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.

Current Tax Settings Lead to Empty Houses!

At the last census there were nearly 120,000 empty dwellings in the greater Sydney region. When combined with under-utilised dwellings, such as those let out as short-term accommodation, the total number reaches 230,000 in Sydney, and 238,000 in Melbourne. These empty dwellings could more than account for the present supply shortfall in housing!

The question is why are these homes are being left vacant when they could command the highest prices or rents, given they are concentrated in central parts of all our metropolitan areas? The answer is that dominant driver of negative gearing is where the capital gain is the main objective rather than the rental yield. On the urban fringe, where there is less expectation of capital gains, there are much lower rates of empty dwellings.

The current tax settings are driving a mismatch between the supply of housing and housing need. This is exacerbating inequalities experienced in our major cities, driving unaffordability in central, well connected and serviced parts of the city. This is not the fault of the planning system, as property developers would have us believe. The situation is likely to have worsened since the last census in 2011 as more housing is being delivered precisely in the locations where there appears to be a concentration of homes standing empty, where supply is being driven by a desire for capital gain not rental yield.

Labor’s policy, addressing this crucial issue of housing affordability will make speculative investment to obtain capital gains less lucrative by reducing the capital gains tax concession from 50% to 25% for all assets purchased after 1 July 2017. This will stem the speculative investment in property that has raised house prices and lowered more productive investment. Negative gearing and capital gains tax exemptions for investors have been a dead weight on the ability to create more housing affordability.

 
Despite the strong economic arguments behind this reform the Liberal Government has chosen to embark on a scare campaign embracing a Chicken Little approach. A far cry from Malcolm Turnbull saying in his 2005 tax paper, that the capital gains tax discount along with negative gearing was a “sheltering tax haven” that is “skewing national investment away from wealth-creating pursuits, towards housing”, and has caused a “property bubble”.

Report Indicates Pentridge Tower Should Be Scuttled

An independent research report released today by the Australian Population Research Institute (TAPRI), ‘Sydney and Melbourne Housing Affordability Crisis: No End in Sight’, has highlighted the flawed approach to housing development currently pursued in Wills, where the main preoccupation of urban planning in relation to the Pentridge Prison site and other activity centre locations is for high rise apartment development. The report finds that such high-rise apartments remain unaffordable to most people and they are unsuitable for younger persons establishing or raising families.

Urban planners have consistently underestimated the proportion of new households over the period to 2022 that will be family households. Not only are record high housing prices driving down levels of home ownership amongst younger persons, but years of ill-conceived housing policy assumptions have resulted in a supply of housing unsuited to raising families.

The report’s findings are particularly relevant to the federal electorate of Wills, in stressing that the “greatest need for additional dwellings is from new young households and recently-arrived migrant households”, not simply for ageing one and two person households as falsely assumed by professional planners to date. 

Official Victorian government population projections for the City of Moreland show that the municipality’s population is not expected to age dramatically. In light of this research, the 19 storey Pentridge tower and other high-rise apartment proposals for Moreland should be scuttled, and planners should turn their minds to retaining family friendly housing in Wills.

The report also vindicates Labor’s pledge to abolish negative gearing tax concessions on new housing. Based on an analysis of housing markets in Melbourne and Sydney, the researchers concluded that rampant house prices, together with continued high net overseas migration, over an extended period have disenfranchised a growing proportion of the younger generation from home ownership. The report’s authors specifically criticised Prime Minister Malcolm Turnbull’s opposition to Labor’s negative gearing reforms as “monumental insensitivity to the growing catastrophe flowing from record high housing prices for the next generation of home owners.”

20 Years in Federal Parliament

Today I clock up 20 years in this House. It is a great honour to serve here, and in an age of the 24/7 media cycle and a cultural tendency to chew politicians up and spit them out, a remarkable honour to serve for 20 years.

George Bernard Shaw said the reasonable man adapts himself to suit the world, while the unreasonable man insists on trying to change the world to suit him, therefore all progress depends on the unreasonable man. For much of my political career I have been in this sense unreasonable.

I couldn't have done this without support. I want to thank the voters of Wills who have stuck with me in good times and in bad. I want to thank my partner Kerry and my children Ben and Naomi, my father Allan and other family members.

I want to thank my office staff – Mimi Tamburrino, Tim Hamilton, Mark O'Brien, Julie Ryan, Cate Hall, Nosrat Hosseini, and many others who have served over the past two decades.

I want to thank the Labor Party members and volunteers in Wills – families like the Hosseini family, the Ouaida family, Angelo Koutouleas, Oscar and Alan Yildiz, Gino Iannazzo and Vic Guarino and so many others.

I want to thank the Trade Union Movement – Ged Kearney and Dave Oliver from the ACTU, Ben Davis and his team at the AWU, Tony Sheldon and his team at the TWU, Glenn Thompson and the Manufacturing Workers Union, Earl Setches at the Plumbers, Dave Noonan at the CFMEU, the Institute of Marine and Power Engineers and many more.

And I want to thank some business leaders too for their support and encouragement – Dick Smith, Graham Turner and Geoff Harris from Flight Centre, Robert Rio from Rio Industrial, Hugh Middendorp from Middendorp Electrical amongst others. To all of you thank you, for the chance to do this.