May 30, 2014 | Graham

Who’s trashing the economy?

It’s now official, since the budget, economic confidence has plummeted. But who is to blame – government or opposition?

For a couple of weeks there the news was unofficial – just straws in the wind. Turnover in the video store was down, but then it’s an industry in decline, so not a very good data point.

But a friend in fashion retail was also reporting the same trend, but then, the weather has been unseasonably warm, so no-one is buying winter fashions.

Then the motelier down south reported that business had been very slow for the last two weeks, so of course she had rooms available. Well, warm weather ought to help her, and its not an industry in decline, so a better data point.

Then Allianz came to my rescue (according to the ads helping out is all part of the service) with the results of a survey they commissioned from Newspoll.

The level of optimism about the future of the economy has slumped following the Federal Budget, falling to a score of 2 on the Allianz Future Optimism Index. This continues a consistent trend of post-Budget pessimism, even though the latest Budget is widely regarded as the ‘toughest’ since 1996.

On the face of it, it appears that Australians just don’t like Federal Budgets, regardless of the political colour of the government that delivers them or the level of fiscal stringency involved.

However, Allianz’s optimism survey reveals that it is not the case that all Australians don’t like Federal Budgets. In fact, post-Budget falls in economic optimism are largely driven by voters that do not support the Federal Government of the day.  This is because  the overall optimism result disguises significant differences in sentiment based purely on Federal voting intentions.

Commenting on the results, Allianz Australia Managing Director, Niran Peiris, said “Allianz commenced the optimism survey in late 2010 and the results have fluctuated and varied according to age, gender and State of residence in various ways. However, post-Budget falls in optimism do not appear to be driven by an across-the-board change in sentiment among all Australians. Now we have had a Federal Election since the survey commenced, we can see that Federal voting intention is often a key factor in economic optimism, particularly in response to a Federal Budget.”

Yesterday I saw a news report of Senator Penny Wong blaming Tony Abbott for the decline in confidence by “trash talking” the economy. Can’t find the piece today, but it’s been a recurrent phrase of hers for years, yet the research shows that the decline in sentiment is driven by Labor voters.

How is it that Labor voters are listening to Tony Abbott?

Or is it opposition leaders who drive sentiment down, not governments?

I think the truth lies somewhere between. If the government had told more of the truth – this is a mild budget, meant to gradually bring us back into surplus, without making too many changes – and the opposition fessed-up to the mess they have gotten us into, instead of pretending a porcine economy is OK – then sentiment would be much higher.

Sure, spending could be down a bit, as people anticipate pulling their belts in half a notch, but we’d know that businesses would have the confidence to invest knowing that things are back on track.

And it’s investment and innovation that drives economic growth in the end.

Posted by Graham at 7:06 am | Comments (9) |
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May 27, 2014 | Graham

Right algorithm, missing sizzle

I’m so impressed I had to blog this.

This advertisement:



appeared immediately over this post on our forum:


…Very true Yuyutsu, but also oversimplified. Take note that 30 percent of the Australian economy lurks in the dark area of the black market. 

…The proponents of this economy are not simply drug runners either; they are your every-day mums and dads that trade favors for cash in the area of trades for example, to avoid paying tax. They are your welfare recipient trading in illicit drugs to supplement meager income, and you name the rest for yourself.But… 

…Just like Greece; every day is sunshine…until! So have we arrived at the intersection called “untill” yet? 

…Looking at the despicable collection on a Canberra windy hill,and the totally corrupted political system that thrives on exclusion, we must be close!

And leads directly to a page about the “cash and hidden economy”.

Brilliant, except, given the tax department has placed the ad there because someone has mentioned the black economy, you would think that the ad would refer to the black economy. Maybe something in black and red with a hand holding a fistful of dollars with the caption “Paying in cash? Make sure the tax is paid. Severe penalties apply. Click here to find out more.” or something in that vein.

A logo doesn’t really cut it as a marketing device.

Full marks for trying, and there is obviously a compliance campaign on foot. Pity they didn’t spend the money on a decent advertising agency. Most people won’t click on such a bland “ad”, and even if they do, the landing page isn’t very persuasive either.

Posted by Graham at 2:17 pm | Comments (3) |
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May 27, 2014 | Graham

Hard left demands monopoly on cultural heights

Well, maybe it is going a little far to describe Crikey as the “hard left”, but with Marni Cordell, ex New Matilda, as their new editor, they have to be trending that way.

Certainly this headline from their email newsletter suggests they know where their audience’s heart is: “Tories dominate PM’s book awards”.

The PM’s book award is an award given on behalf of the Prime Minister who apparently has the right to a say in who wins the prizes. You would think in those circumstances that he or she might also have an interest in the judges.

These are the richest literary awards in Australia, with a $100,000 prize pool (tax-free) for each of six categories. Abbott will make the final decision on who wins the 2014 awards, although previous PMs have been mostly — but not always — hands-off. Judges have to read up to 150 books.

The problem appears to be that Gerard Henderson and Peter Coleman have been appointed to the Non-fiction and History panel. Yet each would appear to be well-qualified for these positions, particularly with Tony Abbott as Prime Minister, with a long history in the war of ideas.

There are five people on this particular panel, and 15 over all the panels. I have no idea how most of the judges vote, and in fact have never heard of most of them, but I do know at least one identifies as a Labor voter, and that is Professor Ross Fitzgerald. Others, like Australia’s leading poet Les Murray, are unimpeachable. (See the full list here).

Crikey also picks on Louise Adler, CEO of Melbourne University Publishing. As far as I know she identifies with the left, and MUP is anything but a right-wing publisher. Her crime is to have published Abbott’s book Battle Lines, and to have made some complimentary remarks about him:

Publishing identity Louise Adler heads up the judging of the PMLA fiction and poetry sections. Adler was the publisher for Tony Abbott’s book Battlelines and spoke glowingly of him in The Age today.

A quick look at the Politics and Current Affairs section of the MUP website, shows that if publishing a politician makes you partial to them, then she would appear to be many more times left than right, with recent books from Greg Combet, Malcolm Fraser, Bruce Hawker, Maxine McKew, and Kim Carr (and so there can be no arguments I’ve only chose authors who’ve nailed their colours to the mast by being elected to parliament for one of our political parties).

Crikey quotes extensively from former judge Colin Steele:

Former PMLA judge Colin Steele says he hopes the awards will not become ideological under the 2014 panel. “It does reflect in some ways possibly a political bent,” he told Crikey. “There are a couple of people who have clearly expressed right-wing views.”

Well, of course we wouldn’t want any judges with “clearly expressed views” let alone “right-wing” ones.

One of the things that has annoyed me over the years is the plethora of government sponsored events that when Labor is power sponsor all sorts of fellow travellers, from all over the world, to come to events and writers festivals, or receive awards, for work which supports a strongly left view of the world.

Yet, when the government changes, Liberal governments do nothing to redress the bias.

Is it any wonder that the youth vote and the intellectual vote seem to skew even more today than they have before?

If one side of the debate monopolises it, then the truth will never have a chance to out.

Whatever I might say about George Brandis, the Minister for the Arts, who chose the judging panel, he does understand that there is a cultural tyranny, and that it needs to be challenged and up-ended.

With comments like the ones above Colin Steele definitely deserved to go as a judge – who thinks he’d give anyone who he identified as “right-wing” a fair go?

Posted by Graham at 7:35 am | Comments (2) |
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May 22, 2014 | Graham

Convenience not cost the key to lower smoking rates

It was an ABC report that alerted me to the fact that smoking rates in New York are now down around 15%, declining from 24% a few years ago.

This is far lower than Australia’s which is around 18%.

The ABC report suggested a number of reasons for the decline, and they are presumably the same factors driving decline in Australia. They are price, and making it harder to smoke in public.

But which is more important?

When reports of New York deal with price, they cite the high price of a packet of 20 cigarettes at $12.

But the price of the same packet in Australia would be $20. The currency effects mean this is effectively a 50% higher price in Australia.

So, if price were the key, our smoking rates ought to be lower, but in fact they are higher.

The insignificance of price signals in the mix is also suggested when you realise that those who can afford to smoke the most are least likely to smoke at all.

You can see that pretty clearly in this graph of New South Wales smokers comparing the average with various disadvantaged groups.


This points to convenience factors being the main driver, as well as the Australian government deriving a super profit from smokers in this country, well over and above any health benefits the government derives.

Good thing Joe Hockey didn’t hit smokers up in this budget. They’re one group who are more than paying their own way.

Posted by Graham at 7:58 am | Comments (3) |
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May 20, 2014 | Graham

Pants on fire

Like the  last parliament this one looks as though it will be diverted to arguments about who lied, and who didn’t.

But as the old joke goes:

“How do you know when a politician is lying?” “Their lips are moving.”

Unduly cynical, but the fact that it is an old joke shows politicians lying is not something just invented in the last two elections.

At the moment the spotlight is focussed on the Liberal Party, with Joe Hockey admitting on Q & A last night to a number of lies. Bad luck for Joe. If he hadn’t been part of the winning team at the last election it would most probably have been Chris Bowen having to admit to the same thing.

While I wouldn’t say that most politicians are honest, I would say that when it comes to elections there is an arms race on dishonesty, and the price of being too honest is that you can lose to the one who lies more.

The best case in point was Paul Keating in 1993 who beat one of the most honest men ever to run a political party in Australia, John Hewson.

He campaigned against Hewson’s Fightback package, the best, most comprehensive and most transparent election package ever taken to an election on the basis of a number of dishonest assertions.

He’s most famous for his LAW tax cuts which were actually legislated before the election and then withdrawn after it. I can’t think of a more blatant lie.

Then there was his whole campaign theme – Jobs not GST. Not only has history shown this to be an empty claim, but Keating, as a champion of indirect taxes must have known it was empty.

By buying Keating at that election electors taught politicians of all stripes a lesson – there are no votes in honesty. It is now a bit rich for those same electors to complain that politicians have taken that lesson to heart.

The problem is compounded by the fact that we are not very good at picking liars anyway, and the young are worse than the more mature.

Research at the University of the Sunshine Coast found that people over 35 were better than those younger at spotting liars, but even the best had a 20% fail rate.

According to the ABC report:

The research, which was initially aimed at finding out whether people with autism are worse at spotting deception, was very popular and attracted 800 participants, 10% of whom were on the autism spectrum.

And while it found that those with autism aren’t as good at reading facial expressions, they are no worse than the average person at detecting a lie.

Neither were women any better than men.

The participants were set two tasks, one in which someone was lying about not liking a meal and another in which a woman was trying to hide the fact she was having an affair.

While most people did well spotting the first lie, the more complex emotional terrain of the second resulted in 50% of those under 35 flunking the test.

Factors which made it difficult to pick a liar were the reputation and prestige of the liar themselves. Even people in occupations where discerning truth is presumably a prerequisite, such as policemen and judges, were no better than average.

So not only do we reward liars in politics, but most of us aren’t very good at working out which are the liars in the first place.

While on the subject one might also ponder why it is that the older a voter is, the more likely they are to vote Liberal at the moment.


Posted by Graham at 7:14 am | Comments (4) |
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May 08, 2014 | Graham

Means test Disability Care

Means testing Disability Care won’t save any money this budget, but it will in future budgets.

And because of the improvident promises that Labor and Liberal made in the election campaign, future budgets are going to be just as difficult to manage as this one, if not more so.

Effectively the public at the last election agreed to a transfer of some wealth from most of us to those who are at school or disabled. I’m not sure that the public understood that is what Gonski and Disability Care stood for, but that’s politics.

While the “I” in the original NDIS stood for “insurance” (National Disability Insurance Scheme), it never was an insurance scheme, just another welfare program.

Now that it has been rebadged it might be thought to be like Medicare, but Medicare is actually tied to a levy in the tax system, and there will be no disability levy.

In which case I can see no reason to pretend that Disability Care is anything other than a welfare measure. And one thing we’ve gotten very good at in Australia is tightly targeted welfare, via means tests.

If the old age pension, which is essentially meant to deal with the disability called “old age” can be means-tested, why not Disability Care. Disability is not something that sets someone apart from the human race.

Like any part of the human condition it can strike anyone at any time.

If Jamie Packer had fallen on that brick fence in Bondi the other day and broken his back rather than a tooth, he could have been disabled. But I see no reason for the state to give him a disability benefit, any more than they will fix his teeth. He ought to be entirely self insured.

For it to work any other way means that money is being transferred from those of us with less who have other costs to bear to meet a cost he, and others much poorer than him, but still far richer than average, can also bear themselves.

Come to think of it, that is an approach that could be expanded to Medicare. The Medicare Levy only covers somewhere around one-quarter of the cost of Medicare.

Perhaps those who earn more than a certain amount of money could lose the ability to claim more on Medicare than they have contributed through their levy.

The alternative is to take the means test of everything else. And that hardly seems fair.

Posted by Graham at 2:36 pm | Comments (9) |
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May 07, 2014 | Graham

Equality and billionaires bumping bellies on Bondi

Thomas Piketty and Capital in the 21st Century is just le dernier in what is likely to be a long list of writers telling us we have a problem with inequality in our society. And maybe they do in France but I’m pretty sure that isn’t the case in Australia.

Sure, there is a disparity between what the poorest and richest have, but equality shouldn’t be measured in terms of wealth.

Equality should be measured in terms of whether it can be bridged by individuals in their lifetime, and whether it matters socially.

On both those counts, in Australia it is abundantly possible to make not just a very good living, but a fortune in your own lifetime, without regard to your background, and even people of quite modest means can mix easily with the “one percent” if they choose to, and, at least in my experience, be accepted for who they are.

Nothing brings this home to me more than the image of a big-gutted billionaire and his powerful media mate slugging it out in a public street, not far from a very popular beach which one of them calls home.

Jamie and David may be rich and powerful, but they behave just like any other larrikins. And they live, fight and love in much the same suburbs.

Societies thrive on specialisation, and one of the specialities you need in a society is people who make money. It makes sense that when they do make money you let them keep most of it so they can keep make even more. It’s a principle of investment that you funnel your investment to the one with the highest return.

Where the problems set in is if these entrepreneurial specialists divorce themselves from your society and behave like they’re not a part of it any more.

There is little evidence that this is happening in Australia today. Unfortunately, apart from the anecdotal, it is difficult to measure and prove this.

Posted by Graham at 7:37 am | Comments (3) |
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May 05, 2014 | Graham

Diesel rebate is tax equity not a concession

The diesel rebate is not a concession because excise on diesel is an example of an hypothecated tax.

I pay full excise on the diesel in my Landcruiser because it is used on the road (almost exclusively) and fuel excise is supposed to be used to maintain the roads network.

A hypothecated tax is one where the tax income is earmarked for a particular purpose or purposes.

If the diesel were going into my tractor or my D9 (assuming that I owned either) I would receive the rebate to reflect the fact that neither uses the road system.

As the excise is earmarked for a particular thing it would be unjust to charge me for that if I don’t use it.

You can read the history of fuel rebates to 2001 here up. The diesel rebate has been in existence since 1982.

Claims that the rebate is a concession are just propaganda from mainly green groups who don’t like farming or mining.

The rebate is about equity, not a tax dodge.

It’s about time that journalists, including Chris Uhlman this morning on AM, stopped mindlessly repeating the lie.

I’m particularly annoyed because Chris is one of the best and fairest journalists, and should know better. (Probably does: producers write the scripts that he reads).

Posted by Graham at 8:14 am | Comments (2) |
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May 02, 2014 | Graham

Most of us already pay a Medicare co-payment

There’s hysteria over suggestions that the government might introduce a Medicare co-payment, and while the introduction is a worthy idea, for the life of me I don’t understand why the government might want to introduce it as a new policy because it is effectively the status quo for most Australians.

Medicare works on the basis of the government setting a prescribed fee and paying the doctor 85% of that fee. So Medicare envisages a 15% co-payment in the first place.

The doctor is not obliged to charge the prescribed fee. They can charge more, or they can charge less. They can bulk-bill, which consists of not taking any money from the patient and taking the government’s 85% discount of their fee from the government in full and final settlement.

That means that most doctors charge a fee that is higher than the Medicare payment. Generally much higher than the $6 the government is rumoured to be thinking about, and even higher than the $15 that the Commission of Audit has suggested.

There are some bulk billing clinics, but they are the minority, although regular doctors generally bulk bill for children, pensioners, and friends. Unless they are just starting out when the rules of economics suggest they should prudently charge less than their elders.

The scheduled fee hasn’t kept pace with growth in wages, meaning fewer and fewer doctors can afford to charge it and keep up their standard of living.

The longer that goes on, the more substantial the “co-payments” that will be levied by doctors.

Both sides of government have indulged in this subterfuge, so why would Abbott break cover on the issue for a very marginal financial gain? It’s almost as though someone doesn’t understand how the system works now.


Posted by Graham at 9:23 pm | Comments (2) |
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