Iran’s threat to close the Straits of Hormuz has only just hit the news tonight in Australia, and it looks like Australian coverage is pretty much in line with the international news organisations, judging by my google search.

It says something about how denuded mainstream media have become of genuine overseas insight that you could have read about this potential threat on On Line Opinion 8 days ago in this article by Ali Omidi from the University of Isfahan-Iran.

While the hyperbole is that the Internet has brought us closer together, in most cases this doesn’t appear to have affected how we get our news, with a few exceptions. And those exceptions seem to be in broadening the range of sources the media can call on after things are current, not before.

So in the Iraq War there were some bloggers who made a name for themselves after the invasion, but this was by way of a supporting cast, not as the leading players.

The challenge to the mainstream media is not really a challenge to their financial model so much as it is a challenge to the value of what they purvey. A recent report in The Australian says that the media ranks last for trustworthiness according to unpublished results from The Australian Electoral Survey. However the graph that illustrates the story uses the term “confidence” rather than “trust”.

Confidence is broader than trust, and encompasses competence, which is the real reason the financial model is under threat.

The print media hasn’t been able to sell its product for what it costs to produce, so has become reliant on advertising to make up the difference. Which has led to a concentration on producing more content so as to have the pages to support the advertising demand.

Now that the advertising is migrating to the Internet and inventory is at a surplus rather than a premium meaning advertisers pay cents instead of dollars to reach audiences the media has to get back to producing something of value in itself.

Fix up the value of what media produce and not only will the financial model fix itself, but so will its approval levels.

Getting on top of stories like the Iranian threat on the Strait of Hormuz before they become urgent is part of that repair. In that respect the Internet can be an ally rather than an enemy, but only if media changes the way that it uses it.

And that’s a message to On Line Opinion as much as it is to any of our colleagues.

If you divided the number of kilometres on the clock of my Landcruiser by ten thousand and called them years it would be just a little bit older than me. So we share a bit of camaraderie that comes with a few more groans in the suspension than we used to have.

I’ve always thought of the car as a rugged individualist, which might be a bit of wish-fulfilment mixed with projection, and although we are sort of contemporaries and have a very close relationship honed by years, literally, on the road, I have never been sure of its gender until yesterday.

It takes one car to know another, and I was surprised, and a little gratified to return after a hectic shopping expedition where I bagged enough Christmas presents to keep me out of trouble to find “he” was being stalked by this cute little Volkswagen. Note the feminist duco that I’m sure our OLO director Dale Spender would approve of, although she might find “cute” a little off.

How do I know the Volkswagen is a girl? Well, as the close-up below shows, she has the most lavish set of false eyelashes since Tammy Fay Baker.

I’m told this is a growing fashion accessory for your car, second only to the furry pair of dice dangling from the mirror which is designed to give an accurate idea of the cant on your car as you take the corner at the bottom of your parent’s street when you’re racing late from your boyfriend’s and want to beat the sun home. If the dice graze your quarto glass you aren’t going to make it.

 

 

Well, she might be a little Bogan, but it’s the best offer whatever-his-name has ever had. The Mercs and BMWs just turn their noses up, and while he’s got quite a few toots from dual cab Hiluxs they’re just too much in your face. And when you find a good woman, you should just stick with her, especially when her eyes are as wide and luminous as these.

What makes for those blisteringly hot Australian days isn’t so much climate change as geography. Sunlight that falls on trees and grass tends to be absorbed and used by plants and doesn’t heat the air nearly as much as sunlight that falls on desert.

So when we get an extremely hot summer’s day in Brisbane it’s because the westerly or north westerly wind is blowing in from the hot centre. In Victoria it’s the northerly summer winds that bring bushfires and 40 plus degree days just when they are playing the Australian Open tennis.

But we’ve had a lot of rain lately which means that more of the desert is covered in plants, which should make them less hot, and there is soil moisture to evaporate, which should also have a cooling effect. There is also more cloud in the sky which means more solar energy is reflected before it even reaches the earth.

So much for theory, what happens in reality?

The graph below is from the BOM average rainfall and temperature anomaly data. I’ve averaged them over 5 years to cut out some of the noise, and I’ve also multiplied the rainfall anomaly by 100 so that it plots better against the rainfall data.

The theory appears to hold true with declines in temperature neatly matching increases in rainfall.

Other things that I noticed are that it has been much wetter since the 70s, than it was before, and that rainfall has increased in general at the same time that temperature has.

This graph suggests that rising temperatures may have been good for agriculture if there is a causal relationship between the temperature and the rainfall. It also suggests that we may be over-estimating the ability of our river systems to support irrigation if we judge them on the last 50 or so years of flow.

In any event, my forecast for temperature this year is that it will be significantly below where it was in the preceding years.

A couple of more phone calls and I need to make one correction and inject some more facts into the situation, as well as make some observations on the potential for damage to PNG by ill-informed half-baked reporting.

First the correction. The constitution does allow for a vote of no-confidence within 12 months of the election, provided that it is immediately followed by an election. It may well be that the current impasse is solved by just this approach. Somare does not have the numbers in parliament (the retrospective legislation mentioned in my previous post was passed yesterday 78 to 1 or 2) and an election is due in May next year. Given the nature of Papua, it takes 5 months to set up an election, so an immediate election would fall more or less on the due date.

The facts that need to be injected are that the PNG constitution is not like ours in that the Governor-General has no reserve powers and the parliament is paramount. That means that he is bound to follow the advice of parliament and has no basis for rejecting it. If parliament appoints O’Neill, then despite the High Court, he is bound to give effect to parliament’s will.

Now for the observations. Of all the foreign countries in the world New Guinea is the only one where the international media are likely to look to Australian journalists to give them a lead in how they cover it. PNG is the Pacific Rim country with the furthest to climb, and the last thing it needs is poor reporting that exaggerates the degree of sovereign risk inherent in investing in the country.

As the former colonial ruler of PNG Australia has history which means that we could be expected to understand the country better than most, and also that the people of PNG might have good reason to resent any undue intrusions, real or perceived, by us.

The current impasse is serious and it will become more serious if it’s not covered with accuracy and empathy by us.

 

 

Papua New Guinea is in disarray with two prime ministers and two police chiefs according to The Australian. The Governor General is confused and doesn’t know who to accept as PM.

But the Oz doesn’t have all the details.

The problem arises because former PM Michael Somare was removed by the parliament after he was away in hospital in Singpaore for 4 months. A new PM Peter O’Neill was installed.

Somare litigated the matter in the High Court which has now rule 3-2 in his favour and found that he is still Prime Minister because he was never properly removed.

Yesterday the PNG parliament voted overwhelmingly to retrospectively amend the legislation removing him so as to cure the defects that the High Court found. You may have issues with retrospective legislation, as I do, but it appears to be a valid exercise of power and the amendments were passed overwhelmingly.

On the basis of this, and his majority in the Parliament, O’Neill claims the right to be PM, while on the basis of the High Court ruling Somare makes the same claim.

It would seem that the course for the GG should be easy. Accept the court ruling, but send the two parties back to parliament to test their majorities. As things lie at the moment O’Neill should win and be sworn in.

But there is a complication.

The Papuan constitution forbids any vote of no confidence in the PM within 12 months of the next election, which falls in the middle of next year, so they can’t test their majority on the floor of parliament, which makes the retrospective legislation more understandable.

I’m told this anti-democratic provision was put in the constitution as a result of the advice of Australian advisors at the time of independence because at that stage Papua’s governments were notoriously unstable, so despite the fact they were being given independence, couldn’t really be trusted.

Ironically, the very provision inserted to ensure stability is in this case giving PNG its worst case of political instability ever.

Hopefully Anna Bligh will call an election mid-way through January and put everyone out of their misery by mid-February.

Does anyone seriously believe that she will get to carry out her “plan” to split Queensland Health into two separate bureaucracies – one that runs hospitals and the other that resources them?

It won’t happen because it is two weeks before Christmas now and while an election can be held as late as June (I think) next year, the only feasible time to hold it is February. The premier might as well be in caretaker mode for all the ability she has to actually do anything.

It’s probably just as well. The plan is daft. Sure, Queensland Health is appalling at running hospitals, but you don’t fix that problem by creating bureaucratic zygotes who will be staffed by exactly the same people who can’t run hospitals now.

What you do is adopt the plan advanced by Federal Opposition Leader Tony Abbott and set-up hospital boards to run  the individual hospitals, corporatise them and slim down the bureaucracy to deal with what small policy issues are left for government to solve.

But Bligh can’t do that because she is so scared of alienating any elector that she feels she needs to pledge that no-one will lose their job, and it doesn’t suit the industrial age top-down model that Labor seems to love.

Job preservation isn’t what she should be promising – heads should be rolling. I guess her promise doesn’t cover the bureaucrat who precipitated this latest eruption by embezzling $16M from health does,but I bet it covers his supervisor, the head of the department and the minister, all of whom should be contemplating more spare time over Christmas.

Then there is the army of bureaucrats who have blown out the administrator to front-line staff ratio so that it equals an HR obesity epidemic. You could probably sack half of them, and not only would no-one notice, but the system would work twice as well.

But that’s part of Labor’s problem. It doesn’t matter what goes wrong anywhere – no-one ever gets sacked or takes responsibility. They just employ more people.

My latest polling shows that health is the most important conventional issue in this election. Normally health favours Labor, but not now.

This ridiculous decision, which is surely driven by the need to do something rather than to do something that works, will only make it worse.

Increasingly, so will the pretence that the government will do something when everyone knows that not only have they had 22 years to fix the problems, but there is no chance they are going to do it now.

Bligh would have been better advised to continue with business as usual, and absorb this further damage, rather than exacerbate the damage by pretending she will do something about it.

Even the bureaucrats who are “tasked” with the job will go slow, knowing that by March it probably won’t matter what edicts Ms Bligh issues.

Brisbane’s Fortitude Valley is routinely adjectivally referenced as “Brisbane’s multicultural Valley”. It’s the down town area that hit the doldrums after the motor car and the regional shopping centre killed the main street department store and for a while robbed it of its meaning for life.

It’s home to China Town, most of Brisbane’s night clubs, sleazy strip joints, prostitutes and some very upmarket residential high rise. But it’s apparently not home to Christmas.

The Valley might be multi-cultural, but it’s not that multi-cultural that it can deal with a Christian European festival that most people acknowledge  by taking a week or two holiday.

It’s quite ironic really. As a child in the 60s I remember being taken to see the Christmas display in McWhirters department store, right in the centre of the Valley, which had a giant Santa playing an organ over the main entry, while their display windows had tableau direct from the Bible.

Now it’s only the holiday that is acknowledged.

This shot was taken in the food court of the Valley Plaza just outside the entry to Fortitude Valley train station.

Does anyone else have memories of Christmases past, or tales of Christmas not-so-present? Or maybe a shot of a Valley department store when Christmas was in its Brisbane hay days?

Peter Martin reveals that Labor is planning to tax any company that makes better returns than average and not tax those companies that make worse returns than average.

When I previously suggested that once the government had taxed mining “super profits” they might tax other companies’ “super profits” I thought I was making a debating point. This was a reductio ad absurdum. An example which proved how wrong the particular case was by taking it to its logical but extreme conclusion.

Little could I have known that this government, and its public service advisors, are so absurd that they would actually take the idea to its extreme and propose arranging the whole company tax structure on the same basis  as my satirical rhetoric.

Under the government proposal companies that earn a return on assets the same as, or worse than, the government bond rate will pay no tax. Those companies smart enough to earn more on their assets than they would by putting them in the bank will be taxed.

Way to go – penalise those people who know what they are doing by taking the money they might invest in doing more of the same and hand it to those people who are incapable of earning their own living. That’s how you make a country rich.

What are the consequences of this proposal?

I don’t have time to make a comprehensive list, but here are a few. Please feel free to add to them in the comments below.

It skewers the idea that the mining resource rental tax is about sharing an asset that we all own. If the tax is on “super profits” then all companies will pay the same amount, irrrespective of whether they are mining minerals or ideas.

Productivity growth will grind to a halt (and those who claim to know say it isn’t high enough at the moment). Nothing measures productivity better than return on assets. It has its faults, but it is the best method. Tax good return on assets higher than low return and you redistribute income from the most productive parts of the private sector to the government – the least productive part of the public sector.

Australia’s growth will grind to a halt. The incentive to put assets into growth industries and companies will be curtailed. Instead people will invest in manufacturing plants in Victoria providing low paid drudgery instead of jobs, and returns less than bank interest  because the tax system will reward them for it.

Capital outflows will increase. The only way Australians will be able to get the fruits of innovation will be by investing overseas in companies in countries where high rates of return are rewarded.

Flexible finance structures where risk is diversified will be unwound making returns from companies more volatile. One of those structures is leasing real estate. If you rent property you will be taxed at a higher rate than someone who owns the same property. For tax reasons companies will want to own their own premises because it will make no immediate cash flow difference, but it will lower the return on assets. It will also lock them into a long term ownership structure that mitigates against corporate efficiency.

I can think of a slew of other reasons, but open to you. It is a reminder of why we need an election as soon as possible. This government is full of do-nothing, know-nothing opportunists who have no idea what they want to do, or what their ideas might do to what we have.