August 27, 2013 | Graham

What is the longest promised rail system in Australia?

Kevin Rudd announced yesterday that he would build a very fast train between Melbourne and Brisbane by 2035. As the idea first surfaced in 1984, it would be a promise 61 years in the honouring. He must feel very safe from leadership challenges to make such a longterm commitment.

Which made me wonder how long it was between first promise and delivery for other rail lines in Australia.

My local favourite is the Redcliffe to Brisbane rail line, now being built, but first promised in 1895 (so that’s 118 years).

A colleague pointed out that the Darwin to Adelaide Railway took from 1858 until 2003, and that’s 144 years.

Any additions to this list?

John Howard got good leverage for his uneconomic Darwin to Adelaide Railway. He contributed $190m to the entire undertaking, making its subsequent bankruptcy surely more bearable. Kevin Rudd is spending $52m just on a study (although spending that amount of money on the NBN could have saved us all a lot more).

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August 22, 2013 | Graham

Winning the war, not the battle

Lily Fontana is currently getting a crash course in public relations and social media. She is the freelance make-up artist whose status update on Facebook has provided the most succinct commentary on last night’s Bronco Leagues Club People’s Forum debate between K Rudd and T Abbott.

Here it is in its brief 78 words:

Just finished doing Kevin Rudd and Tony Abbott’s makeup for the People’s Forum at the Broncos Leagues Club.
One of them was absolutely lovely, engaged in genuine conversation with me, acknowledge that I had a job to do and was very appreciative. The other did the exact opposite! Oh boy, I have ever had anyone treat me so badly whilst trying to do my job. Political opinions aside…from one human being to another…Mr Abbott, you win hands down.

And here is the screen shot:



I don’t think Ms Fontana will be getting too many more gigs at the Leagues Club, but with formals coming up there should be a slew of Liberal voting matrons keen to get her to do their daughters’ make up.

Not that I’m suggesting Ms Fontana did this to boost her business, it’s just one of the serendipitous side-benefits that sometimes accrue from social media. This ought to be going viral.

There may, of course, be more to this. Lily Fontana, apart from having done Mr Rudd’s makeup, appears to also live in his electorate (Facebook thinks she’s near Cannon Hill, and I think she lives in Camp Hill). I’m sure there are Labor apparatchiks at this very moment trying to find a receipt for the Young Liberal function she went to age 17 (#just saying ;-)).

So who won last night’s debate?

I’m told that it was Kevin Rudd, but as I didn’t see it, I don’t really know. What I do know is that the two bits of information that will stick longest in my mind about it are Lily’s comment, and Tony’s quip “Does this guy ever shut up”.

One was an innocent remark, the other deliberately designed to poke the twitter tiger and starve the other guy of oxygen.

They both underline that this election isn’t about who can win debates, but about character. As Abbott said in his opening remarks, probably channelling our What the people want research, or at least borrowing the title of our latest report: “It’s not the budget deficit…it’s the trust deficit”.

If you want someone to get the budget back into surplus, is it likely to be the guy who’s got the short sharp jab, or the one who can’t even ration his own verbosity? And who’s likely to have your interests at heart? The smartest guy in the room, who’s full of himself (and it), or the one who asks you how you are, and means it?


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August 18, 2013 | Graham

Nothing you could say would change my mind

Unless things pick up this will be a disastrous election for TV stations.

In elections not only do they have to spend a lot more covering politics than normal, but this is generally at least partly offset by income from political advertising.

I’ve been watching TV for the ad Tsunami, but it is either still far away at sea having minimal impact on sea level, or it has been over-anticipated.

Perhaps it is the second.

Sure, there have been some ads, but not many.

My perception is that the ALP has been more active with advertising, even resurrecting a version of the 80s “Whinging Wendy” – a 30-something mother of indeterminate numbers who pointedly tells the camera in a Strine-streaked voice that she doesn’t trust Mr Abbott.

But I haven’t seen Wendy for a while.

At the same time I’m subject to an avalanche of results in local seats which say that the national polls just have to be wrong and Labor is doing somewhere as badly as it was with Julia.

Could it be that the public mood has set in so strongly that not only is there nothing either side could say to change their mind, but just the act of trying makes them more inclined to stick with their current intention?

If your ads are backfiring, the worst thing you can do is run with them.

And for what it is worth, here are some links to some devastating local polls for the government:


Posted by Graham at 12:22 pm | Comments (1) |
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August 15, 2013 | Graham

Future of the NT is Switzerland

It appears that Kevin Rudd’s industry of the future might very well be shelf-company manufacture in the Northern Territory.

Adopting a suggestion from Gina Reinhardt, Rudd has promised to make the NT a special economic zone where companies will pay a third less company tax.

Following in the failed decentralisation foot-steps of the Whitlam Government and others (Albury Wodonga anyone?) Rudd is trying to coerce Australian business into going north where there is no business.

Until northern Australia decides to produce something for which there is an international market, no “push” solutions are going to work. People, and companies, go where there is economic advantage. And when there is economic advantage, they don’t need to be coerced.

Having differential tax rates within the one country will only advantage one industry – the tax avoidance industry – with advisors and consultants springing-up to show companies how they can get this advantage.

And even then it will mostly be a benefit for private companies as franked dividends mean public companies will be largely unaffected.

So the NT will be most attractive to private and overseas companies who are looking for tax minimisation, making it a bit like Switzerland, but without the chocolate and yodelling.

The only saving grace about this proposal is that Tony Abbott was stumbling towards a similar one, and Kevin has probably pre-empted and terminated it.

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August 12, 2013 | Graham

Why Abbott won the debate

Immediately after last night’s debate I scored it a draw. Rudd was more fluent and less reliable, Abbott more wooden, but more “fair dinkum”.

Others scored it a win to Abbott, including even the SMH online poll.

But it could have been a narrow victory to Rudd, and still be a loss.

This was the debate that Rudd claimed Abbott was running away from.

Rudd might have cast himself as the wimp, but there is no doubt he wanted the debate because he sees himself as anything but and thought he could best Abbott by a significant margin.

If this is Rudd’s strong suit he might as well throw all his cards away now.

I thought Abbott’s body language was better. His stance was more open, and the chiselled jaw made him look more determined. However, I’ve seen tweets of photos of his handshake with Rudd after the debate that make him look aggressive, a la Mark Latham in 2004, with the tagline “Rudd is smug but Abbott’s all thug”.

The shot’s not what it appears. Abbott seems to have a bad back and walks slightly tilted forward from the pelvis (those of us who also have bad backs know the stance). He’s probably feeling it even more than usual after his 14 km run yesterday morning.

What this image doesn’t catch is that it was Abbott that went across to shake hands with Rudd after the debate, and Abbott who actually spoke to his opponent during the debate.

All of this underlines that, while wooden, Abbott was the more comfortable with the forum which was supposed to be all Rudd’s own.

No doubt Abbott’s woodenness was partly due to a wish not to appear too aggressive.

Rudd’s Brer Rabbit (“I’m the kid in the library with glasses”) pitch to Abbott (“you’re the Oxford Boxing blue”) was transparently “please don’t hit me”, and it would have been potentially disastrous for Abbott if he had.

So that’s another loss for Rudd, twitter images notwithstanding.

There is a lot of doubt in the mind of the public about Abbott, and he’ll probably look like he’s on Mogadon until the day after the election.

Discipline is what Australians want and need at the moment, and that’s what Abbott showed and projected in the debate. Discipline is what has been sorely lacking for the last 6 years.

He was lacking in vision, but Australia’s had 6 years of visions that have turned-out to be delusions, and again it was a handy contrast.

So it wasn’t anything Abbott said that won him the night, but what the context underlined about the past 6 years of Labor governments.

Rudd appears to be a confidence player. In 2007 he declared he would “play with John Howard’s mind”.

It appears to be his own mind that he’s playing with now, and I’d expect his performance to deteriorate further over the next 4 weeks.

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August 07, 2013 | Graham

Get “new” on interest rates

If money is the life-blood of the economy interest rates are its blood pressure. And if the analogy holds, which it does this far, rates can both be too high and too low.

The risks are also similar. Too high and you risk the economic equivalent of stroke. Just right is somewhere between 4 and 6 per cent, just as with blood pressure there is a normal range for rates and this is what it has tended to be over history.

When rates drop below 4 per cent something is wrong and there is a good risk that the patient may be about to faint.

The public knows this, so the posturing of both sides on the issue is bizarre.

John Howard made a comment which, in reasonably foreseeable and campaigning terms, might have been justifiable at the time, that “Interest rates will always be lower under a Liberal government”. The Liberals appear to have felt trapped into supporting this statement even when it had become unjustifiable.

On the other hand Labor doesn’t want to admit that things aren’t travelling that well, so they trumpet lower interest rates as an achievement.

If there really was a new political paradigm, politicians would be straight with the electorate.

Nevertheless, new paradigm or not, I think they would be rewarded if they were honest. And here is what they should say.

Interest rates are only this low because the international economy is sick, and we’re worried that ours might be as well.

They are being lowered because if they stay above the level of the rest of the world overseas speculators will push our dollar to damaging heights by borrowing cheaply in their own currencies to invest not in our productive industries but our financial markets.

They are being lowered because we are worried that the decrease in capital expenditure in the mining industry will leave Australia without an engine of growth.

But do not expect them to stay at these levels forever.

By all means use them to go out and buy houses and expand your businesses, but budget on significantly higher interest rates in the future when you do so.

You see, interest rates represent a bargain between lenders and borrowers. While low interest rates might be good for house buyers and businesses, they put pressure on the retirement incomes of older Australians. 

Whatever has happened overseas, that bargain must eventually move back to favour those who have been savers. Make sure that when they do you aren’t stranded.

And that is advice we are going to take ourselves. This election is not about promising yet more renovations of the Australian political economy to increase the number of shiny objects in it. This election is about facing up to the realities of our economy and the world economy and getting Australia back into tip-top shape.

While ordinary Australians have spent the last 5 years since the GFC getting their own finances into shape, Australian governments have been doing the opposite.

Now is the time to acknowledge that the Australian people were right all along and to realign government with you.

When we’ve done that, interest rates will return to normal – hopefully not too high and not too low, but just right.

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August 02, 2013 | Graham

K stands for Kleptocrat

K Rudd’s tax raid on smokers is an interesting exercise in smash and grab economics. It affects traditional Labor voters more than anyone else, but is likely to be meekly accepted, or wildly acclaimed, by health and consumer groups across the country.

If he beats up on his own like this you have to wonder who is safe.

There is no justification for a price hike – apart from the fact that the government is desperately short of cash and won’t take the hard decisions to fix that.

Rudd tries to disguise that by claiming it is a health measure, but there is scant evidence that raising cigarette prices will have much of an effect on smoking.

Australia already has the most expensive cigarettes in the world. In US dollars a pack of Marlboro will set you back $17.70. Next most expensive is Norway $15.80, NZ $14.50, Ireland $13.9, and NY $12.50. Then you’re down to $10 with the average world price being a long way south of that.

We also have the fourth lowest smoking rate in the world.

Ah ha, you might say, so that proves increasing the price works. Well, not exactly.

Australia already had a low smoking rate before Kevin Rudd last hiked prices – by 20%. So excise increases may have followed habits, not the other way around.

And there seems to be little mathematical correlation between price and rates of smoking.

The countries that are in first, second and third spots for lowest rates of smoking all have cheaper cigarettes. Sweden has the lowest smoking rate and you can buy a pack there for $7.10. Iceland is next and a pack is $8.30, then the USA, where apart from New York a packet is less than $10. Canada, number 5 is $9.90. New Zealand and Norway then come next, but they are followed by Mexico, where the price is $3.20. Ireland, once the poster child for high prices, is 25th with a price per pack of $13.90 but a consumption rate about 50% higher than ours.

On these numbers it seems to be very difficult to get smoking rates below 20%, and while price might be a factor, other factors dominate.

The government is also running the line that the extra excise is needed to meet the health burden of looking after smokers, and the government quotes a figure for this of some $30 billion.

Nick Cater and Andrew Bolt both have some excellent analysis of this claim which appears to be an exaggeration of around 1,000%. The Federal Treasury estimates smokers cost the health system $318 million, and with this hike revenue to the government will be $7 billion.

The tax take is not surprising. Currently excise amounts to about a third of the cost of a cigarette, and a 25% increase should take that to around 42%.

Which means that the Commonwealth will be the biggest profiteer from this trade netting far more from the sale of a cigarette than the manufacturer, even counting the resulting health expenditure as their “cost of goods”.

We’re back to Kleptocratic government where the only justification needed for seizing money not its own is to spot a vulnerable industry with a pile of money where the government can dream up a quasi-moral justification for making an exception to the rules that apply to every other industry.

Today the tobacco industry is easy prey. A few years ago it was the mining industry and the “big polluters”, and apparently, as of the budget statement later today it will be the banking industry.

I wonder who’s next.







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