?

The official Tesla announcement is as amusing as it is revealing in that it seems to imply the batteries will solve any number of problems including helping to “solve power shortages, reduce intermittencies, and manage summertime peak load to improve the reliability of South Australia’s electrical infrastructure.” It also clams its power output is equal to the consumption of 30,000 homes which it magically claims is equal to the number of homes that lost power during last year’s blackout. Convenient.

The most relevant sentence from the Release is: “Tesla Powerpack will charge using renewable energy from the Hornsdale Wind Farm and then deliver electricity during peak hours to help maintain the reliable operation of South Australia’s electrical infrastructure.”

In other words it will be built partly with taxpayer funds, get cheap electricity from a nearby wind farm, wait until the market price is high then sell its limited output for a very large profit. This will also further undercut the economics of the gas generators that faithfully supply electricity into the market for less and less of the time but stick around because they can make up some of their costs during these peak times. Batteries that throw their power into the grid during peak times will push reliable gas and coal generators out of the market sooner.

  • Is there a More Detailed Explanation of Why a Battery Won’t Solve South Australia’s Problems?

Yes. For a slightly technical, but interesting explanation of some of this issues involved and why the battery is unlikely to fix them, see this blog piece by Paul McArdle from March where he explains that there are actually six problems in the South Australian power network.

  • Summary

This is what happens when politicians are in panic mode, particularly when it is to fix the problems that their own policies have created.

Like Transurban’s proposal for a new Melbourne road tunnel to help the Victorian Government get out of its East-West Link cancellation pickle at the cost of extending tolls on existing roads for another 10-15 years, battery providers have used the South Australian Government’s inability to guarantee a reliable supply of electricity to have its taxpayers subsidise their own business model.

The only reason Australia is suffering from supply interruptions and unprecedented price rises, is because governments have pursued policies that have destroyed the electricity market. This problem is likely to get a lot worse before it gets better.

Note

(* Note that a megawatt is typically a unit of strength, not of a unit of output like the traditional megawatt hour. Batteries are usually measured by how much electricity they can provide not by how big they are. Fortunately Tesla has confessed that its 100 megawatt battery will provide only 129 megawatt hours (i.e. the equivalent of 129 megawatts for one hour) of actual electricity. It is like the difference between speed and kilometres travelled).

The Marxist roots of VCE

The truth is finally out. Over twenty -five years after the ALP Government led by John Cain government in Victoria introduced a new two year compulsory Victorian Certificate of Education (VCE) English Study to Years 11 and 12, what has long been suspected a finally been admitted in an innocuously entitled chapter in an equally innocuously book entitled ‘Required Reading: Literature in Australian Schools since 1945’, published earlier this year by Monash University Press. The re-imagined curriculum of the newly introduced VCE imposed on thousands of Victorian schoolchildren in 1990 was in fact – as this book make clear – underpinned by a dangerous Marxist ideology which considered schooling to be one of the many structures of bourgeoisie dominance which warranted destruction in the name of ‘equality.’

In a chapter devoted entirely to a discussion of ‘Text Selection and Curriculum Development of VCE English’, the authors who admit as much opine that the VCE ‘was a brave and imaginative attempt to develop an English curriculum which would no longer privilege the interests of the social “elites.”’  They are clearly of the opinion that the creators of the VCE were courageous social justice warriors, whose ultimate goal was to ensure that the new curriculum would no longer serve the purpose of those interests of the ruling ‘bourgeoisie’, otherwise known as the Australian middle class, the children of which presumably all went to private schools anyway.

It is highly symbolic that the contributors of this particular chapter chose to both introduce and conclude their piece in ‘Required Reading: Literature in Australian Schools since 1945’ with quotes from Louis Althusser. Althusser was a dogmatic Marxist revolutionary, member of the French Communist Party and intellectual leader of the left- wing revolution which swept through the institutions of learning in the 1960s.  After strangling his wife in 1980 on account of her ‘revisionism’ he then spent much of the ensuing decade in psychiatric institutions from whence he continued to write prolifically until his death in 1990.

Althusser’s particular contribution to the development of Marxist ideology was that he invented a highly impenetrable language in which questions could be neither posed nor answered. He also claimed that the only valid reason for intellectual endeavour was revolution. By this he meant the overthrowing of all those institutions which he considered to favour the ruling class, such as Church, family, school, trade unions, culture, press, judiciary and education, all of which he categorised as Repressive State Apparatuses (RSA).  To Althusser, education served the interest of the few to the detriment of the many and thus needed to be abolished or altered. To that end, Althusser redefined its purpose. ‘Schooling’, he wrote, ‘hails’ or ‘interpellates’ individuals as ‘concrete subjects.’

In the 1980s, both Althusser’s ideology and language were adopted by teachers such as Tony Delves who is cited in the chapter of ‘Required Reading: Literature in Australian Schools since 1945 under discussion. Delves subscribed to the Althusserian notion that education was longer about the acquisition of knowledge but rather about who you are and where you belong.  In an essay published at the time, Delves asserted, with a decent dose of revolutionary rhetoric, that English teachers ‘must be concerned with our students as vital, spontaneous, social beings who are being educated in a culture-destroying and soul- destroying community.’  His ideal curriculum was one in which grammar, structure, vocabulary, punctuation and other such trifles of the English language were to be done away because they are the work of the ‘liberal intellectual.’ For Delves and his comrades, this was all part of the class struggle necessary to achieve the Utopian socialism of their dreams.

Thus the VCE was an outright rebellion by the left against the existing order. Everything was reduced to the lowest common denominator in the name of ‘inclusion’ and ‘diversity.’ Percentages were done away and replaced with thoroughly dispiriting and non-discriminatory ‘S’ and ‘N’- ‘Satisfactory and ‘Not Satisfactory’. The authors of ‘Required Reading: Literature in Australian Schools since 1945’ happily informs us that many of classics were expunged and replaced with a dazzling array of modern texts which honed in on Althusser’s long list of RSAs. Olga Master’s’ Amy’s Children’, Marilyanne Robinson’s, ‘Housekeeping’, and Willy Russell’s ‘Educating Rita’ all undermined the traditional notions of the family.  The individual, twentieth century prejudice and discrimination were the main focus of ‘Love Poems and Other Revolutionary Actions’ by Roberta Sykes and ‘In Country’ by Bobbie Anne Mason.

At the time of its implementation, the VCE was quickly sized up by the main daily paper and other mainstream media which took one look at the new reading list and correctly concluded that the ‘Mickey Mouse’ curriculum was a dumbing down and a complete and utter waste of time.  In particular, the inclusion of Raymond Brigg’s graphic novel about the aftermath of a nuclear holocaust, ‘Where the Wind Blows’, attracted much condemnation. Much of the uproar also came from the appalled English teaching community who were of the opinion that the new curriculum did not do ‘justice to supporting our cultural heritage.’  And they were, of course, completely justified. This choice of texts was an undisguised exercise in social engineering and it deprived students of their cultural heritage and core knowledge.

Althusser’s diabolical ideology of the 1960s and the language he employed to express it, was thus formalised into Australian government policy in the 1980s by the then Education Minister, Joan Kirner, with the assistance of the teachers’ unions and a handful of left -wing revolutionaries masquerading as educators. This group of individuals, inspired by Marxist critique, performed a massive disservice to individuals and ultimately the nation. While their efforts were contested with varying degrees of effectiveness by successive governments, much of the philosophy and content ultimately found its way into the ill-considered National Curriculum mandated by the Howard government.

Monash University Press no doubt produced the book for the new ruling class of professional educators keen to congratulate themselves on the progress they have made in destroying the pre-existing model of education and imposing their own. But in providing evidence of the motivations and ideologies of those who drove the changes, it has also done a service to those who believe that this was where the rot started and therefore why a reversal of course is now more important than ever.

 

Australians back globalisation, free trade, and US alliance

Australians are overwhelmingly positive about globalisation and free trade, are showing signs of renewed support for the US alliance, and see China as an economic partner, not a military threat, according to the Lowy Institute annual poll released this week.

Most Australians (78%) believe globalisation, especially the increasing connections of our economy, is mostly good for Australia. This is largely unchanged from when the question was last asked in 2009, and higher (by 14%) than in 2006.

Despite anti-trade rhetoric across the West, most Australians are still positive about free trade. Australians believe free trade improves their standard of living (67%), the Australian economy (67%), Australian companies (61%) and job creation (55%).

Our attitudes to Donald Trump have also softened. In 2016, a small majority (51%) said that Australia should remain close to the United States under a theoretical President Donald Trump. In 2017, now that Trump is actually president, this has increased to nearly two-thirds (65%). Meanwhile, support for Australia’s alliance has actually increased under Trump. In 2016, 71% of Australians thought Australia’s security links with the US was very or fairly important; in 2017, 77% believe our alliance with the US is important.

Australia’s historic bonds of Britain also remain strong. On which global power Australians trust the most to ‘act responsibility in the world’, we express the greatest faith in the United Kingdom (90%). In our own region, most (79%) see China as more of an economic partner then military threat.

The news isn’t all good – most (79%) of Australians are dissatisfied with the direction of the world, and nearly half (48%) are dissatisfied with the way Australia is going. Meanwhile, almost all Australians see international terrorism (94%) and North Korea’s nuclear program (92%) as a critical and important threat. People are nevertheless optimistic about Australia’s economy (74%).

Australians’ views towards democracy also remain a concern. While a majority (60%) view democracy is preferable to any other form of government, there remains solid minorities who believe non-democratic government can be preferable (20%) or don’t care what form of government we have (16%). As confirmed by the IPA’s Growing Freedom survey, young Australians, aged between 18-29, express a lower support for democracy (52%).

Overall, there’s a lot to be happy about in Lowy’s latest survey. Our historic bonds and alliances have widespread support, and Australians understand the benefits of globalisation and free trade. Nevertheless, there is evidence of some pessimism and continued uncertainty about democracy.

Missed The Bank Tax Inquiry? Here’s 6 Points To Catch You Up

Today, a Senate Inquiry into the Major Bank Levy Bill 2017 was held in Parliament. Executives from the major banks and their associations gave evidence to Senators on a range of issues concerning the bank tax, including its likely effects and the policy process that led to its design.

Here are six key takeaways from the hearings.

1. Large scale deregulation and liberalisation of the financial sector is required

Australia is a corporatist country. Many sectors – finance, telecommunications, air transportation, groceries, internet service delivery – are dominated by a small number of large incumbent firms. Their market position is, in part, protected by regulations that make it difficult for smaller competitors to enter the market.

In the financial sector this includes the implicit government guarantee to bail-out a financial institution in the event of a failure. Anna Bligh, CEO of the Australian Bankers’ Associations argued that “I cannot imagine any Australian government of any political persuasion allowing one of our banks to fail.”

While large incumbent businesses may enjoy this position, the corresponding effect is that it is difficult for them to prosecute effective arguments against increased government encroachment. If some regulation is good, why is more bad? If the government guarantee is desirable, why is it wrong for the taxpayer to seek recompense for it?

In the future, it will be important for the banks to argue in favour of free enterprise capitalism, rather than crony capitalism. Yes, reducing regulation and red tape will have a negative effect on the market share of large incumbent businesses. But a more decentralised banking sector would make it more difficult for the government to justify interfering in the commercial affairs of financial institutions, which will be a long run benefit to the sector.

2. The process to develop the tax was poor

The hearings confirmed what has already been widely reported: that the design of the levy was rushed and lacked clarity of purpose.

Stakeholders had just two days to make a submission on draft legislation and only two days to provide a submission to the Senate Inquiry. The Commonwealth Bank noted that they only had one meeting with Treasury officials to discuss details of the policy. While Westpac noted that they had not received any modelling from Treasury despite requests.

In addition, the banks were required to sign non-disclosure agreements in order to receive details of the tax which is highly undemocratic and illiberal.

3. The tax is likely to be increased

Concerns were raised that the tax would likely be increased for two key reasons: firstly, the tax may not meet its revenue target, and, secondly, raising the tax is an easy option for future governments to meet any shortfall to general revenue.

A number of banking executives noted that this raises uncertainty about the future trajectory of the tax and is discouraging investment.

A similar tax introduced in the United Kingdom has been increased four-fold since introduction.

4. There is no such thing as absorbing a tax

Westpac was very strong on this point. Peter King, Chief Financial Officer of Westpac argued “a bank is not an entity separate from customers, shareholders, suppliers and employees.” Ultimately, a combination of these groups will pay the tax through, for example, higher borrowing costs and lower returns to shareholders.

Mr King also argued that the total tax liability increases as lending increases, which effectively makes the levy a tax on growth.

5. The tax has already had a negative effect

A number of the participants noted that the levy has already had a negative effect on the banks, financial markets, consumers, and the broader economy. Anna Bligh argued that $32 billion of share value was lost following the announcement of the tax.

This follows observations by business leaders outside of the financial sector, such as Alan Joyce, CEO of Qantas, that the levy is raising concerns that other profitable enterprises will be targeted for specific taxation.

Indeed, Mr King noted that “this law codifies the notion that it’s ok to tax a small number of companies to fill a budget gap just because they can afford it.” The effect has been to create uncertainty for investors. Mr King argued that institutional investors have already downgraded their position in Australia due to the tax.

6. There should be a sunset clause

All participants argued that, if the rationale for the levy is for Budget repair, then the levy should sunset once the Budget returns to surplus.

See the IPA’s submission to the Inquiry into the Major Bank Levy Bill 2017 and the Treasury Laws Amendment Bill 2017 here.