Let's Make A Quid From Our Asylum

Should the government set aside a few thousand places in Australia's annual refugee intake to be sold to the highest bidders?

Such a suggestion probably seems outrageous, a heartless sacrifice of human concerns on the altar of economic rationalism and the free market.  But it is not so different from the current situation, where Australia faces what amounts to an illicit market in refugee places.

People claiming to be refugees are paying crime syndicates to bring them to Australia illegally, and to instruct them in the most effective ways of taking advantage of our comparatively liberal immigration and welfare programs.  As there are only a fixed number of refugee places available, wealthy asylum-seekers are displacing those in genuine need who are too poor -- or maybe too scrupulous -- to jump the queue.

Reports suggest that illegal immigrants are willing to pay as much as $45,000 to the criminals who are transporting them to Australia.  It is true that some of these people may actually meet the United Nations definition of a refugee, having a well-founded fear of being persecuted in their own countries because of their political opinions, ethnicity, social group or religion.

But it is also certain that many of the illegal entrants are simply attempting to get around Australia's migration requirements by falsely stating that they are escaping from persecution.  Some do not even come from the countries they claim to be fleeing, and destroy their passports and other documents in the hope of preventing authorities from discovering the identity of their true homeland.

Others are "forum shoppers".  These are people who qualify as refugees, but who have residency rights in another country which, while offering them a safe haven, is not a place where they wish to remain, because the economic or social conditions are not sufficiently to their liking.

Despite the heavy penalties Australian law lays down for people smugglers -- up to 20 years in prison and fines of $220,000, as well as confiscation of their boats -- it is a growing racket, as lucrative as drug trafficking, but with much less risk.  And as experience with the narcotics trade around the world has clearly shown, the threat of life imprisonment or even capital punishment is not enough to deter criminal gangs who stand to make millions of dollars on a single deal.

But why should all the money go to foreign crooks?  Surely it would be preferable if the large sums that illegal entrants seem ready to pay went into Australian public coffers, where they could help to provide a higher level of post-arrival services so as to integrate needy refugees more effectively into the wider community.  The money could even be used to give us a better coastal surveillance system, allowing surfers and fishermen to concentrate on their recreation without having to double as guardians of our shores.

It seems reasonable to expect that were the government to put them on the market, refugee places would fetch as least as much as the criminal syndicates are now charging, perhaps considerably more.  Auctioning, say, 2,500 places a year at an average of $40,000 each would bring in $100 million.

Those who were able to purchase places would obtain a comfortable risk-free trip to Australia, secure in the knowledge that on arrival they would be given the benefit of the doubt, and treated as though they might actually be genuine refugees.  Such a scheme would cut much of the ground from under the illegal people-traffickers by siphoning off their most lucrative potential customers.  It might even serve to allay at least some of the opposition to immigration by cutting its costs to the Australian taxpayer.

Another major benefit would be that the successful bidders could commence their new lives in Australia without first breaking our immigration laws.  Given that many of the desirable aspects of our way of life depend on a widespread respect for the rule of law, new arrivals should not gain the impression that Australia condones -- and even rewards -- illegal behaviour and rorting.  This would be a further step towards reducing public disquiet about immigration.

So although a government-run market in refugee places would clearly disadvantage the poor, it would still be morally and practically superior to the current illicit market, which is just as discriminatory.  Nevertheless, such a scheme is never likely to be adopted.  It would cause apoplexy amongst the soft-hearted spokespeople for the Uniting Church, the Australian Democrats, and all the other self-appointed keepers of the nation's conscience.

Yet these same groups are bitterly attacking the Federal Government which, with somewhat reluctant Labor support, is attempting to make Australia less of a soft touch, and so reduce the "pull factor" which sustains the illicit market.

Certainly, it is valid to question whether or not the government's measures will actually work.  While I believe we should maintain a generous immigration and refugee program -- though one that gives due consideration to social harmony and the national interest -- I think the real problem with the recent moves against illegal entrants is that they may not do enough to undermine the "pull factor".

It is fanciful to suppose that diplomatic moves and stronger actions against people smugglers will make much of an impact on the illicit trade in asylum-seekers, without correspondingly tough measures designed to make Australia far less attractive to would-be illegal immigrants.  And given the nature of the problem, it is also wrong to think that such tough measures are somehow unfair or unjust.

Unless they realise this, the caring advocates from the refugee lobby will only be manifesting a failing they share with many of their kind -- so preoccupied with displaying their tender hearts that they ignore the need to develop hard heads that might offer genuinely equitable and effective solutions to difficult social problems.

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So sorry, my mythtake

There is nothing for it but to apologise.  I got it wrong.  I did not check my facts as well I should have and I relayed an urban myth as fact.  The incident I related (Opinion 22 November, reproduced below) with Jane Fonda, Colonel Carrigan and the beatings was an urban myth replicated by e-mail.

Jane Fonda did go to Hanoi, she did appear in North Vietnamese uniform supporting the North Vietnamese cause and she did later call PoWs liars for claiming they had been tortured.  But the specific incident of the beatings did not happen.

My problem was that I received the e-mail from a very reputable source, and later from another reputable source, it is being circulated very widely amongst US military personnel, it accorded with information I already had, it was mixed in with information which was true and I was affronted by Jane Fonda being regarded as one of the 100 great women of the century, as I still am.

I did not consider carefully enough the information provided back to me when I looked into the story:  they were not quite the confirmations I thought they were.

So, I should not have relayed that particular story, and I apologise to Age readers for doing so.  Those who want the full details can go to http://www.snopes.com/spoons/faxlore/hanoi.htm.

It is, of course, a classic example of how we get bitten by urban myths, particularly spread by e-mail.  The printed word has a feel of authority to it, magnified if it comes via someone who is reputable, magnified even more if you receive it from other, equally reputable, people.

And rather than the things you are automatically inclined not to believe, it is the things which naturally accord with your prejudices -- in fact things which engage your emotions -- which you are most inclined to get wrong.

But, as I certainly well know from other issues, just because something is repeated a lot, doesn't make it true.

Oh well, I am told contrition is good for the soul.

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Why Hanoi Jane's a traitor, not a hero

It is a common complaint about modern American culture in particular that it mistakes fame for importance.  Earlier this year, the American ABC network screened a program on the 100 most important women of the 20th century.  One of the women to be honoured was Jane Fonda.

Why Jane Fonda you might ask?  After all, she is merely an actor, the child of a famous actor, who made some films, some workout videos and married media billionaire Ted Turner.  She has lived a deeply privileged life, and she is famous, but what has she done that makes her a great woman?

Well, she was involved in the anti-Vietnam War movement.  But so were many, many thousands of people.  But she was famous and in the anti-War movement.  Again, so were others.

But Jane Fonda used her fame in a very particular way.  At the height of the Vietnam War she went to Hanoi and publicly paraded her support for the North Vietnam regime and people and accused American PoWs of being war criminals.  Some of those PoWs remember Ms Fonda very well.  They have reason to.  Because of Fonda some of them never came home.

Larry Carrigan spent six years in the "Hanoi Hilton" as a PoW, the first three of which he was listed as missing in action.  His wife lived on faith that he was still alive.  One day, his group got the cleaned-fed-clothed routine in preparation for a "peace delegation" visit.  They devised a plan to get word to the world that they were alive.  Each man secreted a tiny piece of paper, with his Social Security number on it, in the palm of his hand.  When paraded before Fonda, she walked the line, shaking each man's hand and asking little encouraging snippets like, "Aren't you sorry you bombed babies?".

Believing this had to be an act, they each palmed her their sliver of paper.  She took them all without missing a beat.  At the end of the line and once the camera stopped rolling, to the shocked disbelief of the PoWs, she turned to the officer in charge and handed him the little pile of notes.  Three men died from the subsequent beatings.  Carrigan was almost number four.

Other former PoWs have similar memories of Ms Fonda.  Carrigan was one of a group who attempted to have Ms Fonda charged for her actions, but her fame and position have so far protected her.

Another former PoW, when asked what he thought of Jane Fonda and the anti-war movement, replied that he held Joan Baez's husband in very high regard, for he thought the war was wrong, burned his draft card and went to prison in protest.  If the other anti-war protesters took this same route, it would have brought our judicial system to a halt and ended the war much earlier, and there wouldn't be as many on that sombre black granite wall called the Vietnam Memorial.  That, the former PoW added, was democracy, that was the American way.

Jane Fonda, the former PoW continued, chose to be a traitor, and went to Hanoi, wore their uniform, propagandized for the communists, and urged American soldiers to desert.  After her heroes -- the North Vietnamese communists -- took over South Vietnam, they systematically murdered 80,000 South Vietnamese political prisoners.  May their souls rest on her head forever, he added.

The moral choice was not being for or against the Vietnam War -- there were worthy values which led either way.  The moral choice was what you then did.  And even in a postmodern world, actions speak louder than words.  Or attitudes.

Jane Fonda was allegedly included in the 100 great women for "bringing fitness to the masses".  There is, and was, nothing great about Jane Fonda.  Yet, it appears fame itself is enough to make her so in the eyes of American TV.

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The folly of setting prices

Letter to the Editor:

John Quiggin ("Microsoft deserves a hard time" AFR 11 Nov) demonstrates gaping holes both in his knowledge of competition law and in his awareness of the importance of incentives for innovation.  He argues that Microfoft's Windows should be "declared" by the ACCC as an essential facility and be required to be sold at marginal costs.

Neither the ACCC nor other government price fixing authorities specify marginal cost principles as an appropriate basis for price setting.  The ACCC's favoured approach, "provides for a normal commercial return on efficient investments in infrastructure (in the long term) ... (and so) provides the appropriate incentives for future investment."

A moment's consideration reveals the folly of a regulator setting prices based on marginal costs.  The message such an approach delivers to innovators is, "Don't incur the costs in the first place".  Dr Quiggin's prescriptions are for a static world where all innovation has ceased and the only task is to milk the incumbent suppliers.  The policy approach he advocates would create that static world for Australia.

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Insecure Elites

After crushing a popular uprising in 1953, the communist leaders of East Germany said that the people would have to work very hard to regain their confidence.  In response, Bertolt Brecht wrote a famous poem which sardonically proposed that the regime should consider dissolving the people and electing another.

Our elites' reaction to the result of the republic referendum suggests that this is just what they would like to do to those of us who did not follow their exhortations, stupid and unworthy wretches that we are.

Rather than a gracious acknowledgement of the possibility that people who voted "no" might have considered the issue just as responsibly and intelligently as those who voted "yes", our righteous worthies went ballistic.  In doing so, they must have quelled the misgivings of some people who were wondering whether they had really made the right decision in voting against the republic.

But the vehement response of the elites seems out of all proportion to the issues that were supposedly at stake.  It was not a referendum over radically different social or economic programs, which might lead to a substantial realignment of winners and losers on a national scale.  Surely all those angry and tearful celebrities had not been nursing a secret hope that one day they might be Parliament's choice for President?

The most plausible interpretation of the referendum result is that, even though a substantial majority of Australians would like us to become a republic eventually, they do not view it as an urgent matter.  The republican push did not derive from a groundswell of popular sentiment.  It was imposed from above, motivated at least in part by some rather shabby political considerations.

Obviously, people would prefer to wait until they are presented with a more agreeable model for a republic, one that better expresses the national ethos and that is not as flawed as the model on offer last Saturday.  Such an attitude is neither irrational nor irresponsible.  It is offensive to state that the Australians who voted "no" are "ignorant", or "unpatriotic", or "gullible", or any of the other nasty epithets hurled at them by activists, commentators, and correspondents to newspapers.

A somewhat less patronising explanation was proposed by Paul Kelly of The Australian, and taken up by a number of others.  Based on voting patterns in different kinds of electorates, the suggestion was that the "yes" supporters were generally people who feel confident and secure about the pace of social and economic change, whereas the "no" supporters were those who are finding change tough.

Perhaps there is something to this explanation, although I remain to be convinced.  But even so, the commentators have avoided the really interesting question.  Why did the elites respond with such intensity to the outcome of the referendum?

I think that the answer may be found by turning the Kelly explanation on its head.  People who really feel confident about their place in the world would be much more laid back about their defeat on what is only a symbolic issue.  Clearly, important sections of our cultural and political elites are deeply insecure, uncertain about their own identities, and very worried about what others think of them.

Having convinced themselves that the world was focused on the referendum and that they would somehow be judged by the outcome, they are now in an awful funk.  They have globalised the old lament of jittery conformists -- "what will the neighbours say?".  The usual suspects are now lining up to express their shame at being Australian, in the hope that they can somehow distance themselves from the international opprobrium that they foolishly imagine will befall this country.

Anguished expatriates are writing to ask how they can explain the "no" victory to their colleagues.  (Simple enough -- "Most Australians made up their own minds, despite all the attempts by academics, celebrities and the media to browbeat them into voting 'yes' ".)  Eight superannuated diplomats pontificated that "overseas", we will continue to be seen as "subordinate", and as "turning away from the progress Australia has made in the past 50 years to establish a truly independent national identity".

The obvious fact that most ordinary Australians are not swayed by such overwrought nonsense -- widely canvassed before the referendum as well -- suggests that unlike the elites, they feel comfortable about their national identity.  Their justifiable pride in being citizens of a decent and highly successful nation has not been compromised by Australia's status as a constitutional monarchy.

And they are much less likely to indulge in pompous navel gazing about Australia's identity.  Although the elites portray their relish for such activity as a mark of their sophistication and public-spiritedness, it is more the expression of an adolescent self-absorption which projects personal anxieties and emotions onto the nation as a whole.  After all, it wasn't "Australia's heart" that was broken last Saturday night, but Malcolm Turnbull's heart and the hearts of his mates.

Given their role in our national life, it is not a good sign that our elites are so lacking in confidence.  But it is hardly surprising.  Many prominent people in politics, academia and the arts have achieved their positions through patronage networks which provide protection and advancement in exchange for loyalty and conformity.  Such an environment encourages self-doubt, because people can seldom be sure of whether their success is a result of their own talents, or a consequence of their connections.

So we should adopt a more understanding approach towards our elites, and be more sympathetic about the personal anxieties that drive their obsessions.  Until they feel good about themselves, they will never feel comfortable and relaxed about Australia.  It is not a republic that they need, but a national program of therapy and education that might help them to become more independent and confident of themselves.  Only then might they stop patronising their fellow Australians.

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ABC Needs a Culture Change

Jonathan Shier is the best person for Aunty's top job

The defence by ABC TV journalist-producer John Millard (Opinion, Thursday) of the ABC's current culture and staff prerogatives expresses what is wrong with the ABC.

An ABC completely independent of government is an ABC independent of any real owner.  The lack of any effective owner means that -- as is common in the public sector -- the organisation becomes largely captured by the interests of its staff.

The obvious massive vested interest governments have in media coverage simply exacerbates this, since any attempt to enforce accountability on the ABC can be, and is, immediately derided as partisan interference.

This staff capture does not mean that the ABC is therefore a happy organisation to work in.  On the contrary, there is a rich literature on how organisations lacking a real owner-interest as a focus have inherent tendencies to become collections of feuding fiefdoms fighting over resources.

The ABC is also an organisation dominated by progressive viewpoints.  A major aspect of the personal return for progressive politics is publicising particular opinions and receiving recognition for their superior moral insight and worth.  In the absence of an effective owner, there is a premium placed on nurturing the moral vanity of the dominant worker group, and excoriating their critics.

First, moral vanity.  Millard is at some pains to make it clear that the new ABC managing director-to-be Jonathan Shier's background in (horrors!) commercial broadcasting is a significant disadvantage.  As he informs us, the public associates the ABC -- unlike, of course, the commercial broadcasters -- with editorial integrity.  It would have been so much better, Millard tell us, to have had someone with a background in public broadcasting.  The utterly transparent adoption of a posture of moral superiority is almost endearing in its total lack of self-consciousness.

It is also an indicator of everything that is wrong with the internal culture of the ABC -- a sense of moral superiority that has huge difficulties in treating other perspectives and viewpoints fairly.  As he makes clear in the rest of his article, Millard regards any connection with private enterprise as having an inherent tendency to pollute the ABC's moral purity.

Second, staff capture.  Millard informs us that "inside the ABC, staff have expressed concern, as has this journalist, that our Aunty is quietly repositioning herself".  Pardon:  whose Aunty?  In case we had any doubt that it really is the staff's ABC, Millard immediately proceeds to complain bitterly about ABC management actually telling people what to do.  The concept that managers might actually manage is clearly offensive to him.

But one would expect that in a staff-captured organisation.

Of course, this is put in terms of editorial-compromising budget cuts and of enterprise deals that directly or indirectly compromise the ABC charter responsibility of editorial independence and distinctively Australian program content.  And this from the organisation for whom 8 out of 10 of whose top-rating shows are British, and 60 out of 100 top-rating shows are produced overseas.  (What many people actually like about the ABC is its role as a BBC relay station.)  But self-interest can always find appropriate rationalisations.

The major question facing policy makers is how to make use of the digital spectrum.  If the decision to allocate the spectrum to the current incumbents and mandating high definition TV for the commercial broadcasters stands, then public broadcasters will have an advantage in being able to engage in multi-channelling and datacasting.

If the Howard Government -- via the ABC Board it has now largely appointed -- wanted to do a hatchet job on the ABC, the new MD would have been someone with a track record in what is euphemistically known as organisational restructuring.  That MD-elect Jonathan Shier is both an outsider and has a background in broadcasting and, more particularly, broadcasting technology makes him an excellent appointment.  The last thing the ABC needs is an ideologue to the taste of ABC staff such as Millard.

Shier must, however, resist attempts -- such as that of John Millard -- to pre-shrink him to conform to the current ABC culture:  changing that culture has to be one of his key tasks.

Contractors and Tax

In the last ten years or so the use of contractors has grown from 3% to more than 10% of the workforce.  Yet even this substantial growth has been held back by business concerns over tax arrangements.  Businesses thinking of using contractors could never be sure if the contractor arrangements they used would be accepted by the tax office.  The tax push was to use PAYE employees.  Contractors were considered by many to be tax evaders.

This is all about to change.  Under the federal tax reforms, contractors are set to enjoy a new tax legitimacy that will remove business worries thus increasing prospects for use.

The tax confusion over the use of contractors has been a result of the Income Tax Acts' tying of the collection of PAYE to master-servant employment.  The courts have used PAYE to denote "controlled" employment, ensuring that PAYE workers were brought within the jurisdiction of industrial relations regulation.  Conversely, PPS payers were taken to be contractors not subject to IR regulation.  As a result, the legislative objective of collecting income tax and the employment definitions used by the Australian Taxation Office have been linked to IR issues, a bad outcome for the ATO and Australian workers and businesses.

Critical to understanding the IR-tax dilemma is the often repeated claim that PPS causes a loss of tax revenue relative to PAYE.  The truth is that PPS and PAYE payers have always paid the same amount of tax.  The difference has been in the method and timing of tax collection.  PAYE workers pay on a sliding scale and enjoy a tax-free threshold.  PPS workers pay at a lower flat rate but from the first dollar earned.  Any differences are corrected by the provisional tax system.

Tax deductions said to be available to PPS contractors but not to PAYE employees merely reflect the transfer of deductions away from a business using PPS workers, who generally supply some tools and on-the-job transport.  They are paid more than PAYE workers by way of compensation, have higher expenses and consequently claim tax deductions for these items which would have been claimed by a business if PAYE workers were used.

The remaining potential tax-revenue problem arises from income splitting.  But even this is not the dramatic issue it is usually claimed to be.  The tax losses from income-splitting have often been alleged to be between $2 billion and $3 billion a year;  but the ATO has shown these figures to be false.

In the most detailed audit for income splitting ever conducted, the ATO, in its Alienation of Personal Services Project, targeted the tax returns of 65,000 taxpayers profiled as likely income splitters.  In an intense eighteen month audit only 714 taxpayers were issued adjustment notices, with increases in tax paid varying from 1.9% to 11.6% per taxpayer.  The audit confirmed that the great bulk of individuals who form companies do so for legitimate business purposes, not to avoid tax.  The audit team was disbanded in late 1998 because the additional tax collected did not cover the cost of the audit.

The Ralph Committee thinks, however, that there is a residual income splitting.  But it is recognised that the issue arises not from contractors as such but from artificial company structuring.  People do not necessarily need to create a company to be a contractor.

The truth has always been that the facts on contractor tax, have not justified the accusations of contractor tax avoidance.

The more serious but largely ignored issue, has been that the tax collection system has been corrupted by being an instrument of industrial relations systems.  The important overriding principle is that legislation should, as far as possible, avoid confusing the ATOs' obligations to collect tax with non-tax issues.

The federal tax reform package addresses this issue, beneficially separating tax from common law employment definitions and thus from industrial relations issues.  Through the interconnecting mechanisms of the Australian Business Number (ABN) and PAYG, all people will pay income tax under PAYG without the legal issues of contracting or employment even being a consideration.

No longer will managers need to sit down and study pages of legalistic style ATO rulings to decide if they should withhold tax.  Managers will not need to become bush lawyers knowledgeable on common law presidential case studies to determine a persons tax status.

The decision will be simple.  If a person supplies an ABN, GST will normally apply and no income tax will be withheld.  If no ABN is supplied income tax will be withheld and remitted to the ATO under PAYG.  Under labour hire, the labour hire company will charge GST and attend to workers income tax under PAYG.

Where community concerns exist over artificial income this will be partially controlled through the ABN because, on achieving an ABN, GST applies.  This, combined with the Ralph Committee's recommendation on personal income tax application where 80 per cent of income is obtained from one source, will limit the commercial incentive to split incomes.

The ABN/PAYG aspect of the new tax system will supply comparative administrative simplicity and legal surety.  Consequently businesses will be able to focus on the true managerial alternatives presented by employment and contracting.

Employment as both a legal and a top driven management paradigm, is about human inequality where control of one human (employee) is exercised by a dominant other human (employer).  In comparison, using contractors involves legal and managerial ideas of equality where control of humans is replaced with achievement of results through mutual agreement.

With these tax changes businesses will be freer to focus on people performance dynamics without having decisions confused by administrative tax demands.

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