60 Minutes in Lebanon

It is doubtful that Channel 9 really needs to conduct an investigation into how its crew came to be arrested in Lebanon. It was right in the middle of this story, in it up to their eyeballs, and they no doubt already know exactly what happened.

The "review" is not independent. The people doing the review are all connected with Channel 9. If there was a major bungle by a Government Department or a Bank, and the Department or the Bank simply conducted an internal review, 60 Minutes would scream "cover-up". The "review" may be simply an attempt to buy time and hope the public loses interest in this debacle.

There is evidence the Channel 9 network paid $69,000 directly to the personal company of Adam Whittington, the imprisoned head of Child Abduction Recovery International. News Corporation has reported that Channel 9 made two separate payments in this case totalling more than $115,000.

Given this, rather than buying time, Channel 9 should do three things. First it should do would it would demand of anyone else in a comparable situation – provide a full accounting to the public of exactly what it did, what money it has paid or promised and to whom, and which of its personnel decided on or approved the actions it carried out.

Second, it should change its ways in relation to chequebook journalism. Chequebook journalism is a slippery slope where media outlets risk losing their moral compass. You can end up like the UK paper "The News of the World" did in 2011, caught paying bribes to police officers to reveal information about cases.

If there's nothing wrong with chequebook journalism, let TV stations always reveal when they do a story and they have paid someone for their role in it, who they have paid, and the amount. Let's have the full story. Many stories are presented as being justified in the pursuit of openness and transparency and the public's right to know. It is therefore hypocritical for those paying for the stories to shy away from saying how much was paid, to whom, what it was paid for, and why it was paid.

 
Third, it should resolve never to pay money in order to create news, and certainly not to facilitate the commission of a crime. Journalists should report the story, not be the story. If you pay the Beaconsfield miners for their story after they are rescued that is one thing – it should be disclosed – but paying money to set up a story is another thing altogether. It runs counter to the ideals of journalism which should have ethical principles and truth telling at its core.

Channel 9 Owes Public Explanation of Lebanon Conduct

Channel 9 must now provide what its 60 Minutes Program would require of anyone else involved in a debacle like the child abduction in Lebanon - a full accounting to the public of exactly what it did, what money it has paid or promised and to whom, both before and since the abduction, and a full accounting of which of its personnel decided on or approved the actions it carried out.

Channel 9 has embarrassed Australia and its diplomatic personnel, has put its own employees in danger, and has almost certainly been involved in a conspiracy to break the laws of another country. People are not entitled to take the law into their own hands, and two wrongs do not make a right.

60 Minutes seeks to shine a light in dark places and is strident about the public's right to know. On this occasion the public has a right to know exactly who in its organisation did what, and who is responsible for this.

Australian Business Culture Doomed to Remain in the Stone Age?

On April 14, the Knowledge Nation 2016 Summit was convened in Sydney, involving leaders in science, technology and innovation, to consider how Australian society may be successfully transformed into a prosperous, globally competitive, knowledge-based economy. Elena Douglas, Convenor of the Summit, outlined the nature and urgency of this challenge in The Australian (‘Yes, we have innovation skills, but we must foster entrepreneurialism’, April 14, p. 12).

Although Elena Douglas highlights a number of home truths about the Australian economy and business culture which obstruct economic revitalisation, there are also a number of significant factors which she does not discuss, but which are central to any serious attempt to foster such a transition.

Acknowledging the quickening pace of technological innovation in the world economy, it is argued that Australia needs to become an ‘agile’, innovative economy, which will require a new sense of purpose and collaboration between government, business and educational institutions. Cultural obstacles are identified – lack of ambition (the ‘lucky country disease’), and a business culture too focussed on short-term return.  

Much of this criticism is valid particularly in relation to an Australian business culture preoccupied with short-term economic return. A longer-term view of the Australian economy and governance since the 1980s, however, points to a number of other uncomfortable truths which need to be faced up to by national leaders if any genuine progress towards economic and cultural renewal is to be realised.

The neo-liberal orthodoxy which has dominated Australian business and government thinking since the 1980s represents a major barrier to economic innovation and renewal. Too great a reliance upon market processes alone has resulted in the hollowing out of the Australian economy through the widespread destruction of existing enterprises and a failure to deliver new ones with higher technological sophistication and global reach.  That this failure has been met with calls for an even greater reliance upon small government and deregulated market processes is an impediment to national economic renewal. Basic lessons have not been learned.

At the same time, other economies in Pacific Asia have modernised - developed new, globally oriented and knowledge-intensive industries from relative economic backwardness and left Australia behind. We are left with no alternative, but to import virtually all elaborately transformed goods that we associate with our First World lifestyle. In return, for the most part, we depend on mining and agriculture for export income.  A key observation, however, is that these economies – South Korea, Japan and China, have not engineered this success on the basis of crude free-market principles, but coherent, mercantilist national strategies. These societies have not relied upon ‘comparative advantage’ as determined by market forces, but have created their own advantage through strong pro-active government, focussed government-business collaboration and an unswerving sense of national purpose. Former US Assistant Secretary of Commerce, Clyde Prestowitz, has highlighted this dilemma. The trade policies of the free market West have become increasingly divorced from reality. The reality, he argues, is a global economy where “roughly half the countries are more or less free trade driven, while the other half are neo-mercantilist (Prestowitz, 2009).”

Furthermore, before there can be any paradigm shift in investment priorities from short-term to strategic long-term innovation outcomes, there has to be an honest recognition of the extent to which Australian business elites have become dependent upon quick returns from crude, low-level capital widening based on rapid population growth and city building. The economic pie does get bigger, but the growth is largely ‘more of the same’, doing what we do already, but on an ever larger scale; with declining GDP per capita.

So entrenched has this approach become that, in its 2015 Intergenerational Report, the Australian Treasury calculates that  nearly half of Australia’s modest expected annual economic growth to the year 2054-55 will be due to continued high  population growth. It is worrying that the Australian Treasury engaged in outright political deception in overemphasising the negative implications of reducing population growth, while largely ignoring the serious social and economic problems of high population growth.

It is simply muddle-headed to bemoan the Australian business culture’s fixation on short-term financial gain and upon the domestic market rather than global competitiveness, when the primary economic strategy of the Australian Government and the Australian Treasury is to facilitate, encourage and reward such entrepreneurial backwardness. Moreover, powerful business interests (retail, housing construction and banking), which have benefited from this failed strategy continue to successfully lobby government for its perpetuation.

Nevertheless, crude growth is politically seductive; it has created an illusion of prosperity and even the illusion of good governance – an economy that is ‘the envy of the world’. It is worrying that the Prime Minister, Malcolm Turnbull, on his recent visit to China bragged about the “remarkable resilience” of the Australian economy in context of the Global Financial Crisis and its aftermath. The fact is that Australia faired reasonably well through the GFC because of a mining boom propped up by Chinese iron ore demand and reliance upon a high population growth capital widening strategy. The reality is that, when the Chinese demand for Iron ore rapidly subsided, the Australian economy was exposed as ill-equipped and underdeveloped in the global high-tech stakes. In terms of economic modernisation, high population growth and city building is now exposed as a road to nowhere.    

The Federal Government’s response to this is woefully inadequate. Instead of a robust hands-on approach by government, as practiced by our successful regional neighbours, the Federal Minister for Industry, Innovation and Science, Christopher Pyne’s key initiatives for correcting the situation have been to offer tax breaks for start-up firms, to flag the creation of a special visa to attract smart minds from overseas and to reprimand those who suggest that the Australian Government might spend more on public research and development. A whole hearted commitment to Australia paying for and generating its own human capital seems to be beyond the Minister’s and the Government’s expectations.

Australia is now behind the eight ball in the economic modernisation stakes. The 1990s and the recent mining boom have been an era of lost opportunity for Australia. Until our economic and political elites can face up to this, talk fests and any amount of hand wringing about Australia’s falling position in global knowledge economy rankings will likely fail to rectify the situation.

The contradictions are staggering. While the Federal Government insists that the public research sector has to pay its own way through stronger links with private industry, its continuing commitment to high population and crude growth sees a disproportionate share of Australia’s limited wealth being diverted into urban infrastructure and other spending in our ballooning capital cities.

Population Growth Driving Infrastructure Deficit

Josh Gordon is absolutely right to raise the problems associated with Melbourne's rapid population growth of the past decade. It is absolutely correct that politicians and economists are allowed to get away with murder by talking about economic growth when they should be required to talk about GDP per capita. It is like saying that because more people have moved into your street, that the street has more money, and therefore you are richer. You are not personally richer at all – indeed the probability is that your street is more crowded and that in amenity you are poorer.

Melbourne's rapid population growth is the reason there is an infrastructure problem. The Queensland academic Jane O'Sullivan has done research which shows that in a stable population the community needs to set aside around 2 per cent of its income to repair and replace ageing infrastructure, but that in a community growing by 1 per cent it needs to set aside 3 per cent of its income to keep up, and in a community growing by 2 per cent it needs to set aside 4 per cent of its income. The infrastructure task doubles, with only 2 per cent extra people to pay for it.

 
Little wonder that Councils and State Governments in rapidly growing populations are unable to keep up. It is not that they are lazy or incompetent or corrupt, it is that the task is too big for anyone. This is also why we are seeing so many Councillors and State Governments having short political life expectancies. If they worked on getting the Federal Government to reduce the greatly increased net migration rate of recent years, their job would become achievable and their political life expectancy would increase.

http://www.theage.com.au/comment/governments-cannot-keep-using-population-growth-to-inflate-economic-figures-20160412-go4wxz.html

Colin Barnett Right About Gas Reservation

Unaccustomed as I am to agreeing with WA Premier Colin Barnett, he is right to observe that Western Australia is the only state to reserve 15 per cent of gas deposits for domestic use, and that the LNG industry in Western Australia enjoys more public support than the coal seam gas industry in the eastern states.

It may well be the case that people are more supportive of an industry if they feel it can benefit them. In the eastern states both manufacturing industry and consumers have been offered nothing except the prospect that locally produced gas will all be exported and the price will go up!

Public opposition to coal seam gas has forced a ban on it in Victoria, and projects being halted in New South Wales. Labor in the Northern Territory has said it will ban onshore drilling if elected.

The Federal Government and the gas industry would do well to listen to Colin Barnett and stop being so greedy and trying to have it all their own way. 85 per cent of something is, after all, a lot more than 100 percent of nothing.

Australia Should Come to the Table

Timor-Leste has launched compulsory conciliation proceedings under the United Nations Convention on the Law of the Sea (UNCLOS), with the aim of concluding an agreement with Australia on permanent maritime boundaries.

UNCLOS provides an internationally accepted method for delimiting maritime boundaries which Timor-Leste is confident would place oil and gas reserves in the Timor Sea within its territory.

However Timor-Leste can’t have an independent umpire decide a maritime border with Australia because in 2002 the then Foreign Minister Alexander Downer decided to pull Australia out of the compulsory jurisdiction of international courts and tribunals in relation to maritime boundary matters. This decision was made just two months before Timor-Leste achieved its independence.

Timor-Leste’s Prime Minister, Dr Rui Maria de Araujo said “establishing permanent maritime boundaries is a matter of national priority for Timor-Leste, as the final step in realising our sovereignty as an independent State.”

I agree with Timor-Leste’s Minister of State, Agio Pereira, who says this process is still worthwhile. The conciliation will lead to a report after 12 months. Both sides can appoint two members and have to agree on the chair of the conciliation. If Australia declines to participate, the UN will intervene to appoint experts.

East Timor and Indonesia have committed to formal talks on the boundary but Australia refuses to negotiate a permanent sea border. Australia should come to the table and participate in these proceedings in good faith.

Further reading: 

My speech on the Timor Sea Maritime Boundary given to Friends of Dili 15 March:

 

http://www.kelvinthomson.com.au/editor/assets/160315%20Timor%20Sea%20Maritime%20Boundary%20-%20Friends%20of%20Dili.pdf

Council Mergers in NSW – Back to the Future

The Liberal Premier of NSW, Mike Baird, is advocating the merger of local councils across NSW, with a view to reducing their numbers from 152 to 112. The basic arguments put forward to justify council amalgamations are somewhat predictable, reflecting the premise that less government is better government. Council amalgamations, it is asserted, will result in improved economies of scale and improved service delivery for residents, with modelling showing that $2 billion in savings would be achieved over the next 20 years. While much is made of the fact that many local governments in NSW currently spend more than their revenues, the fact that such a saving would represent only a small proportion of aggregate council expenditure over this period goes barely acknowledged.  

To date, Premier Baird’s proposal has met stiff resistance. Anger amongst residents and councils is widespread, including affluent and lower socio-economic councils alike. There is much about the NSW Government’s proposal that is not transparent. Claims of improved financial efficiencies do not seem to stack up, and many proposed council mergers do not reflect the formal criteria put forward by the Baird Government.

The NSW Government’s heavy handed response to such resistance is all too familiar to Victorians who experienced forced municipal amalgamations during the 1990s under the Kennett Coalition Government. There, too, resistance was met with a ruthless determination not to allow local community sentiment and identity to stand in the way of municipal ‘reform’. The Victorian experience should serve as a warning to the people of NSW. There was a lot more involved in forced municipal amalgamations than imagined economies of scale in services delivery.

The Kennett Government’s policy approach was firmly founded on neo-liberal tenets - intent on maximising property investment opportunities by opening up established urban areas to massive redevelopment and densification. With this goal in mind, it set about coercively limiting the capacity of municipal government and local residents to defend their local urban environments from unwanted change. Council amalgamations set in motion a wave of urban ‘renewal’ - dramatically increased residential densities - across metropolitan Melbourne with only superficial regard for the preservation of neighbourhood character and valued community amenity, which has continued to the present day. The property development industry has had a field day. Fortunes have been made through the institutionalised vandalism of inherited urban amenity. Despite superficial claims of improved efficiencies from larger Councils, the underlying motivations were clearly political. The priorities of local constituents can be more easily suppressed within a smaller number of bigger councils.

This is part of the NSW government’s hidden agenda. Recent public statements by Sydney architect, Penelope Seidler, clearly represent the big property development interests behind the Baird Government’s push to reduce the number of councils. Arguing that the Baird government’s municipal rationalisation agenda does not go far enough, and acknowledging the ‘huge resistance to higher density” development in Sydney, Seidler explicitly cites small local government as an obstacle. Small local governments in her view, have allowed “local vested interests groups [to] get hold of these councils and there’s too much self interest in there.” For the most part, the local vested interests that Seidler refers to are simply the priorities and values of local residents and community groups. However, the objection that small local government is prone to minority group capture completely misses the point. Local government should be about local capture. Residents should be entitled to a real say in the character of the street and neighbourhood in which they live. As one academic (Allan, 2003) has stated: “The smaller the council the more control and hence responsibility citizens feel for its operations.” This is what the Baird Government and the property industry are opposed to. To facilitate their own capture of the urban development agenda, they need to undermine the existing democratic ‘capture’ by local residents that stands in their way.

Council amalgamations in Victoria ushered in a worrying sea-change in the very nature of local governance. Council amalgamations were accompanied by legislation which facilitated greater state government control over council decision making. At the same time, there was a shift from administrative to managerial values. Public servants were transformed into managers and the public into customers. And there was an accompanying shift which saw increasing local government reliance upon market values. For a period, local governments were dissolved and CEO’s installed. Local public servants were required to adopt private sector principles and practices, rendering councils less politically responsive to local aspirations and more ‘business like’.

Since the 1990s, there has been increased expert scrutiny of issues relating to council amalgamations and associated claims of beneficial scales of economy. Studies have noted widespread disillusionment with the “almost universal belief in amalgamation as a panacea for improving the operational efficiency of municipal service delivery”. Nevertheless:

…despite increasing scepticism in the broader Australian local government community, which echoes similar sentiments in American and Canadian policy circles…. Australian state government policy seems largely immune to doubt and continues to employ amalgamation. (Dollery and Fleming, 2005)

The Baird Government’s determination to push ahead with council amalgamations in the face of deep public resistance and questionable economic assumptions is a case study in the persistence of the big end of town in promoting bad ideas and democracy busting.

Supporting Local Steel Does Not Jeopardise Trade Deals

Claims by Liberal Government Ministers that if Australia required the use of Australian made steel in government projects that this would tear up or invalidate existing Free Trade Agreements are without foundation and are simply scaremongering.

A court or tribunal MIGHT find that a particular contract or provision was not legal under the FTA. This would invalidate the contract, but have no impact on the FTA, which would continue as before.

Whether a court or tribunal WOULD find that a particular contract or provision was not legal under the FTA depends on the particular facts. While some of Australia's FTAs contain rules preventing discrimination in government contracts, others do not. Those that do – the US FTA, the Korea FTA, and the Japan Australia Economic Co-operation Agreement – contain exemptions, such as for defence contracts and for SMEs.

For a government procurement contract or provision to be invalid:

(1) a company in another country would want to obtain a contract for the supply of steel to the Australian Government,

(2) the company would need to be based in a country which had an FTA with Australia that contained rules preventing discrimination in the awarding of government contracts,

(3) the government contract would have to be for a purpose that was not specifically excluded from the government procurement rules, such as defence procurement, and

(4) the company would need to win a legal challenge against the contract. The government could argue that foreign firms were not being discriminated against; they could win the contract, all they were being required to do was to use Australian steel, as local companies were being required to do.

As I said earlier, even if these hurdles were all jumped, all that would happen is that the contract would be invalid – the FTA would continue as before.

I personally think it is unwise to agree to government procurement provisions in trade deals. They can fetter the capacity of governments to act in the best interests of their own industries and workers. I don't mind if other countries do it – why shouldn't they support their own industry and their own workforce? The China FTA contains no government purchasing rules because the Chinese Government itself wanted to make its own decisions about purchasing. And the US Australia FTA exempts the US steel industry from government purchasing rules, but not Australia's! Those Liberal Ministers who now say we are blocked by the US trade deal from helping the Australian steel industry should explain the negotiating genius of the Howard Government in achieving this outcome.

But to claim that we can't support local steel in government procurement contracts because they will invalidate existing Free Trade Agreements is scaremonging nonsense. The reason Liberal Ministers say we can't give local preference is because they basically don't want to.

Senate Education and Employment References Committee on the Exploitation of Temporary Resident Visa Holders

The recent report of the Senate Education and Employment References Committee on the exploitation of temporary resident visa holders, ‘A National Disgrace: The Exploitation of Temporary Work Visa Holders’, highlights the way in which current visa arrangements facilitate foreign worker exploitation and fail to protect the job opportunities of local workers. 

Including visa holders from New Zealand, the number of temporary visa holders in Australia has remained steady at around 1.8 million persons since 2013 (primary and accompanying visa holders combined). The majority of these visas have work entitlements attached to them.  The Committee’s report is valuable for its emphasis upon the broad range of such visas available and the scale of the associated flows. A major focus of the report deals with exploitation linked to the skilled temporary entry 457 visa.

The 457 visa category is demand driven, uncapped and virtually all occupations entering under the 457 visa program are exempt from labour market testing. A serious broadening and strengthening of labour market testing requirements for 457 skilled temporary entry visa holders, as recommended by the Committee, is essential. The flow of these workers has been slow to respond to worsening labour market conditions for local workers in many occupations. A factor explaining this is the pathway between 457 sponsorship and permanent residence, providing a back door to permanent migration for many workers who would not otherwise gain entry as independent applicants. About half of those sponsored on a 457 visa go on to acquire permanent residence. The link between skilled temporary entry and permanent residence needs to be reconsidered. With this motive in play, 457 visa holders are easily exploited because running foul of their sponsor jeopardises their prospects of permanent residence in Australia

457 visa holders, especially in the IT area, are paid at low rates compared with Australian industry norms. Further, as the report indicates, local training efforts are likely put at risk from easy access by Australian employers to relatively unchecked temporary resident flows. The recommendation to apply a training levy upon employers for each 457 entrant has merit, as does the recommendation to require employer sponsors of trade workers to demonstrate that 25% of their total trade workforce consists of apprentices. The recommendation that sponsors of 457 professionals be required to employ an Australian tertiary graduate is also sound.

Contrary to claims by government and business leaders that the 457 visa entry only consists of migrants with occupations that are in short supply in Australia, skills targeting under the program has been consistently poor. Only a relatively small proportion of skilled temporary entry workers arriving under the 457 program (around 36%) have had occupations listed on the Skilled Occupation List (SOL), which purports to identify occupations in short supply in the Australian labour market. Major anomalies have resulted. The SOL has included many occupations that were known to be in over supply. In recent years, for example, cooks have figured prominently in 457 visa arrivals even though cooks were not on the SOL.

 
457 temporary residents aside, the now massive temporary resident migrant flows include student visa holders (uncapped), working Holiday Makers (uncapped), and bridging visa holders. A factor which has had a severe impact on the job prospects of local workers is the ease with which temporary residents have been able to easily shift from one temporary resident visa type to another, enabling them to prolong their access to the Australian labour market irrespective of prevailing labour market conditions.