Red tape ready for Malcolm Turnbull to cut

The ridiculous story of Tori Gentle and Bea Cobon and their cafe reveals how red tape threatens Australia's prosperity.  Their cafe is a small business, but what's happening to them is the same thing happening to big business.

Tori and Bea are the owners of Crate Speciality Coffee cafe in Heidelberg Heights, Melbourne.  In response to customer demand they recently applied to their local council, Banyule Council, to increase the cafe's seating from 15 to 30 people and extend its opening hours to 9pm on Thursdays, Fridays and Saturdays.  If their application had been successful, Tori and Bea would have had to hire more staff.  But it wasn't successful.  The council rejected Tori and Bea's application as a result of a single anonymous objection from a member of the public.  That's right.  Because one person objected, the application was refused.  According to the council, "the proposal needed to balance economic opportunities and amenity impacts".  And apparently, according in Heidelberg Heights, one single anonymous objection can tip the scales against economic opportunity.

In the light of red tape like this it should be no surprise that according to the World Economic Forum, Australia now places 80th out of 140 countries in a ranking of the burden of government regulation on companies.  The country rated as the best place for doing business was, of course, Singapore.

What Banyule Council forgets is that community amenity is a product of economic activity.  If it wasn't for the rates businesses pay Banyule Council wouldn't have the money to fund its Arts Plan as outlined in a glossy 76-page full colour brochure.  As part of the plan the council consulted with five-year-olds about the cultural activities they wanted in their neighbourhood.  Among the things the children said they'd like to have were a chocolate mountain, "a big beautiful castle with steps that go up", a circus and dinosaurs.

We tend to think of red tape as only unnecessary or unproductive rules and regulations imposed by government.  And there's certainly lots of this kind of red tape in Australia.  I have calculated red tape costs the country $176 billion a year in foregone economic output.  Some industries are hit harder than others.  The consulting firm Deloitte estimated that nearly one in 10 employees in the mining sector works in compliance.  The Roy Hill iron ore project in Western Australia required more than 4000 government permits, approvals and licences in its pre-construction phase alone.

Abolish bodies that create red tape

One of the ways to cut such red tape is simply to abolish the bodies that impose and implement red tape.  The Rudd/Gillard/Rudd government established 497 new authorities and organisations.  In the three years since it was elected in 2013, the Coalition has abolished and amalgamated just 53 of those bodies.

Another kind of red tape is the requirement for seemingly endless "stakeholder engagement".  Certainly there's a role for community consultation, and there's nothing wrong with Banyule Council asking residents for their views about a cafe operating in a residential area, but the opinion of one person shouldn't necessarily decide the cafe's opening hours.  In a democracy the voices for and against economic development can be heard, but left-wing activist environmental groups should not be able to use the legal system to delay projects for years.  And those groups shouldn't be funded by state government to run litigation against projects.  Adani has spent $1 billion and six years on community consultation and in court in an effort to build its coal mine in central Queensland.  The Environmental Impact Statement for the project was 22,000 pages long.  The project would create up to 10,000 jobs.

In an interview with this newspaper a few days ago the Prime Minister, Malcolm Turnbull, said "top of mind for me are jobs and growth and the critical objective for us is to deliver the economic reform measures, whether it is in the form of savings or whether it is in the form of getting rid of red tape and excessive regulation ..."

If the Prime Minister is serious about cutting red tape, he should start by chatting to Tori and Bea and then he could visit the municipal offices of Banyule Council.

Federal spending a dangerous drug of dependence

While the deal struck last week between the government and opposition to get $6.3 billion of savings over four years through the Parliament is welcome, it is still just treating the symptoms rather than tackling the disease.

In fact it is the expectation that Canberra must be involved in tackling every problem and managing every program, with the assumption that this commitment is backed by spending, funded by taxes and powered by regulation, which is slowly poisoning the patient.

Government spending has become a dangerous drug of dependence.

According to the budget papers, Australian government spending more than doubled from $209 billion in 2003-04 to $425 billion in 2015-16 and is forecast to reach $502 billion by 2019-20.

Gross debt, which was worth about $55 billion in 2007-08 rose to $427 billion in 2015-16 and will pass $500 billion in the next 12 months.

It is the inability to control government spending that recently led the three major credit rating agencies to issue warnings to Australia.

It is the need to fund government spending that drove the government's superannuation tax changes, turning the objectives of the retirement incomes system on its head and convulsing its voter base for a paltry $2.9 billion net over the forward estimates.

It is the absence of any government spending boundaries that has drawn the federal government into so many areas of private sector or state government responsibility including health, education, childcare, energy, transport, planning, the environment, and local government to name but eight.

This trajectory is clearly unsustainable yet still doesn't include the full impact of the NDIS from 2019-2020, the cost of implementing election promises and deals with minor parties, or — heaven forbid — another global financial crisis or dip in commodity prices.

To begin the healing process you must first isolate the patient from the cause.

As a first step, the government should use the deteriorating budget position, fractious political climate and ratings agency warnings to set a firm target to cut its own spending to the pre-GFC benchmark of 23.1 per cent of GDP (currently 25.8 per cent) as soon as possible, but by no later than the end of this parliamentary term.

All spending commitments over the next three years would need to be viewed through this prism, with all policy ideas on the table.  Achieving this target would alone put the budget back in surplus and enable the government to start paying off debt.

But to get there, a number of big changes need to be made to our approach to government.

The federal health and education departments should be abolished, and these powers transferred back to the states.  A small secretariat inside the Prime Minister's Department could administer residual responsibilities, with the states wholly responsible and accountable for policy and service delivery.

Australia's clean air, water and impressive state and national parks are due to state and not federal government management.  All environmental, planning and other land management functions should be returned to the states with the federal government absolving itself of responsibility for funding cities and local governments.

Noting that the federal government collects about 80 per cent of taxation revenue, the partial repatriation of income taxing powers or a fixed proportion of existing income tax revenue would help the states to fund these returned responsibilities.

The government should also abolish the Renewable Energy Target, and supporting bureaucracies.  The role of government should be to promote cheap sources of energy, and support genuine competition between technologies, rather than cripple one of Australia's few remaining international advantages.

If the government must get itself involved in childcare, a more affordable policy that respects parent choice would be to just offer vouchers so that parents can choose the arrangements that best suit them, rather than featherbedding the interests of private-sector operators.

In the second decade of the 21st century, the rationale for state-run media organisations, a parcel service and national communications infrastructure or vast bureaucracies that regulate what people say to each other, whose cars they can get into or what they can charge for their labour is also worthy of consideration.

The resurgence of protectionist forces both domestically and overseas, and parlous financial state of many governments and central banks, mean that unless we address our spending and debt addiction now we risk international events taking these decisions out of our hands.

Making it crystal clear at the beginning of the new parliamentary term that there is a limit to what individuals and businesses can expect from government would be a major step towards healing the body politic.

How to defuse the authoritarian populist timebomb

It is no foregone conclusion that simply giving government more power and money will fix income inequality.

Adam Smith once wryly said "there is a great deal of ruin in a nation", and many would argue this statement is aptly represented in the re-emergence of an anti-immigration, anti-trade populism mainly on the right, but also from the far left, in many countries.

The Swedish think tank Timbro recently released a study showing authoritarian populism well and truly on the rise in European politics, but this trend is also evident in the US (Donald Trump) and Australia (Pauline Hanson).

There are many economic, political and social factors that could be used to explain the increasing voting shares captured by these groups, but for some commentators the answer seems pretty clear-cut already.

The issue, apparently, is that growing inequality of incomes and wealth between the rich and the poor has been driven, almost wholly and solely, by a dreaded neo-liberal "Washington Consensus" seeking to fiscally starve the state and to lift trade barriers.

Inequality-inducing neo-liberalism, it is alleged, foments political resentment among the less well-off, leaving such disaffected people to be lured by politicians somehow offering a better way through rebuilding walls and retooling "picking winners" industry policy.

The Labor-aligned think tank Chifley Research Centre released a report promulgating this kind of narrative, suggesting the best way to beat Hansonism at home is to upend inequality.

Much of the current discussion about economic inequality rests on movements in the measure of income concentration, known as the Gini coefficient, within any given society, with higher values of Gini implying that income is being earned by relatively fewer people.

There have been some recent empirical works, published by the likes of the OECD and the IMF, which claim that there is a negative correlation between inequality, as measured by the Gini, and economic growth.

The studies received much fanfare as of late, and have been approvingly cited by Chifley including in background consultancy studies it has commissioned.

However the studies do not present a definitive case about the relationship between inequality and growth, let alone the kinds of policy prescriptions needed to suppress income dispersion.

Indeed, the methodological underpinnings and policy conclusions have been contested on several grounds — for example, Eric Crampton of the New Zealand Initiative pointed out a few problems with Federico Cingano's OECD paper late last year.

As for the Jonathan Ostry IMF study, which no doubt influenced Chifley's positions concerning the economic implications of income inequality, it shows that a degree of government redistribution above a certain threshold is detrimental to growth.

Australia's social welfare state is lauded by many as reasonably well-targeted, but Ostry and his IMF colleagues estimated us to be close to the critical threshold whereby any further redistribution would be associated with falling growth rates.

Despite its popularity by inequality economists there is a more fundamental question as to whether the Gini coefficient itself represents the most useful measurement of inequality in the first place.

Some economists have been critical of the predominating usage of Gini during the contemporary inequality debate given the numerous limitations of the measure, say, in relation to the treatment of non-cash benefits and how demographic changes affect the coefficient results.

The Gini coefficient provides low informational content in that it is difficult to infer to what extent the measured inequality is wrought by beneficial changes, such as improved productivity or market-tested entrepreneurship, or by malign changes such as economic cronyism and corruption.

And the Gini cannot appropriately account for the degree and breadth of changes in economic and social opportunities, nor the mass improvements in living standards enjoyed over the past few decades and even longer.

Indeed, classical liberals have stressed that relative income changes, as reflected in movements in the Gini coefficient over time, do not necessarily provide the insight needed to establish whether economic conditions have improved on a broad scale.

In her critical review of Thomas Piketty's work, economic historian Deirdre McCloskey argues that the size of Gini is "irrelevant to the noble and ethically relevant purpose of raising the poor to a condition of dignity".

Elsewhere, McCloskey refuted the notion the poor are getting poorer:  "Millions more have gas heating, cars, smallpox vaccinations, indoor plumbing, cheap travel, rights for women, lower child mortality, adequate nutrition, taller bodies, doubled life expectancy, schooling for their kids, newspapers, a vote, a shot at university, and respect."

The redistributive approach pursued by Chifley appears grounded, to some extent, upon an economic view that diminishing marginal utility of income implies that poorer people value an extra dollar in their hand far more than a wealthy person already in possession of many dollars.

But a key dilemma is that forcibly redistributing incomes, or other rewards emanating from the production process, could potentially reduce the available total bounty (including resources that could be redistributed) in future.

As philosopher David Schmidtz described it in his book The Elements of Justice, "the society takes seed corn out of production and diverts it to current consumption, thereby cannibalising itself".

Now, there should always be some place in civil society for charitable contributions to the needy, and influential liberals like Milton Friedman and Friedrich Hayek agree a lean, efficient public sector "safety net" should complement charity.

But there always is a question of balance here, and it isn't a foregone conclusion that politicians have the knowledge and incentive to ensure the welfare state is always well proportioned with the market-based economy.

An aggressive redistributive agenda, perhaps to greatly reduce the Gini coefficient, could threaten opportunities for productive economic advancement, which could have a particularly injurious effect upon the poor who most urgently need chances to improve their situations.

And expanding the public sector in such circumstances would give a certain class of people more political power to non-consensually transfer resources from politically unfavoured constituencies to the politically favoured, potentially treating the former group in unjust ways.

One could agree with the likes of the Chifley Research Centre that lots of people seem politically disaffected right now, an unsurprising outcome in this low-growth, high-cost economy at the present.

But giving government an opportunity to star in its own "Super Size Me" policy experiment is unlikely to fix inequality, nor placate those whose political preferences gravitate toward extremist parties.

WA Labor's uranium ban sells the state short

According to WA Labor's Plan for Jobs, "a McGowan Labor Government will free business from the burden of poor regulations".  Yet if elected WA Labor will also ban new uranium mines and refuse to complete approvals processes for mines that are already underway.  So much for freeing business from red tape.

The prospect of a Labor victory next March is already wreaking havoc on the uranium industry.  According to recently released figures by the Australian Bureau of Statistics uranium exploration has come to a virtual standstill, with just $2.3 million invested in the sector in the June Quarter 2016.  This is 92 per cent below the December 2010 peak and the lowest level since level since the original ban on uranium was lifted by the Barnett Government in 2008.

Part of the decline is structural;  the resources sector has declined on the back of lower commodity prices.  And people have grown more cautious about nuclear fuel following Fukushima.  But Labor's policy is clearly causing damage.

Over just the past year for example, quarterly expenditure on uranium exploration has declined by some 66 per cent.  While expenditure in the non-uranium resource sector has actually increased by 14 per cent.  Businesses are hedging their bets on a Labor win in March and are retreating from the market.

But what is so bizarre about the proposed ban is that it will prevent Labor from delivering on a number of its own policy objectives.

Firstly, Labor's Plan for Jobs says more skilled jobs are needed in regions.  But this cannot be achieved without a buoyant resource sector.  According to recent research commissioned by the Minerals Council of Australia, up to 22,600 jobs could be created in the uranium sector by 2040 across the country.  Western Australia will share these jobs with South Australia and the Northern Territory, with the lion's share going to rural and regional areas.  Opposing uranium means opposing these jobs.

Secondly, Labor claims to want to improve our climate and natural environment.  But banning uranium means banning a low-emissions fuel with a relatively small environmental footprint.  Even prominent environmentalists, such as the former Executive Director of Greenpeace UK, Stephen Tindale, have recognised the importance of nuclear fuel in facilitating a cleaner environment.

Thirdly, the proposed ban undermines Labor's Brand WA which seeks to "promote and support WA businesses across all sectors".  Labor's ban would send a clear message that Western Australia is closed to investment — hardly a positive brand.

Fourthly, Labor has criticized the Barnett government for "poor management of mining royalties".  But at least the Barnett government had an industry policy that would allow royalties to be received in the first instance.  Under Labor royalties from uranium will come to the grand total of $0.

Lastly, it makes Labor's claim that they value "the economic freedom to pursue our own employment and enterprise" simply laughable.  You could not do more to undermine free enterprise than ban an entire industry.

But what is happening in Western Australia's uranium industry is occurring across the country as prohibitions and red tape stunt primary industries.

For example, the Victorian government recently announced it will extend the current moratoria on coal seam gas development to a permanent ban.

The Productivity Commission has found that just obtaining a mining exploration licence can take more than two years.

The Roy Hill iron ore mine in the Pilbara required more than 4,000 licences, permits and approvals from Commonwealth, state and local governments in its pre-construction phase alone.

And it has taken more than six years and a billion dollars for Adani to get approval for its central Queensland coal mine.  And having just overcome two frivolous legal challenges in a month, Adani faces three more.

The anti-development ethos, epitomised by WA Labor's proposed uranium ban, and illustrated by reams of red tape across the country, is one of the biggest issues holding back economic development and growth.

Red tape is increasingly being used to shut down industry and development under the pretense of responsible government and environmental concern.

The Western Australian Labor Party should reverse its opposition to uranium.  This would generate regional jobs, a cleaner environment and expand freedom, all of which WA Labor claims to support.

Banning political donations is banning freedom

In the wake of the Chinese ­donation scandal engulfing "Shanghai" Sam Dastyari, more than a few politicians have ­massively overreacted by calling for bans on all political donations from not only foreign sources, but companies and unions too.

Tony Abbott last week advocated such a ban:  "We need to look long and hard at restricting donations to real people on the electoral roll.  To that end, there should be no union donations, company donations or foreign donations."

Other members of parliament have since agreed.  While current MPs fought over who had the strongest plan to crack down on an important means of democratic participation, another former prime minister — John Howard — was resolute in his defence of political donations:  "I've spent 40, 50 years of my life and interest in politics fighting the nationalisation and socialisation of things and I don't want to see the political party system owned by the state.

"The more you make it difficult or you discourage companies, individuals, foreigners from donating, the more you end up with the state ­controlling it."

It's a brilliant defence of the ­primacy of the individual over the state.  And is there any area where that principle is more important than in the structure of our democratic system?

Howard is right.  Under the current political funding model, individuals, companies and unions make voluntary donations.  The alternative is compulsory financing.  That means your tax dollars get siphoned to candidates you would never support.

Abbott has form in this area.  As leader of the opposition in 2013, he made a deal with the Greens and the Labor Party that would have seen them hand themselves hundreds of thousands in extra taxpayer funds.

Public funding is bad.  But there's a more fundamental issue here;  banning political donations represents a huge attack on freedom of speech.

In the 1976 case of Buckley v Valeo, the US Supreme Court held that making a political donation "serves as a general ­expression of support for the candidate and his views".

In Australia, the High Court has developed the doctrine of the ­implied right to freedom of political communication, limiting government bans on speech.  The court has held that political donations give rise to political communication.  It was on these grounds the High Court in 2013 invalidated New South Wales laws prohibiting donations from anyone not on the Australian electoral roll.  Given this precedent, identical federal laws would also be struck down as unconstitutional.

The proposal creates a false ­distinction between individuals acting alone and individuals acting ­collectively.  Individuals participating in the democratic process under the umbrella of a distinct legal identity, such as a company or a union, are as entitled as individuals to make donations.  Banning them is an attack on free speech.

The Turnbull government backs an unprincipled purpose of super

On Wednesday the Turnbull government released draft legislation to bring some of its superannuation promises into law.  These changes are not the whole policy — we are told that some of the most contentious parts will be legislated in the future.  But in many ways this legislation is even more significant than the policy of how superannuation should be taxed.  Because for the first time the draft legislation enshrines the purpose — the principles — of our compulsory superannuation system into law.

When the government used the May budget to shred its promise not to increase taxes on superannuation, it did not consult the public on its proposal.  At least they're having a consultation this time.  But the consultation will go for nine days.  That's correct.  The public get nine days from when the draft legislation was unveiled (7 September) to the date consultations close (16 September) to make submissions on the future of an industry with more than $2 trillion in assets.

Meanwhile, the government estimates it will get $100 million this year from new taxes from overseas backpackers working in Australia.  The consultation period was a month, and reportedly resulted in 1000 public submissions.  But the consultation on the objective of superannuation goes for nine days.  A sceptical observer might conclude that perhaps ministers have already made up their mind.

Over the last month the Treasurer has travelled the country assuring the public that the Coalition's plans to retrospectively apply a $500,000 cap on post-tax contributions and limit the amount that can be held in accounts in the pension phase will only affect one per cent of superannuants.  The problem with this analysis is that even if the one per cent figure is true (accurate figures for superannuation are notoriously inaccurate), the number only applies to people who are immediately affected by the change.

The figure takes no account of people potentially affected into the future.  Further, the implication of the Treasurer's claim is that if only one per cent of superannuants are affected by arbitrary and retrospective changes to superannuation, then there's nothing to worry about.  He is coming perilously close to claiming the rule of law shouldn't apply to rich people.

'Primary objective'

The thing that the government will spend nine days consulting the public on is the idea that the "primary objective" of superannuation should be put into law.  According to the Coalition the primary objective of the superannuation system should be "to provide income in retirement to substitute or supplement the age pension."

The problem with this as the objective of the superannuation is that it puts superannuation and the age pension the wrong way around.

The focus on any retirement income policy should be on strengthening self-funded superannuation, and the age pension should only act as add-on or top-up.  The government should aim to have as few people rely on the welfare of the age pension.

Expressing the objective of superannuation in the way the government proposes is to put tax and financial consideration at the centre of superannuation policy.  Instead, the starting point for any consideration of superannuation should be the inherent dignity of individuals taking personal responsibility for the care of themselves in retirement.

Saying that the main objective of superannuation is merely to save taxpayers the cost of the pension, is like saying people should be encouraged to get a job so the government doesn't have to incur the expense of paying the Newstart Allowance.  Work is important in and of itself.  The self-respect of a retirement that doesn't rely on support from someone else is no less important.

An objective for superannuation that was centred on dignity and choice in retirement could be expressed in the following way.

"The objective of the superannuation system is to ensure that as many Australians as possible take personal responsibility to save for their own retirement.  The age pension provides a safety net for those who are unable to provide for themselves in retirement."

Their policy on superannuation is not the only thing Turnbull and Morrison have got wrong.

They're also wrong on the principles of superannuation.  Getting a principle wrong is much more serious than mucking up a policy.  Policies can be fixed and reversed.  Principles are more difficult to correct.

Dead to history

A movement to censor our history is forming at Australian universities.  Students and academics are campaigning for buildings and lecture halls to be renamed because of their association with "offensive" historical figures.  They no longer feel comfortable confronting, or even acknowledging, the past — instead, they want to expunge it altogether.  Their first target is the renaming of the Richard Berry building at the University of Melbourne.

Richard Berry revolutionised the teaching of anatomy in Melbourne.  He wrote the standard anatomy textbook used by students for some twenty-five years.  As dean of medicine he advocated for the placement of a hospital near campus that could work closely with the university, a dream that became a reality after his departure.  Berry's contributions to teaching, as well as an administrator, were so outstanding that when a new anatomy building opened, which he designed, it was only natural to name the building after him.

Sadly, despite his capabilities, Berry, along with John Maynard Keynes, George Bernard Shaw, H.G. Wells, and Winston Churchill, advocated for the patently racist and discredited eugenics movement of the early 20th century.  Eugenicists sought to promote certain genetic traits, and discourage others, by manipulating sexual reproduction.  This supposedly scientific theory was used by the Nazis to justify their atrocities.

Berry (right) researched the relationship between skull sizes and intelligence, collecting a large number of human skulls for research.  He also advocated for sterilisation of Aboriginals, people with a disability, and other groups he viewed as inferior.  Student union president Tyson Holloway-Clarke says the existence of a building named after him is "confronting and alienating situation for Indigenous students".

The move to wipe Berry's name from the building he designed follows in the footsteps of similar campaigns on British and American campuses.  Oxford University students unsuccessfully advocated for the destruction of a Cecil Rhodes.  However, their campaign failed to appreciate Rhodes' positive legacy.  The Rhodes Scholarship has provided extraordinary educational opportunities to thousands from the developing and developed world, people who would otherwise never have had the opportunity to attend such a prestigious institution.  It has helped train the leaders of countless countries, including our own prime ministers Malcolm Turnbull, Tony Abbott and Bob Hawke.

Yes, Rhodes' legacy, just like Berry's, is deeply flawed.  It is vital, however, that we acknowledge both the virtuous and vile in our history.  Our past is neither good nor evil, rather, it reflects the varying shades of grey that make up the complexities of human character.  It reflects our constant drive towards progress and developing a more compassionate society.  It is vital we remember and attempt to fully understand the complexity, not seek to censor our past.

We must be careful to not project modern ideas, which simply did not exist at the time, onto history.  The speed of human progress has led to an extraordinarily rapid change in cultural understandings, political values and scientific theories.  The essence of historic analysis is gaining a full understanding of these changes, and the world in which historic figures lived.  The alternate, applying today's values to the past, makes it almost impossible to find any respectable historical figures for admiration or study.

It would require Labor to rename their think-tank, the Evatt Foundation, because Doc Evatt brandished a letter in Parliament from Soviet foreign minister Vyacheslav Molotov falsely claiming there was no Soviet spying in Australia — a letter written by the same individual who signed the Soviet-Nazi Molotov-Ribbentrop Pact.  Liberals would have to stop celebrating Robert Menzies because, in the height of the Cold War, he advocated for the illiberal policy of banning a political party, the Communist Party of Australia.  Americans would have to abandon their constitution and bill of rights because two-thirds of the founding fathers owned slaves.

If we actually want to understand, not simply abandon, the past we must comprehend the world in which these people functioned, the threats that motivated them, and the cultural values of their time.  We must understand that Evatt was motivated by a theory, albeit false, of conspiracy between the government and the security establishment to discredit Labor.  We must understand that Menzies believed, based on the stated aims of Australian communists, that there was a serious clandestine threat to our democracy.  And we must understand that the American founders lived in a time when slave ownership was common across the world.  We can, and should, criticise their views and actions, but it is ahistorical to apply today's values to figures living in a different time.

Censoring the past also hinders the educational mission of universities.  These statues, buildings, and lecture halls provide an important opportunity to confront our history.  Renaming buildings allows past injustices to be forgotten, to be wiped off the public memory.  Leaving them in place is a good reminder and educational opportunity.  Rather than rename the Richard Berry building, making him float away into the abyss of history book footnotes buried in the basement of a campus library, it would be appropriate to place a prominent plaque near the entrance of the building explaining both his contributions and abhorrent views.  This would allow students to understand the fact that this person did exist, and what he actually did.  It also prevents the university from taking the relatively easy step of wiping out a dark part of their history.

Ironically, the University of Melbourne has previously hosted a disability support services unit in the Richard Berry building.  Some have claimed that this placement is insulting.  However, the opposite is in fact true.  The best way to show just how wrong Berry's ideas were, and to display how far we have come as a society, is to act in the completely opposite manner.  It is to celebrate that students from all backgrounds roam freely in the corridors of the Richard Berry building.  This allows us to not forget the complexities of our past, and delivers a far more nuanced understanding of what is right and wrong.

Way too much fuss over a simple T-shirt

This week Target became the latest target of the politically correct warriors.

Target's crime of political correctness was to sell a T-shirt.  A pink T-shirt for girls.  The t-shirt read, "Batgirl to-do list:  Dryclean cape, wash batmobile, fight crime, save the world".

And with that, the warriors launched their attack on social media.  The accusations the warriors levelled at Target ranged from the T-shirt being "outrageous", "really inappropriate", sending a "really damaging message" and the final coup de grace, "out of step with 21st century family values ... it is utterly offensive and must be removed".

Target is a business and it isn't in the business of fighting political correctness.  It's in the business of selling affordable clothing to the mass market.  So it withdrew the T-shirt from sale and issued the following statement:  "After reviewing and reading our customers' concerns on the Batgirl tee, we have decided to remove the shirt from our stores.  It was never Target's intention to offend our customers with this item."

The warriors celebrated their victory like a grand final win.  But we should be commiserating.  The surge of political correctness undermines our freedoms, including in this case the freedom to raise our children in a way we choose.

Let's consider a few things.

First, the T-shirt wasn't sexist.  For many, including me, the T-shirt sent an empowering message to girls that they can do anything.  It was far more interesting and sassy than the boys' version of the T-shirt which merely read, "Like father like son, yes my dad is Batman".  No crime-fighting or world saving for the boys.

But the deeper meaning in this two-year-olds' T-shirt was open to interpretation.  For the politically correct warriors who found the T-shirt sexist, was it necessary to attack Target and call for its withdrawal?  If you don't like it, don't buy it.  No one is forcing anyone to buy these clothes.

Why should the moral outrage of a few bind us all to their value systems?  In parenting there are many hotly contested debates about "good parenting" and what sort of messages we should send our children, especially our girls.

As a parent, it is and should be your choice how you raise your children and the values you instil in them, what you dress your children in, what schools you send them to, what language you use with your children.  But inherent in this is "choice" and freedom to choose.  Instances such as the Batgirl T-shirt are indicative of a disturbing trend of the politically correct imposing their value systems on the rest of us.  Next time, warriors, please remember not everyone agrees with you.

A shift in monetary policy won't work miracles

A nominal GDP target for central banks isn't without merit, but a monetary fix won't be a cure-all for our economic problems.

Given these chaotic days of unorthodox monetary policy practice, such as ultra-low interest rates and quantitative easing, talk about reforming the way central banks manage the monetary system is seemingly at an all-time high.

Bursting from the academic literature into the blogosphere, and from international economic bloggers into the Australian public policy discourse, comes an idea that the Reserve Bank's longstanding policy to target price inflation at least ought to change.

That the RBA must forgo its effort to keep increases in consumer prices between 2 and 3 per cent, on average and over the business cycle, comes from an unlikely source:  protectionist South Australian senator Nick Xenophon.

In collaborative work with economist Danny Pearce, Xenophon says that inflation targeting as a basis for monetary policy has passed its use-by date, especially in a low-growth world in which the inflation scourge appears well and truly vanquished (at least for now).

Xenophon and Price call for the RBA's inflation target to be swapped with a "nominal GDP growth target" of 5.5 per cent per annum for Australia, which they claim will deliver a more stable macroeconomic environment.

The call to refurbish this country's monetary policy settings in favour of a NGDP target, which incorporates both prices and real GDP, is something that has gained significant traction among economists irrespective of their ideological leanings.

Classical liberal economists Scott Sumner, Lars Christensen and Tyler Cowen are proponents of an NGDP objective for monetary policy, and these sentiments are broadly shared by progressive economists including Paul Krugman and Australian John Quiggin.

Before discussing the merits and limitations of changing the ground rules for how monetary policy is conducted in Australia, it may be beneficial to rekindle memories as to how and why the RBA came to earn its modern reputation as an "inflation fighter".

During the 1970s and early '80s, Australia and most other advanced economies confronted high rates of price inflation, oftentimes with bouts of high unemployment, as oil prices peaked, wage costs escalated, and discretionary fiscal and monetary policies boosted prices but failed to sustainably raise output.

We briefly flirted with directly targeting money supply growth to control inflation, in line with first-wave monetarist precepts about price inflation always and everywhere representing a monetary problem, but with targets proving a touch too tricky for the RBA to reliably pin down.

Price inflation remained particularly troublesome during the 1980s, continuing to erode the real wages earned by Australian workers, and measures of inflationary expectations stayed in double-digit figures.

It was only following the severe recession of 1990-91 that inflationary expectations were finally subdued, and the opportunity to lay out a basis for a new monetary policy framework arose.

Determined to ensure general price increases remained modest, the Keating government entered an agreement with the RBA setting the price inflation target as a monetary policy objective.

Australia's rate of price inflation has since been kept to an average 2.5 per cent, which has been largely attributed to the role of monetary policy anchoring price-inflationary expectations, although falling trade barriers and other microeconomic reforms have also contributed.

With price inflation still seemingly nipped in the bud, the argument is that central bankers must now do something different in an attempt to wake the economy up from its post-GFC coma.

If the RBA adopted a NGDP target of 5.5 per cent, as recommended by Xenophon and Price, then the presently "easy" monetary policy stance under the price inflation targeting regime might be reinterpreted as "tight", given our current NGDP growth rate is only 2 per cent.

A new monetary policy regime in these circumstances would imply further reductions in our already-low cash-rate interest rate or, worse still, a green light to dabble with unorthodox policies that have side-tracked the US, Europe and Japan firmly onto a slow-growth path.

It is not clear that additional easing would be beneficial, given the dismal international track record for monetary policy exotica and the non-monetary problems constraining our growth potential.

In fairness, from a theoretical perspective, there are certainly some potential upsides to pursuing a style of monetary policy that engages in NGDP targeting.

The new-wave "market monetarists" such as Sumner and Christensen argue that a specified NGDP objective would serve as an improvement over price inflation targeting, because the former places fewer informational requirements upon central bankers.

Under NGDP targeting the RBA would not have to undergo the fatigue of trying to determine whether a change in average prices in the economy is primarily attributable to developments in the supply or demand side of the economy, and whether change should warrant a monetary policy response.

Consider the example of a positive supply shock resulting from microeconomic reforms, which would generally be seen as a beneficial development.

Under the price inflation targeting regime for monetary policy, the central bank would feel obliged to impose expansionary monetary policy to counter the falling generalised prices threatening the achievement of the target, but with the potential side-effect of exacerbating asset price bubbles.

But under an NGDP target there is no need for a policy response from the central bank because the declining price level is offset by increases in actual, and potential, output in the wake of supply-side economic reform.

Nick Xenophon has indicated that he prefers the government to abolish the price inflation framework when it sits down with the incoming RBA governor Philip Lowe to strike a new agreement on the framework for monetary policy.

It is best to consider any change to monetary policy frameworks soberly and carefully.

After all, the current inflation-oriented approach has helped focus monetary policy on a clear objective (that is, price stability) where arguably none existed beforehand, and Australians have benefited immensely from lower rates of price inflation.

And there is plenty of other reform business for the new Parliament to contend with, such as reducing red tape burdens, cutting taxes, and repairing the budget, all of which would improve our productive capacity if implemented.

NGDP targeting isn't the worst reform idea going around, but let's not think that changing monetary policy would magically resolve our economic issues.

Homogenised temperatures, and planning for bushfires

How hot was it at Rutherglen on Black Friday?  Black Friday was that tragic day — 13 January 1939 — when a firestorm swept across Victoria destroying whole towns.

Just to the north, at Rutherglen, did maximum temperatures reach 47.6°C on that fateful day — or only 42.2°C?  Experts will explain that when considering the likely impact of future bushfires, it is important to consider the historical temperature record — but which record?  The Australian Bureau of Meteorology keeps two records:  there is the official ACORN-SAT record used to report on climate change each year and easily accessible at their website through an interactive map;  and then there are the raw values in a back cupboard — metaphorically speaking.

The difference between the official-adjusted maximum temperature for Rutherglen on 13th January 1939 versus the actual measured value is rather large — more than 5°C.  Historical temperature data is used to model and forecast the likely impact of future bushfires, with Fire Danger Indices sensitive to small changes in temperature.  But which values should be inputted when modelling bushfire behaviour:  the raw data, or the improved-adjusted ACORN-SAT values?

According to the Bureau adjustments to the historical temperature record do "improve it" and are based on a, "Percentile-matching (PM) algorithm, which applies differing adjustments to daily data depending on their position in the frequency distribution.  This method is intended to produce data sets that are homogeneous for higher-order statistical properties, such as variance and the frequency of extremes, as well as for mean values."

Australian climate scientists generally prefer to work with the adjusted values as passed along by the ACORN-SAT unit in the Bureau, and increasingly refer to these adjusted values as "observations" (i.e. Sophie Lewis and David Karoly, Bulletin of American Meteorological Society, Volume 95).  But this is a travesty:  the adjusted values may be quite different from the actual recorded values — the real observations.  It is the real values that should be used for contingency planning in the real world — including for bushfire preparedness.

Of the temperature series from the 112 weather stations used to calculate year-on-year temperature increases in Australia, 109 have been adjusted by the Bureau's ACORN-SAT team — many by rather a large amount.  In the case of Rutherglen, the adjustments are dramatic, not only to the daily temperature maxima, but also the minima.  These adjustments are then incorporated into international datasets, in particular HadCRUT that informs IPCC deliberations.

This was pointed this out to News Limited journalist Graham Lloyd over two years ago:  that while the raw mean-annual minimum temperatures for Rutherglen showed a slight cooling trend of 0.35°C per century, after the ACORN-SAT adjustments, there is statistically significant warming of 1.73°C per century.  This warming has essentially been achieved by the ACORN-SAT team of just 2.5 persons, by progressively dropping down the measured raw values from January 1974 back to the beginning of the record, which is November 1912.

The Bureau attempted to fob Lloyd off explaining that the adjustments had been made at Rutherglen because the weather station had been moved:  as though a move between two paddocks in a relatively flat terrain should change the temperature trend so significantly! Regardless, this advice directly contradicts what is written in black-and-white in the Bureau's official weather-station catalogue:  the catalogue states "There have been no documented site moves" at Rutherglen.  When Lloyd queried this, rather than admit that they were-in-error, the Bureau advised Lloyd they would be assigning someone to find supporting evidence.  But, they would need more time, because the evidence was surely in an archival box:  except no-one knew which one.

When Lloyd reported in the Australian newspaper that the Bureau was now in search of evidence for a site move Ibid — information which, if found, would contradict the official catalogue — I thought there might be some public outcry.  But I was told by those less surprised by the apparent apathy that this is simply another example of the bureaucracy taking a revisionist approach to history.

I've since discovered that a "revisionist history" is not the same as "history written by the victors".  What I am referring to as regards the Bureau, is the rewriting of even benign events — and things as apparently politically irrelevant as an historical temperature series.

After much rummaging the Bureau came to the following conclusion regarding sites moves at Rutherglen:  "No document has been located which states explicitly that the observation site moved.  However, there are a number of documents from 1958 or earlier which make references to the site which are not consistent with it being in its current location, indicating that the site moved on one or more occasions at some point between 1958 and 1975.  There are also additional documents which indicate a strong likelihood of a move or other changes."

But if all the adjustments to the values as actually measured at Rutherglen correspond with breakpoints which were caused by site moves (as claimed by the Bureau), there should be evidence for a total of six "site moves"!  Because there are a total of six adjustments listed in the two advisories that have been published by the Bureau:  the first in August 2014, and the second in September 2014.

To be clear, when I run the unadjusted raw temperature data as measured at Rutherglen (the observational data) through standard QA software — as detailed in this submission to the Australian Auditor General — I can't find any breakpoints, let alone six.  But there should be six, if the Bureau's explanations are to be consistent with their improved ACORN-SAT remodelled temperature data for Rutherglen as available at their website via an interactive map.

Most peculiarly, according to the Bureau's own policy, in accordance with world's best practice as recommended by the World Meteorological Organisation, any significant site relocation should result in a new site number.  Yet Rutherglen has always been referred to by a single station number:  082039.  This is in contrast, for example, to the nearby location of Deniliquin that was number 074128 when the weather station was at the post office, and number 074258 when it was moved to the airport.

Putting all of this aside, is it reasonable to assume that moving a weather station between paddocks will create a difference of 5.4°C for 13 January 1939 between the measured and the adjusted values?  No, it is not.

Back in 2014, then Prime Minister Tony Abbott was right to suggest an inquiry into the Bureau of Meteorology and this revisionist approach to the historical temperature record.  Greg Hunt, Environment Minister at the time, apparently "killed" the idea during these discussions in cabinet claiming confidence in the Bureau by the Australian public was paramount — especially so we (the public) would heed bushfire warning.  But how reliable are these warning — and exactly which historical record are they based on?

Postscript

More information on temperature trends at Rutherglen is detailed in Temperature change at Rutherglen in south-east Australia, New Climate (2016).

The difference of 5.4°C between the adjusted and raw values on 13 January 1939 can be verified by scrutinising the ACORN-SAT versus CDO/raw daily data for Rutherglen available at the Bureau of Meteorology website online.  Specifically the ACORN-SAT TMax for Rutherglen versus the raw TMax for Rutherglen — scroll to 13 January 1939.