Sunday, May 30, 2004

Training System Needs Reform

In his reply to the 2004 Federal Budget, Opposition Leader Mark Latham committed a future Labor government to a "train or work" policy.

Under this policy, all able-bodied people will be given two choices -- either work or train.  No sitting around collecting the dole.

This is a positive re-affirmation of the Labor Party's commitment to mutual obligations.

Nonetheless, if it is to be successful and get people into good paying jobs, it will need to be accompanied by more money (which Latham promised) and root and branch reform of the training system.

The Australian training system was established in the late 1980s and no longer fits today's environment.  Indeed, it was out of date almost before being completely established.

The system arose out of efforts by the ACTU to slow the momentum towards enterprise-based bargaining while satisfying its members' demands for productivity-based wage rises.

The solution it hit on was awards restructuring coupled with competency-based training.  Under this system the ACTU, along with the employer association, decided what jobs industries required and what training was needed to do the jobs and locked these into the awards.

They then negotiated a detailed training framework which supported the awards and got government, in large part, to fund the training.

The promise was that this would create career paths for employees, guaranteeing them wage increases as they moved up the career ladder on the basis of skills they acquired.

It also brought training under the control of the industrial relations club, thereby helping to guarantee its continuation in the face of declining union membership.

The system was always deeply flawed.  First, it is not relevant to most businesses.  The job specifications and training levels were driven not by the needs of business but by agreement among third parties.

They were also provided through the industry-based awards system when most people are employed under enterprise or individual agreements, or as contractors.

The system also gives the wrong signal to employees -- that is, all they need to do for a wage increase is to get training rather than perform.  As a result, employers are reluctant to fund or utilise the system.

Second, it does not match the needs of workers.  The model is based upon the assumption that people work in the same firm or career throughout their working lives, and via seniority and training, steadily progress up an established pathway.

This, however, does not fit the work experience or demands of most people.

Most people can expect to pursue multiple and often divergent pathways over their work career, including, at times, starting again.

The training system -- and awards system -- does not meet these needs.

The system is not starved of funds.  Indeed, the Australian National Training Authority, which supports and fosters it, has a budget in excess of $1.2 billion.

As a CEO of a major company recently observed of the National Training Agenda:  "It's just this 4000-pound marshmallow that's out there".

Last thing we want is for the unemployed to be trapped in a messy and costly marshmallow.


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Friday, May 28, 2004

Challenging Beliefs on Dryland Salinity

It is often only when decisions are likely to significantly affect our livelihoods or our quality of life that we bother to check the facts.

Given many government environment policies are only ever likely to impact on resource uses -- foresters, farmers, fishers etc -- most of the rest of the population is unlikely to ever challenge "accepted wisdom".

Bjorn Lomborg, author of the international best seller The Sceptical Environmentalist, suggests that some fields of research have a natural tendency to become "veritable industries" defining their own reality and the accepted wisdom of the community.

This is a problem if key assumptions underpinning a field of research are flawed, but never challenged, because researchers only investigate problems within the field.

The accepted wisdom on dryland salinity in the Murray Darling Basin could be a case in point.

A recent released technical report, Salinity Mapping Methods in the Australian Context (January 2004), from the Australian Academy of Science restates the cause as "changes in the water balance of landscapes following the removal of native vegetation and the introduction of European agricultural practices" (pg. 8).

It predicts that the area affected by dryland salinity will continue to increase because of continuously rising saline water tables from the changed water balance.

This basic premise, however, was challenged by NSW government scientist Dr Christine Jones, who had articles published in The Australian Farm Journal in 2000-2001.

She contends that the "rising groundwater model" has failed us because it makes false assumptions about the nature of pre-European vegetation and the way water moves in the landscape.

Rob Gourlay and Dr Brian Tunstall of Environmental Research and Information Consortium Pty Ltd (ERIC) independently came to similar conclusions through the development of an airborne gamma radiation salinity mapping technology.

According to Gourlay, "Dryland salinity (in the Murray Darling Basin) is really a soil health issue, a symptom of soil degradation not a rising water table issue.

The Academy of Science report compares salinity mapping methods with the conclusion that the main "knowledge gap" is the location of salt at depth and whether it is likely to be mobilised by rising groundwater.

The electromagnetic (EM) mapping technique that the report advocates for plugging this knowledge gap is expensive -- up to 10 times the cost of doing the gamma ray mapping that focuses on the top metre and that Gourlay has commercialised.

The Academy of Science report was dismissive of the gamma ray technology for salinity mapping describing it as not having a scientific foundation and advising potential users of the technology to seek "independent advice on claims made by the vendors".  Gourlay regards this as an attack on his "professionalism and capacity to trade".  He questioned how "publicly funded scientists who compete with the private sector can get away with using taxpayer money to discredit the only technology that has delivered benefits to clients at a paddock, farm, catchment and regional scale across Australia since 1992".

One of the authors of the Academy of Science report, Brian Spies, works for the CSIRO and has been involved in the development and commercialisation of the TEMPEST electromagnetic mapping system.

CSIRO provides commercial services based around the TEMPEST technology and hence the Australian Academy of Science report could be interpreted as knocking a competing service as well as promoting the CSIRO method.

While different scientists may be motivated by different needs and interests, real science is value-free.

It is a way of understanding the world in which we live from an evidence-based perspective using observation, experimentation and tested theory.

When we are debating issues of evidence and science, the motives of those who have done the research should be largely irrelevant.  Of more relevance is whether or not the findings stand up to critical examination?  Can they be verified or falsified?

Thirteen new Catchment Management Authorities (CMAs) have been formed across NSW and the catchment plans or blueprints they endorse will potentially affect the livelihood of farmers.

The inland blueprints will apparently include specific catchment targets for salinity and will guide prioritisation of activities under the Federal Government's National Action Plan for Salinity and Water Quality.

Here is an opportunity for at least one of the CMAs to compare the relative usefulness of the two competing salinity mapping technologies at paddock, farm and catchment scales.


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Wednesday, May 26, 2004

Flaws in anti-FTA Stand

Peter Garrett lets his cat out of the bag (AFR, 20 May, "Environment pays dearly for free trade").  He opposes the free trade treaty with the US because it will enrich us and in the process cause us to use more water, energy and land.  There's an irony in being lectured on the evils of wealth by a millionaire pop singer.

What Mr Garrett is saying is that he opposes economic growth because, according to the CSIRO, each dollar increase in GDP entails use of more water, energy and land.  It follows therefore that he would rather see a poorer Australia so that with each dollar of lost income we will see less use of water, energy and land.

His real agenda is to overturn the existing system of individual choice and supplant it with a system in which his politburo will ensure that the expenditures we make are consistent with the ACF vision of a productive economy.  This would replace our market system with one that entails massive taxation and rationing of the goods and services that joyless environmentalists say they abhor.

Aside from this, his philosophy demonstrates a failure to understand that enrichment allows us to afford greater environmental protection (and the richest nations like the US, Switzerland and Australia have far better environmental conditions than poor nations like India, China and most African countries).

He also says the FTA would give foreign firms more secure property rights than those Australian citizens presently enjoy.  This is absurd since any improvement in property rights would actually extend to everyone and would warrant a full throated three cheers rather than the polite "hear hear" the FTA presently receives.


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Tuesday, May 25, 2004

The Strange Return of the Industrial Relations Club

Occasional Paper

Our Work Reform Unit was formed in 2001 in response to a vacuum in the debate over work reform issues.  At that time the view seemed to be that "the reform job had been done".  We proceeded to case study industries and situations to see what was happening on the ground.  We developed the Capacity to Manage Index.  Rather than indicating that the job was finished, we identified a job not even half done.  In many areas the "progress" seems to be going backwards.

This latest report from the Unit is far-reaching in that it brings together all the elements that show why the formal industrial relations system is systemically failing Australians.  All the players have dropped the ball.  The system is pulling Australian workplace relations back into a regressive era which is already affecting the ability of workers and business to compete in a global world.  This report suggests a revitalising way forward.


1. SUMMARY:  REFORM SUCCESS HAS
REVERTED TO REFORM REGRESSION

  • 1997:  The last serious attempt to reform the national industrial relations system.
  • Subsequent Commonwealth reform policy has gridlocked in the Senate.
  • A new regressive agenda has emerged -- driven by the States -- and proposed to be implemented if and when government changes federally.
  • Decisions of the AIRC have acted to undo the national reform policy of 1997.
  • Business has fallen silent and compliant.
  • Unions have rationally acted to regain the initiative of the industrial agenda.
  • The national skills training system remains in contradiction of national industrial relations policy.

The report's recommendations state that a complete re-construction of the legislative framework for industrial relations is required which would involve four separate pieces of legislation to:

  • Establish a more effective means to address low income issues.
  • Administer the law governing trade unions.
  • Establish an effective bargaining process.
  • Provide employee protection.

In addition, reform of Australia's skills training system is needed to free it from industrial relations constraints.


2. THE ECONOMIC CONTEXT

The reforms made to labour market regulation, especially the regulation and practice of industrial relations, have been a very significant source of Australia's economic success over the past 20 years.

The regulation of industrial relations has undergone a revolution.

Traditionally based on the need to guarantee wage equity both horizontally and vertically, industrial relations regulation in Australia fed the mechanisms that transmitted wage increases quickly across the economy.  If it was considered at all, the need for enterprises to be competitive ran a long second, with daylight in between.  Preserving these characteristics of the industrial relations system in a globalising economy would have been a substantial threat to the very objectives that broader economic policy was intended to serve:  inflation management, the reduction of unemployment, our external economic relations, efficiency and competitiveness in private and public enterprises and utilities.

Instead, the industrial relations reforms of the Hawke, Keating and Howard Governments dulled the effectiveness with which Australia's industrial awards transmitted wage increases across the economy, making a significant contribution to the management of inflation.  They also created opportunities for private and public businesses to improve performance by fixing poor work practices and freeing up managerial leaders to focus on building high standard businesses rather than managing the interference of third parties in their day-today activities.

The opportunities and threats due to globalisation remain.  International competition is now even more intense than it was in the 1980s.  There is a continuing need and opportunity for improvements in Australian competitiveness and business performance.  The last thing the Australian economy needs is a return to the 100-year-old assumptions that underpinned industrial relations law until over-turned by successive Labor and Coalition governments.

Yet that is exactly what is happening.  The developments in legislation over the past three years, the decisions by the Australian Industrial Relations Commission (AIRC) that are inconsistent with the policy of the Workplace Relations Act, and the poor management of industrial relations by at least some parts of Australian business, are shifting the industrial relations framework towards the old wage-equity model and ignoring the competitive imperative.

This relapse in policy and practice risks undermining some of the key factors on which Australian economic success has been built.


3. THE POLICY CONTEXT

The drift towards the past is being orchestrated largely within the labour movement, as trade unions take advantage of their leverage in the Australian Labor Party to shape State industrial relations legislation, with an eye to doing the same at the national level.

The current approach represents a failure of trade union policy since the mid-1990s to reverse the decline of trade union membership and influence.  That policy has been based largely on appeals to an outdated set of collective values.  These appeals have fallen on the deaf ears of young Australians who have no interest in participating in someone else's class war.  Acknowledging that failure, trade union policy-makers have returned to the traditional Australian way -- entrenching narrow, sectional influence through government.

It is seven years since any significant advances in industrial relations reform.  The last step forward was made at the beginning of 1997 with the commencement of the Workplace Relations Act.

Arguably, the length of time since the last reforms represents a political failure by the Coalition Government on two fronts over that period.

First, it has failed to achieve parliamentary support for the many legislative changes it proposed over the last seven years.  In the main, these changes have not been epoch-making.  For the most part, the proposed changes have been intended to clarify aspects of the Act, or to remedy deficiencies thrown up by practice, or to address attempts by the Australian Industrial Relations Commission and some courts to read the law down or to read it up, depending on what best suited at the time.

The minority parties in the Senate, especially the Greens and the Democrats, share some of the blame for this failure.  However, the Labor Opposition has been the major sponsor of the legislative paralysis.

Second, and perhaps more fundamentally, there has been a failure to innovate on policy, to take the legislative framework into different territory.  For example, it is possible to imagine a framework for workplace relations based on the assumption of overlapping interests between businesses and their employees, or of a framework, untainted by industrial relations, for income equity based on a combination of wage, tax and welfare policy.

One of the reasons for the Coalition's failure to articulate a more innovative position has been the absence of business from the debate.  The policy reform agenda from 1983 to 1996 was largely articulated and advocated by business, especially the Business Council of Australia (BCA).  Business has gone missing from the debate since.  It has declined to build a case for further reforms and to argue for those reforms.

Business has been "missing in action" on industrial relations reform since the period shortly after the 1993 election, when the Keating Government shut it out of policy-making forums in revenge for the support business gave John Hewson's 1993 election campaign.

The silence of business has left a vacuum filled by the ACTU, trades hall councils, individual unions and their acolytes in the universities and the media.

As a result, all recent policy and legislative change has been reactionary -- returning us to a worse past -- and driven by State ALP governments (with the exception of Victoria).  These governments are unconcerned about the implications for national competitiveness.

An "ALP industrial relations model" has emerged.  It is based on restoring wide powers to tribunals, strengthening union bargaining power, restricting the capacity to make non-union and individual agreements, and enabling tribunals to arbitrate more easily when unions cannot reach the agreements they want.  The recent legislative changes in Western Australia are a good example.  One result has been a flight by WA-based companies to the Federal domain, a move which may only provide temporary relief should an ALP federal government be elected.

ALP State Governments have also given legislative support to union agendas on safety, hours of work and the contracting environment.  With respect to the last of these, it is now also evident that ALP Governments are targeting individual contractors and attempting to treat them as employees for the purposes of industrial legislation.  This is a significant extension of the role of industrial laws.

One of the principal drivers of this reaction has been the efforts by the ACTU to forge common ground between ALP State Governments on key policy issues, including legislation and wages policy.

In the wake of this, the conservative stance on industrial relations policy taken recently by the Federal Opposition should be no surprise.  The key features of Federal ALP policy are:

  • The abolition of Australian Workplace Agreements without replacement.
  • The re-empowering of the AIRC to enable it to deal with any industrial matter, to enable it to prevent and resolve industrial disputes, and to award increases in wages and conditions usually only available through workplace-based collective bargaining.
  • The introduction of good faith bargaining, including requiring employers to negotiate a collective agreement with a union and to regulate the bargaining process itself.
  • An increased role for trade unions, including enhanced rights to organise and take industrial action.

The scheme of the 1996 Act was that union, non-union and individual agreements had equal standing, that agreements once made should be adhered to during their lives with4 out industrial action and that the Commission's power to arbitrate was heavily and clearly circumscribed.  The role of "public interest" considerations was further confined and the scope for unions to force businesses to make agreements they did not want was reduced.

The strategy underpinning this regime was to give employers and individual employees greater choice about the way their relations were regulated by confining the power and influence of the Commission and the unions.  The purpose was to facilitate improvement in the performance of enterprises by reducing the external barriers to modernising work practices.

At the same time, the legislation retained mechanisms for protecting the interests of employees, including provisions to address low wage issues.  The equity objectives of the legislation were not diluted by the more liberal approach to employment relations generally.

The Federal Opposition's proposals would undo the scheme, strategy and purpose of the 1996 Act.

Under the ALP's proposals, the scheme of the law would be one in which union agreements would be favoured, industrial action would be tolerated in more circumstances than at present, the Commission's power to arbitrate would be widened, "public interest" would be fashionable again and unions would be able to force unwanted agreements on employers.  The ALP strategy is to re-empower the Commission and unions at the expense of businesses and individual employees.

The ALP's proposals appear to be based on the assumption that the current Act is a recipe for unfairness to employees.  This is a problematic assumption.  In any case, there are means to address perceived unfairness that do not require a reversion to a worse past.  At the very least, the ALP's proposals will raise the cost of doing business.  At worst, they will create a framework for employee–employer relations that is inconsistent with the liberal macroeconomic framework that has progressively been put in place since 1983.

The ALP would take the industrial relations framework back to at least the 1993 position and, depending on the detail, possibly as far back as the 1988 position.


4. THE AIRC'S PERFORMANCE SINCE 1997

Since the commencement of the Workplace Relations Act in 1997, decisions of the AIRC have consistently reinterpreted and undermined its key principles and provisions.  The Commission's decisions have also helped undo the scheme, strategy and purpose of the Act.

Specific examples of departures from the policy of the Act resulting from decisions of the Commission include:

  • the interpretation of dispute-settling clauses to include the power to arbitrate disputes during the life of agreements even beyond the definition of "allowable matters";
  • an expansive view of the nature and purpose of "exceptional matters";
  • the attempts to discover a legislative duty to "bargain in good faith" when the Parliament clearly removed such a provision from the law in 1996;
  • the intense scrutiny given to non-union agreements compared with those involving unions;  and
  • expanding the scope for unions to take industrial action during the life of agreements.

The main effect of the Commission's decisions in these examples has been to re-instate to the Commission powers that it lost under the 1996 amendments.

The Commission's decisions have been complemented by those of the Federal Court.  For example, in a series of cases including the Belandra case (Australian Meat Industry Employees' Union v Belandra Pty Ltd [2003] FCA 910), decisions of the Federal Court have seriously compromised the ability of employers and employees to choose Australian Workplace Agreements.  The current position appears to be that offering AWAs to existing employees entitled to an award or agreement may contravene the freedom of association provisions.

There is a need for remedial legislation to correct this drift away from the policy of the Act, including by:

  • ensuring agreements automatically cease on their expiry date;
  • simplifying and clarifying the freedom of association laws;
  • remedying the problem whereby certified agreements covering one business are transmitted to another business even though no transmission has occurred.
  • preventing the Commission arbitrating about non-allowable matters under section 170LW (arbitration of disputes over certified agreements).

5. AUSTRALIAN MANAGEMENT OF INDUSTRIAL
RELATIONS HAS BEEN PATCHY

Australian human resources management can be as good as anywhere in the world.  There have also been some outstanding successes in the management of industrial relations and the reform of poor work practices during the last decade.  Mining, in particular, has been the stand-out example.

The paradox, however, is that there are many more examples of the failure of managements to take advantage of the opportunities available to improve performance by better management of industrial relations.  Good human resource practice has been constrained by poor industrial relations practice.

This is largely because co-operation and agreement with unions, not leadership of employees and business success, is the single most identifiable aim of the way in which Australian businesses manage their relations with unions.

The assumption underpinning the search for co-operation appears to be that sharing decision-making will align unions with company goals or help the business avoid being damaged by union behaviour.

This strategy is deeply flawed.  It has never delivered.

In contrast, Australian trade unions are usually clear about what they want to achieve, they know what their leverage is and they are prepared to use their leverage.  That is the single most identifiable characteristic of the way in which unions manage their relations with Australian businesses.

Inviting unions to share decision-making does not deflect them from their goals.  Unions co-operate as long as it helps them achieve their goals.  When it ceases to yield returns, unions stop co-operating.  Past co-operation does not align unions with organisational goals on a continuing basis and does not immunise against industrial action.

Unions speak the language of co-operation.  Yet they are prepared to stop co-operating when they judge that it is strategically necessary to do so.

Unions are unabashed about this.  When it comes to the crunch, they are prepared to inflict damage, perhaps quite a lot of damage, on a business in order to achieve their goals, even when there is a history of co-operation and joint decision-making.

Unions explain their unco-operative behaviour by transferring responsibility for it to the employer.  Unions withdraw co-operation because employers are being "provocative", or are "attacking workers", or because of "safety issues", or because an employer is behaving "ideologically".  This is code for "the employer has the upper hand".

There is a standard, predictable, identifiable union approach.  No-one should criticise unions for this.  They are part of the legitimate social activist tendency that any pluralist, democratic and free enterprise society should be able to absorb happily.

Unions usually behave in their own interests and in what they believe are the interests of their members.  They are recognised at law in Australia, they represent 1.8 million employees and they are authentically part of the Australian democratic process.  They do what they do because of what they are.  They are entitled to decide what they are.  This is a very business-like approach.  There is no point complaining about it.

Yet complaint, rather than strategy, is what is heard too often from Australian businesses.  The complaint is that unions are "irresponsible" or "punishing customers" or, the political perennial, "damaging the economy".  Complaints like these have never changed a single union strategy and serve instead to provide a union with confirmation that it is on the right track to an easy win.

Many businesses do not behave in a comparably professional or strategic a fashion when it comes to relations with unions.  The prevailing orthodoxy in Australian industrial relations is that it is not acceptable for employers to behave in an unco-operative way in their interactions with unions, whatever the circumstances.  This is why businesses still profess their wish to co-operate as they are being taken apart.

The prevailing orthodoxy leads to the classic situation where managers decline to act because they cannot get union co-operation.  They may decline despite the fact that managers usually have the capacity to act, without further recourse to the union, in accordance with the award and agreement on which the union had signed off.


6. TRAINING POLICY HAS BEEN A DRAG ON THE
MODERNISATION OF INDUSTRIAL RELATIONS

A recent report prepared by the Allen Consulting Group for the Business Council of Australia (1) observed that:

There are major changes in the dominant model of work organisation, with a greater role for generic knowledge, updating skills over time, and an increasing emphasis on skills driving competitive advantage.  There are unanswered questions about the future of the role of the AQF (Australian Quality Framework), competency based training and training packages as currently applied.  Consideration needs to be given as to whether these are still the tools to support effective skill formation in the next decade.(page 10)

There are very good reasons to believe that these tools are not the tools needed to support skill formation and, indeed, have not been since the national training system was created in 1992 -- either for the members of the BCA or for small- and medium-sized enterprises.

Again, as the BCA report observes:

This system was developed ... in response to the need for training policy to be integrated into strategies for industry growth and national economic development ... (page 6)

The national training system has always been about the economy and industries and not about enterprises.  The difficulties that the BCA report identifies with the national vocational education and training system (for example, how training packages are developed, their content and how they are delivered;  the small number of national enterprises that have seen it worth their while to become Registered Training Providers) are sharp reflections of that overarching problem.

The issue not so clearly identified in the report for the BCA is how the national and industry focus of Vocational Education and Training (VET) is applied to enterprises through the industrial relations system.  In addition to the reasons Allen Consulting identifies, it is this linkage which brings into question some of the key constructs of the national training system.

To understand this linkage, it is first necessary to understand the origins of national training reform.

In response to the risk that it was losing control over the direction of national wages policy in the late 1980s, the ACTU launched the award restructuring agenda.  Manufacturing unions, especially the AMWU, were key ideological and political drivers of the agenda.

The ACTU launched that agenda because it needed an alternative to the wages policy developments then in train.  Those developments ran the risk for the ACTU of giving momentum to enterprise bargaining when the ACTU neither wanted it nor was prepared for it.  Award restructuring was a way of bringing wages policy back under centralised control.

The rhetoric of award restructuring was that it was intended to provide the skills basis on which the Australian economy could become more competitive.  It required a thorough overhaul of the classification structures in awards, which could only be done by agreement between the "owners" of awards -- national trade unions and national employer associations.

While the rhetoric was one thing, the ACTU's marketing strategy was another.  The ACTU marketed training reform to its constituency on the basis that it would create career paths for employees, guaranteeing them wage increases as they moved up the career ladder on the basis of the skills they acquired.  And it would guarantee the roles of the Commission and national trade unions when they otherwise would have been threatened.

While the ACTU did not appeal directly to national employer associations, they have always been pre-disposed to national level policy-making, especially when they are involved.  Under pressure of competition from the BCA and others, the traditional employer associations grabbed the opportunity that the ACTU presented to re-invent themselves.

The pre-existing national industry training advisory bodies, on which unions and employer associations were represented, were ideal for the task of policy-making.

Award restructuring adopted a competency-based approach to training.  While competency was not universally supported (either in practice or theoretically), it had the advantage of matching trade union values:  all workers doing the same job could be treated the same or, a fitter is a fitter is a fitter.

The model to which the ACTU's strategy gave rise operated like this:

  • National trade unions and employer associations decided what jobs their industries required and what training was needed to do the jobs.  They negotiated the new award classification structures needed to reflect their agreements.
  • In parallel, within national industry training advisory bodies, the same unions and employer associations negotiated the training framework and sought government funding for it.
  • A usual result of industrial negotiation was that employees were entitled to training and employers were required to provide it.  The volume of training was an agreed item, not a business-driven one.
  • The completion of training qualified an employee for a higher level job at a higher rate of pay.

This is essentially the model operating today.

The problems with this model are:

  • It encourages less than optimum performance and effort by employees because employees are paid for skills they have acquired rather than how well they use their skills.
  • It leads to poor labour and capital utilisation across the economy.  The training model is a manufacturing model applied across the economy.  It is not even necessarily a good fit with manufacturing enterprises' needs.  Work becomes heavily demarcated at relatively fine points of distinction between jobs and employees can only move between jobs when they obtain the necessary qualification.
  • It is unfair.  Employees doing the same job are paid the same no matter how well or badly they do it.
  • It is a poor use of community resources.  Competency Based Training (CBT) is an inadequate strategy in a labour market, such as Australia's, not characterised by whole-of-life job security.  The notion of job-based training for a structured career path (another central concept) fits poorly with an increasingly diverse set of employment arrangements and labour market attachments.  The underlying philosophy of CBT is about "economy" and "industry", not about enterprise.  The link with industry awards implies a specific industry-based version of workforce organisation for diverse enterprises.
  • Policy-making is dominated by union activists and the minority of businesses that deal with them to make training policy.  They have considerable Australia-wide influence despite their minority status.

The Australian National Training Authority (ANTA) supports and fosters this system.  Its budget for Australia's training system is over $1 billion annually -- in fact, it was over $1.2 billion in 2003–2004.

As Allen Consulting observes:

... the policy framework, regulatory and administrative processes and training practices of the VET system fall short of serving the future complex skill development needs of large enterprises.

As one CEO observed somewhat more colourfully of the National Training Agenda in a Business Council survey conducted in 2000, "It's just this 4,000 pound marshmallow that's out there." (2)

It is time to re-assess national training policy.


7. THERE IS A FORWARD AGENDA

Going backwards, being conservative, is not the only reform agenda.  There are several areas of potential progressive reform that go beyond just fixing the problems apparent in the existing legal framework.  The need is not for re-regulation or de-regulation but for better regulation;  regulation that is common sense in a twenty-first-century economy and which remains consistent with the broader economic framework in which employment relations occur.


7.1 Union representativeness.  Notwithstanding their political, legislative and industrial power, unions' representative legitimacy is questionable.

Union membership has been falling steadily for 25 years in absolute terms and as a proportion of the workforce.

As Table 1 shows, in August 2003, private sector union membership was down to 17.6 per cent.  Public sector membership was 46.9 per cent, down half a percentage point since 2000.  Less than a quarter of men and slightly more than a fifth of women were union members, down by about 2 percentage points since August 2000.  Membership has fallen in most States and Territories, with marginal rises in WA and the ACT.

Table 1: Employees In Main Job, Trade union membership
August 2000 to August 2003

August 2000 %August 2003 %
Sex
Male26.323.6
Female22.821.8
State/Territory
NSW25.723.6
VIC24.622.1
QLD24.723.5
SA25.924.6
WA19.720.0
TAS31.829.4
NT21.821.5
ACT23.423.8
Sector
Public47.446.9
Private19.117.6

Source: ABS 6310.0


It is arguable that the few concentrated pockets of union membership remaining are the outcomes of monopoly representation rights rather than superior representation services.  ACTU recruitment policies, though more innovative under Greg Combet than under Bill Kelty, have failed to halt the decline in membership.

Unions still command considerable political influence.  The changes in State industrial and other legislation are directly attributable to the symbiotic relationship between unions and the ALP.  That relationship will drive any changes to the Workplace Relations Act.

Unions retain monopoly representation rights in law.  A union is allowed to write and enforce rules that permit it (and no other union) to represent specified classes of employees.  Unions are largely protected from the legal empowerment of a competing representative entity.

The Coalition made only a half-hearted attempt to reform this situation in 1996 and none since.

There is a stark contrast between the non-competitive framework for the provision of union representative services and the competitive frameworks regulating service provision in most other fields.

Not surprisingly, most unions have failed to embrace a service orientation.

Unions are also still powerful industrially, especially in the "old economy" -- transport, large-scale manufacturing, construction and in the public sector (including in service provision and utilities).  It is arguable that poor industrial relations strategy by businesses in those industries is at least partly responsible for the powerful position unions still hold in them.

There has been no serious public policy debate about the role of, and legislative underpinning for, unionism -- notwithstanding the widespread acknowledgement of the continuing membership decline.

One approach would be to link union representation more clearly to employee preference, removing registration under the WRA as the vehicle by which unions assume a representative status.  Representation would be driven by the quality of managerial leadership and of union representative services rather than representative rights created from 100 years of history.


7.2 Wage equity.  The Conciliation and Arbitration Act 1904 was intended to prevent strikes in the public interest by establishing wage equity, by bringing greater certainty to wage relativities and by enabling decisions to have wide effect.

Creating unions established on a trade or occupational basis as machinery of the Court and giving them exclusive membership rights was the mechanism chosen to give wide effect to decisions.

The Act was a means to set minimum wages administratively, not a means to regulate bargaining.  Inevitably bargaining regulation has been built on to the system's primary purposes.

Australia's system for setting minimum wages by trade and occupation, a system based on contradictory premises, is bound to have a number of fatal defects:

  • It runs a major risk of confusing minimum wages and market wages and of allowing an interaction between the two.  This was the central problem of wage inflation.  While this problem is now dormant, the system can, with little amendment, again become a very efficient mechanism for quickly transmitting wage increases gained by bargaining to all parts of the economy.
  • It is a very complex system that has given rise to complex job classifications arrangements which, in turn, have spawned an even more complex training system.
  • The system cannot meet its equity objectives because it can only deal with wages and employment conditions.  Equity is a matter of tax and welfare (and arguably of budgets for community services) in regard to which the tribunal has little influence.  Government is accountable for spending, tax and welfare but not for minimum wages.  We can only ever hope to have a second-best public policy outcome while this divided responsibility remains.
  • Laws governing union coverage are also a victim of the confusion between equity and bargaining.  Currently, one member in a workplace is enough to confer union legitimacy in a workplace and, for new sites, no members are needed.  This may be satisfactory for the "wide effect" objective.  It is, however, arguable that there are better ways of ensuring minimum wage equity than to rely on a mechanism whose practical legitimacy is problematic due to declining union membership.

Perhaps the major reason for re-considering how "equity" can be brought to income determination is that the assumptions which underpin the current system for setting minimum wages are 100 years old.

A different approach would be to establish a multi-partite body to advise the Federal Government on the combination of wage, tax and welfare (and possibly other spending) measures needed to bring about "equity".  It would then be open to the government of the day to pass laws, based on its consideration of the advice given to it, about the appropriate combination.


7.3 Clarity in legislation.  The existing legislation is the product of one of the most amended original pieces of legislation on the national statute books.  The original 1904 Act has never been considered afresh.

Currently, the legislation covers at least four different domains.  It provides for the establishment of minimum wages.  It regulates bargaining.  It establishes and regulates trade unions.  It provides legislative protection of various types to employees.

The law is administered by a single institution with a very significant bias towards settling disputes.

It is arguable that these functions are so different that they should be covered by separate pieces of legislation administered by separate institutions:

  • legislation establishing a body to advise the government on a minimum wage and accompanying employment conditions;
  • legislation to establish a body to regulate bargaining, include overseeing bargaining in good faith;
  • legislation to establish a body to register and regulate trade unions and to conduct ballots to establish the wishes of employees regarding representation (the only situation in which bargaining in good faith makes sense);  and
  • legislation to establish, protect and enforce the rights of employees.

The opportunity to clarify should include creating a unified national industrial relations system and remedying the conflict between industrial laws and competition laws, especially the way in which industrial law facilitates anti-competitive behaviour.


7.4 Training reform.  There should be no barriers to businesses and employees or unions agreeing on whatever arrangements for training they believe suit them best.  As it is now, it should be possible for enterprise bargaining agreements to embody the classification structures, career paths, training content and employer obligations that employers and unions care to agree upon.

It is, however, neither necessary nor desirable for national training policy to provide the platform for that to occur.

It is clear that the existing national policy still has its basis in the ideological and political milieu of the 1980s.

It is also clear that the national infrastructure for defining training content provided by ANTA is in conflict with the national industrial relations policy implemented in 1997.  It is in conflict because that infrastructure facilitates the development of industry-based training arrangements, when the thrust of industrial relations policy is collective or individual at the enterprise level.

The tripartite approach is also questionable given the low level of union membership, especially in the private sector.

Moreover, national training policy is at odds with the composition of the Australian labour market and with the way it operates.

A different way forward would be to:

  • Dismantle the national infrastructure for deciding training content.
  • Take advice directly from business on its needs for training provision.
  • Empower individuals to look after their own needs by directing some of the funds currently committed to supporting national infrastructure and State TAFE systems to individuals.  Finance individuals to purchase training provision directly from the training providers of their choice.
  • Whether ANTA is the most appropriate mechanism for managing this policy approach is an issue for future consideration.

8. CONCLUSIONS

A reversion in industrial relations policy and practice is already happening:

  • in State legislation and potentially at Federal level;
  • under the influence of the AIRC and the Federal Court;
  • by default, through poor industrial relations management in some industries;  and
  • as a consequence of the failure to re-assess national training policy in the light of national industrial relations policy.

There is a serious risk of labour market laws being taken back 12 to 15 years under a future Federal ALP government.  The legislative reversion will probably gain support from the practical application of the existing legislation.

There has been no countervailing policy position.  Business and business organisations have largely vacated the public debate.  The Coalition has no overall policy or strategy.

Economic and business performance is at serious risk of being undermined in the next three years, especially if a Latham ALP government is elected and implements its foreshadowed revisions to labour laws.  Such revisions would have serious consequences for inflation performance, employment growth, interest rates and competitiveness.

There is a progressive alternative to the conservative ALP agenda.  The alternative requires a complete reconstruction of the legislative framework for industrial relations and involves four separate pieces of legislation (income equity, regulation of bargaining, regulation of trade unions, employee protection) and a reassessment of national training policy.



ENDNOTES

1The Vocational Education and Training System:  Key Issues for Large Enterprises, The Allen Consulting Group, March 2004.

2Managerial Leadership in the Workplace, Business Council of Australia, September 2000, page 36.

Thursday, May 20, 2004

Iraq:  The Importance of Seeing it Through

An address given at the CD Kemp Dinner,
Melbourne, 19 May 2004


INTRODUCTION

It is a great pleasure to join you today to deliver the 60th CD Kemp lecture.

CD -- "Ref" -- Kemp stimulated debate on the issues that mattered since 1943.  In so doing, he played a role in shaping, as well as articulating, our nation's values.

During the Second World War, it should be no surprise that CD Kemp wanted to give emphasis to the promotion of democracy, freedom and the rule of law.

His key interest was to ensure that post-war Australia had a policy framework in place that balanced individual freedom with responsibility -- a framework which could deliver both prosperity and social cohesion.  It, therefore, seems particularly appropriate that today, in his honour, I will be talking about the struggle for democracy in Iraq and Australia's role in helping that nation build a better future for its people.

In a special way his legacy has endured.  His sons, David and Rod, live out their father's values and beliefs.  In the process they contribute significantly to the strength of the current government.  They are the only two brothers to have simultaneously served in a Federal Ministry since Federation.

CD Kemp shared with two other very distinguished Victorians, RG Menzies and BA Santamaria, a passion for the "navy blues".  I am told, and I choose my words carefully on such crucial matters, that Carlton has now entered a rebuilding phase.  If that be the case, then CD, RG and BA would have all been mildly encouraged.


A CONTEST

Iraq is caught in a complex and crucial contest of values and ideals.

It is a contest between the majority of Iraqis who want to establish a viable democracy and a violent and determined minority who want to install a new dictator or a Taliban-style regime in Iraq.  It is a contest of will -- as the terrorists and insurgents try to use fear and intimidation to drive the forces that support the democratisation of Iraq -- the coalition forces out of Iraq.

Ultimately, it is a contest of conviction -- whether the free world is prepared to protect and encourage democratic values.  Those values Australians cherish -- tolerance, opportunity, security and respect for one's neighbours.

A wide range of contending forces in Iraq have demonstrated they are prepared to use violence, against both coalition forces and the Iraqi people, to achieve their political objectives.  Their motivations and their ambitions are complex, sometimes rooted in the old divisions between Sunni and Shia or ethnic and tribal tensions.

The jihadist terrorists -- taking their inspiration from organisations like Al Qaeda are driven by a bigoted and distorted ideology that is the complete antithesis of our own and, we should remember, the vast majority of Muslims.

But we also need to understand that this contest in Iraq represents a critical confrontation in the war against terror.  We recognise this and so do our enemies.


WHY WE MUST STAY

I find it astonishing when people claim that Iraq is a diversion from the real war against terrorism.  The reality is that international terrorism has invested an enormous amount in breaking the will of the coalition in Iraq.

Not only are organisations associated with al Qaeda operating in Iraq but each and every turn of the Iraq struggle is interpreted by spokesmen for international terrorism as part of the ongoing campaign against the United States and her allies.

Whatever may have been the origins of the horrific attack in Madrid, al Qaeda and its associates opportunistically associated that attack with Spain's participation in the military operation in Iraq.

The terrorists have recorded Spain's subsequent decision to withdraw from Iraq in the victory column against the West.

With that in mind it is incontestable that a failure of will in Iraq by the coalition would be seen as an enormous propaganda victory for international terrorism.  A victory with far reaching consequences.

Any weakening or retreat by the coalition in Iraq will not appease the terrorists.  Those who imagine that respite from future terrorist attacks can be purchased by withdrawing or temporising could not be more wrong.

International terrorism is an enemy of Australia because of who we are, not what we have done.

Australian withdrawal from Iraq would not buy immunity from terrorist attacks.  International terrorism treats weakness and retreat with contempt.  Countries, and their citizens, which have suffered terrorist attacks over recent years include those who have opposed as well as those who have supported coalition action in Iraq.

It will be a heavy blow to the terrorist cause if democracy and all that it offers is brought to the Iraqi people.  That is why the ferocious campaign of recent times to derail not only the transfer of power on 30th June but also the establishment of a democratic infrastructure for Iraq has been so determined.

The terrorists know that if democracy is installed in Iraq they have lost.

Iraq is the key to creating new hope for the people of the Middle East.

It will be a great encouragement for them to see democracy take root in Iraq to witness a more equal distribution of wealth and greater opportunity for ordinary people to live peaceful and independent lives.

It was very sobering during my recent meeting with William Shawcross, the well known commentator on international events, to be reminded that out of the seven regions of the world, the UN Development Programme found that the Middle East region had the least freedom of all -- fewer civil liberties, fewer political rights and less free media.  Women's lives, in particular, are more restricted than anywhere else in the world.

Sadly, the appalling abuse of Iraqi detainees in Abu Ghraib prison will have caused many in the region to question whether democracy will make a difference.  They need to see that difference in action -- that the victims of abuse are not only able, but encouraged to speak out, seek redress and find justice.

We share their sense of outrage.  The Australian Government unreservedly condemns the abuse of prisoners of war.

We remain profoundly shocked and disturbed by the terrible images of wanton acts of cruelty and degradation -- behaviour which dehumanises all those involved.

Australia expects the US and UK forces to observe the highest standards of discipline and conduct -- just as we do of our own defence force personnel.  We therefore welcome the statements by President Bush and Prime Minister Blair that there will be a full investigation with those responsible being brought to account through an open and transparent process.

It is important that these reprehensible actions of a few do not overshadow the careful, disciplined and courageous behaviour of the overwhelming majority of the coalition forces.  Their work in Iraq is too important.  Their professionalism is too admirable.  The stakes are too high.

We should reject the line that the moral basis of coalition action in Iraq has been destroyed by the unacceptable behaviour of some of its personnel.

Helping Iraq build a democratic future represents not only a challenge but also an important opportunity for the whole region.

That is why, irrespective of views held as to the wisdom of the original campaign against Saddam Hussein, it is overwhelmingly in the interests of not only the coalition but the cause of freedom around the world that the forces opposed to democracy in Iraq are overcome.

During a recent visit to Baghdad, John Howard discussed the current situation with representatives of the Iraqi Governing Council.  They asserted strongly that the majority of Iraqi people want a democratic future.

But he was also reminded that that future hangs in the balance.  Events are passing through a critical phase.  Iraq is poised between the establishment of a new democratic order and the resurgence of chaos and tyranny.

There is a job to be done in Iraq.  And my view remains that Australia should be contributing to that effort -- if anything it has been strengthened and reinforced by the experience of recent visits.  I am more determined than ever that Australia should stay the distance and finish the tasks for which we have taken responsibility.


WHY WE WENT

We could spend a great deal of time revisiting the merits or otherwise of Australia's military commitment as part of the coalition of the willing.

I do not intend to revisit in detail the events surrounding that decision.  But I would remind those who now want to rewrite history that disagreement then centred on how the international community should respond to Iraq's continued non-compliance with UN resolutions.  In the lead-up to coalition action, there was never any argument about the existence of Saddam Hussein's weapons of mass destruction.

The government remains steadfast in our view that it was the right decision, taken in the long-term national interests of this country.  The firm stand taken by the coalition against Saddam Hussein has contributed already, in my view, to some very significant improvements both for Iraq and for global security.

As a result of the coalition's action, Iraq is no longer ruled by a loathsome and homicidal dictator, and potentially hundreds of thousands of lives have been saved.

Understandable anger at abuse and other wrong-doing by some coalition personnel should not result in our forgetting that, if the advice of last year's critics of coalition action had been taken, Saddam Hussein and his regime would still be brutalising Iraq.

Through its actions in Iraq the coalition has sent a clear signal to other rogue states and terrorist groups alike -- the world is prepared to take a stand against actual and potential proliferators of weapons of mass destruction.

This has already had some resonance.  There is little doubt that the firm stand taken against Iraq has influenced countries such as Libya which has now decided to give up its weapons of mass destruction.  I am not arguing that it was the sole motivating factor but I think it certainly conditioned the circumstances that resulted in Libya's change of heart.

But regardless of the positions people might have held in relation to the coalition's actions against Saddam Hussein, it is time to recognise that the situation in Iraq has moved on.

Iraq, along with the caves of Afghanistan, the hills of Pakistan's Northwest Frontier Province, and the haunts of Je ma'ah Islamiyah in South East Asia, is now the front-line in the global fight against terrorism.

Violence and brutality, often against innocent civilians, are being used as a deliberate tactic in the on-going campaign to undermine Iraq's hopes of representative government and a free society.

If they succeed it will send out a very bad message not only through the Middle East but around the world.  It will dishearten those who struggle for democracy and give confidence to repressive regimes and terrorists everywhere.


FRIENDS AND ALLIES

If we lose heart, if we abandon our friends, if we choose to give the wrong signal to the terrorists, that will not only make the world a less safe place but also damage the reputation of this country around the world.

We must remember it is in times of adversity that the value of friendship is most keenly felt and it is in times of adversity and challenge that that friendship is tested.

Our presence in Iraq is read as an important and valued demonstration of Australia's support for her allies -- and in this regard not only the United States and the United Kingdom, who continue to carry the major share of the burden.  It is often forgotten that close friends and partners of Australia in the Asia Pacific region, such as Japan, Korea and the Philippines, are valued members of the coalition.

Our alliance with the United States was, unapologetically, a factor in the decision to join the coalition.  And it should be a factor in any consideration of our continued participation in the coalition.

For Australia, there is nothing comparable to be found in any other relationship -- nothing more relevant indeed to the challenges of the contemporary world.

Our view on Iraq is not dictated by the United States.  It is determined by consideration of Australia's national interest.  And that consideration has led us to the same conclusions as the Bush Administration:  a stable democratic Iraq is important for world security and stability.  Given the commonality of values and interests, that we have reached the same conclusions should come as no surprise.

Alliances are two-way processes and, where we are in agreement -- where we recognise a commonality of interest we should not leave it to the United States to do all the heavy lifting just because it is the world's superpower.  To do so would undermine the most important security relationship we have.

We understand, as do our other allies, that the United States is the only nation that actually has the power to change the world for the better.  That is what they are trying to do in Iraq.

Surely even the most passionate opponents of our involvement in the Iraq war, even the greatest sceptics about the American alliance, can see that right at the moment, when the threat posed by terrorism is so potent, we should be aligning ourselves strongly with countries like America and Britain, and other proven friends and allies.  In this context, the actuality of our presence in Iraq is very important.


NOT SYMBOLISM

I felt very privileged to spend ANZAC day with the Australians currently serving in Iraq and to be able to convey to them, personally, the thanks and good wishes of the Australian community.  They are engaged in very important, dangerous work and our recognition and support are very important to them.

There was nothing symbolic about the attitude and demeanour of the men and women I met on ANZAC day -- they take their role seriously and so does the government.

Surely no thinking person could describe the crew of the HMAS Stuart, for instance, as merely symbols as they fished American personnel out of the water following the suicide attacks on Iraqi oil refineries last month.  I am sure the staff of the Australian diplomatic mission do not regard the detachment of ADF personnel assigned to their protection as symbolic.  To view the ADF presence as symbolic is not only factually inaccurate -- it is insulting.


THE CURRENT SITUATION

Elements of danger While in Baghdad, I also had the opportunity to talk to Ambassador Paul Bremer, the Coalition Provisional Authority Administrator, and American field commanders about the reconstruction effort and the current security environment.

The recent outbreak of violence has been very serious, but we do need to keep a sense of proportion.  We have to remember that while the situation has deteriorated in certain areas, it has improved and continues to improve in others.

The coalition is making progress in restoring order in those areas affected by violence.  This lawlessness is not indicative of a mass uprising.  Media reports of widespread loss of control across central and southern Iraq are, in fact, an exaggeration and misreading of a complex situation.

The north of the country remains relatively peaceful and most of the south is now reasonably stable.

But violence and brutality are a deliberate tactic in the campaign to undermine Iraq's hopes of representative government and a free society.

And we must expect that the insurgent and terrorist groups, including foreign Islamic militants and jihadists, former regime elements, disaffected Sunni nationalists and political opportunists, will continue to use violence in a bid to disrupt the political transition and reconstruction.

The fight against the insurgents and illegal militias is not easy.  They have shown complete contempt for Iraqi civilians.  They routinely launch their attacks from mosques, schools and markets using innocent people as cover - knowingly exposing them to danger.

As so brutally demonstrated in Basra -- a busload of children on their way to school are of no account, provided the target is hit.  Civilians are, in the dreadful language of terror the "soft targets".

Elements of hope But despite these serious security challenges, significant progress has been made over the last year to rebuild that nation.

The coalition has made steady progress in restoring basic services and infrastructure and reviving the Iraqi economy.

Electricity, water, telephone and sanitation are gradually being restored to pre-war levels or above.  Peak power production is greater than it was before the war, as well as being much more equitably distributed.  Six major water treatment plants have been rehabilitated.

More than 15,000 mobile telephones are sold each week -- under Saddam Hussein mobile phones were outlawed.  Total telephone subscriptions have now passed the 1 million mark -- 20 per cent higher than under Saddam Hussein's regime.

All the universities are open and 2,500 schools have been rehabilitated throughout the country.

All 240 hospitals as well as 1,200 health clinics are operating.  More than 3 million Iraqi children under the age of five have been immunised against preventable disease.  Public health spending is now close to 60 times greater than under the Hussein regime -- when it was virtually non existent.

Some 255 municipal councils have been established since July 2003.

The Central Criminal Court is operating.  And Iraq has a single unified currency for the first time in 15 years.

Crude oil production is already around pre-war levels.  The difference now is that the benefits flow directly to the Iraqi people.

The Coalition has also invested in 18,000 reconstruction projects, providing thousands of jobs for local Iraqis as well as infrastructure for their future.

Inflation is stable at around 20 per cent after the terrible hyperinflation experienced during Saddam Hussein's regime.  And real GDP is forecast to recover by 30 per cent in 2004.

Another very positive sign is the return of government ministries to Iraqi authority, including the Ministry of Agriculture, an area where Australia is making a significant contribution.

Moreover, Iraq now has a growing and robust independent media, which is absolutely essential for the development and maintenance of a healthy democracy.

Even the harshest critic of the coalition's activities would find it difficult to argue against the fact that, in large parts of Iraq, the situation is better than it was twelve months ago and measurably better than it was under Saddam Hussein.


WHAT IS THE OUTLOOK FOR IRAQ

In April, the Iraqi Governing Council adopted a landmark Transitional Administrative Law, protecting the basic human rights of all Iraqis and laying out the roadmap for an elected Iraqi government.

After 35 years of ruthless oppression and misrule, Iraq will have free elections and a representative government.

The Iraqi Interim Government will be installed on 30th June.

It will be replaced in January 2005 by an Iraqi Transitional Government with broader powers, which in turn will be replaced by a new Iraqi Government following a referendum on a constitution and fresh national elections scheduled for the end of 2005.

The Australian Government is pleased to note that the United Nations special envoy Lakhdar Brahimi is actively consulting a wide range of Iraqi groups to develop workable arrangements for the Interim Government.

We also know that active debate is taking place in New York about a new UN Security Council resolution to express the international community's support for the new political arrangements.  In this context, we also strongly support the role of the United Nations in helping prepare elections for a transitional and then a permanent Iraqi administration.

In referring to this role for the United Nations, I note over the weekend calls by the Leader of the Opposition for the coalition to withdraw from Iraq and be replaced by, and I quote, "a UN force that has strong involvement of Arab states".

This suggestion ignores the facts.  The multinational force in Iraq, composed of over thirty countries led by the United States, is already fully sanctioned by the UN Security Council.  There are strong International precedents for this approach

It is quite unrealistic to suggest that this arrangement should now be replaced by a UN blue helmet operation.  Such an operation would depend on voluntary contributions, but there is no sign of the required willingness on the part of a wider range of countries, including Arab States, to contribute peacekeepers to a UN force.

Nor is it at all certain that the Iraqis would welcome the presence of armed forces from neighbouring countries.

Even when the Iraq Interim Government is in control, there is still likely to be a pressing need for a continued coalition presence.  Iraq will continue to depend on coalition forces to provide security and respond to threats of violence and terrorism.

As General Abizaid of US Central Command has acknowledged, it will take time to establish credible and capable Iraqi security forces.

Progress is being made -- close to 200,000 Iraqi security personnel are already on duty and recent polling indicates that the general public's confidence in the Iraqi security forces is increasing rapidly.  I am proud that Australia is assisting to build those forces.

No one imagined that the task would be easy.  And perhaps the task is harder than we first thought.  In the euphoria that followed the toppling of Saddam Hussein, some hoped that Iraq's post-war transition could be accomplished relatively quickly.

The reality is that the transition period has been, and will continue to be difficult, more difficult than we might have hoped.

The next two months in Iraq will be critical both politically and militarily if the timetable for transition to democracy is to be achieved.  And it is likely that the violence will increase as extremists, the supporters of the old regime and political opportunists try desperately to disrupt the process.

A graphic example of such disruption occurred on Monday this week, when the President of the Iraqi Governing Council, Izzedine Salim, was assassinated.

Nevertheless, 30 June 2004 represents an important milestone on the road to Iraqis controlling their social, economic and political future.


WHAT ARE AUSTRALIA'S OBJECTIVES

Enhance security One of Australia's key objectives in Iraq is to help achieve the stability needed to establish and support democratic institutions and processes.

While the coalition forces currently provide the bulk of security, and will need to do so for some time, we know that this role will be assumed by a properly trained Iraqi military and police as soon as is practicable.

That is why Australian Defence Force personnel are in Iraq helping to train Iraqi army and navy personnel.  That is why Australian Federal Police officers will be assisting to train Iraq's new police force.

We also want to contribute to Iraq's economic rehabilitation.

We have focused our effort on areas where we have particular expertise - agriculture, economic management, governance capacity building, donor coordination and human rights investigations.

Australian advisers are working directly with Iraqis to build their capacity to take responsibility for long-term agricultural policy planning and providing expertise in agricultural research.

We have helped to re-establish the Ministry of Agriculture, set up a payments system for the 2003 harvest and used our experience to help Iraqi farmers bring in the bumper summer grains harvest.

Australian experts have also been deployed to help rehabilitate water and sanitation services, emergency services, oil production, update Iraqi law -- including economic and commercial law, assist in the preparation of a credible budget -- the first in 30 years, and provide expertise for the criminal investigation into human rights abuses during Saddam Hussein's rule.

Our ADF Air Traffic Control Detachment has also played an important role in ensuring one of Iraq's essential infrastructure installations -- the Baghdad airport functions effectively.

This year's budget will ensure the continued funding of our involvement in Iraq until the middle of next year -- 30th June 2005.  That doesn't mean we are going to leave on that date, or any specific date, but simply means that we are making prudent provision for being in Iraq for a while yet.

When can our forces leave Iraq?  The answer can only be -- when the jobs assigned to respective force elements have been completed.

It is impossible to be more precise than that.  As each milestone along the path to a more democratic Iraq is passed, the time of coalition force withdrawal draws nearer.


IRAQ IS A TEST

When the government announced on 18th March last year that we had committed Australian Defence Force elements to the coalition of the willing, we made a commitment to the people of Iraq.  We undertook to help them build a new nation, one which would respect the rights of all its citizens, one that was at peace with itself and with its neighbours.

We also made a commitment to our long-term friends and allies to stand with them in the fight against proliferation and terrorism.

Iraq is an important test for the world's democracies, including Australia.  It is a test of values -- whether the powerful call for freedom can overcome the destructive force of terror.

And ultimately, it is a test of character and leadership -- whether we possess the necessary determination and resolve to meet our commitment to the Iraqi people or whether we will retreat in a pointless attempt at isolationism.

I know Australia for its part can meet this test, because denying terrorists victories and playing our role in ensuring global stability is something that I believe the Australian people, whatever their politics, overwhelmingly want.

Sunday, May 16, 2004

Punitive Taxes Hurt Us All

Tax reform remains an incomplete project in Australia.

While the 2004-05 Federal Budget makes some steps in the right direction, much more needs to be done.

It is well recognised that Australian middle-income earners -- the group that represents the majority of taxpayers -- face some of the highest marginal tax rates in the world.

The reason is that the top two income tax rates are high and kick in at lower levels of income than in other countries.  For example, Australia's top tax rate is 48.8 per cent, excluding the Medicare surcharge, and kicks in at $60,000.

This compares with a top marginal rate in Britain of 40 per cent on income of more than $83,000 and a top marginal rate in the US of 43.5 per cent, including state surcharges, on income of more than $595,000.

The result is that the tax take on the most productive people in society is far too high.

It is also having a substantial impact on the average person.  Anyone on average male weekly earnings faces a marginal tax rate of about 43.5 per cent.

But tax rates and thresholds only tell half the story.

Australia also has a welfare system with multiple payments and multiple withdrawal schedules based on income and other factors.

The interplay between Australia's high marginal tax and its welfare system produces large effective tax rates -- tax rates plus welfare payment withdrawal rates -- which are often more than 60 per cent on median income families.

This is not only unfair and breeds resentment, but is undermining the country's productive capacity.  It provides a strong incentive for people not to work harder, or invest in new and more profitable skills.

It also gives a strong incentive for people to waste resources in tax minimisation schemes and other unproductive activity.

The incentives are particularly perverse in the key areas of balancing work and home, and retirement.

Skilled women re-entering the workforce face not only high effective tax rates but the additional costs of paying for child care and other home-based assistance.

Retired people, especially partly self-funded retirees, also face high effective tax rates, as the pensions and other benefits are withdrawn with additional income.

The solution is clear.  The top tax rates should be cut substantially on a permanent basis and the corresponding income threshold should be increased.

The Howard Government attempted to follow this path as part of the GST tax reform package but the ALP and minor parties succumbed to the politics of envy and blocked it.

In the latest Budget, the Government has proposed a phased increase in the tax threshold for the two income tax rates by about $10,000 each.  Wisely, the ALP has said it will support these changes.

While the proposal will help, it is inadequate.  First, the benefits will be temporary, as they will be eroded by bracket creep.  Second, the key problem is that rates of tax are still high and are not being altered.

What is needed is political maturity, in the media as well as political parties, that can see through the politics of envy and recognise that taxing the hell out of the most productive people hurts us all.


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Friday, May 14, 2004

Zero-risk Science

It is budget week and the government has promised a $5.3 billion five-year program designed to lift research and development and put the "nation's innovation system" onto a more commercial footing.  The fine print, however, should have included a disclaimer explaining that in the agricultural and environment areas the innovation must be zero risk and also perceived to be zero risk.

Given the precautionary principle, and well funded activists who are quick to label new technologies anti-environment, commercialising agricultural R&D can be difficult.

The extent to which the national psyche has become captured by environmentalism is evident in The Australian newspaper's "Saving the Murray" series.  Journalist Amanda Hodge was awarded a United Nations Association of Australia Media Peace Award for promoting "understanding and resolution of environmental issues" through a story that included the following data-free assessment of technology and the Murray River.  "Bridled by dams and beggared by progress ... the Murray's health has deteriorated in direct proportion to the increasing importance of its resource to the nation's economy", she wrote.

Using Hodge's logic, last summer's record wheat harvest must have been another blow to the river's health!

The reality is that the Murray is an old river flowing through a semi-arid environment of "droughts and flooding rains".  Technology, however, has allowed us to store water and keep the river flowing even during extreme drought.

Biotechnology offers the potential for crops to be grown in the Murray-Darling Basin that are more drought tolerant.  There is currently a research program at the South Australian-based Centre for Plant Functional Genomics (ACPFG) focused on drought tolerance and the related problems of high soil boron, salinity and frost tolerance.

Frost tolerance has become an issue because plant breeders have been selecting for early maturing varieties in order to escape potential summer drought.  But, this has now exposed crops to frost during flowering.

As an example, there is variation for all these traits in the "crossable" gene pool for wheat and barley, but there are far better genes in other plants and these would need to be transferred via GM methods.

This is where the commercialisation problem is likely to begin and end.

The Victorian government claimed, and still claims, it wants to be the biotechnology capital of the world -- but in the laboratory.

There appears no clear path for the commercialisation of GM food crops in Victoria or any other State (with the possible exception of Queensland).

In my view this is a direct consequence of the very successful anti-GM, anti-technology, anti-innovation Greenpeace campaign.

In New Zealand, anti-GM sentiment was very strong and so a confused government held a royal commission into the issue.  The commission found that GM is not inherently dangerous;  that New Zealand could not afford to ignore the potential benefits of the technology, and recommended the lifting of their moratorium.

In 1988 Australia was the first country to release a GM organism, a successful crown gall bacterium to prevent the disease of roses, apples, pears and peaches.  Since then, we have made only one other release, GM cotton, first planted in 1996.

Australia has been a secular, rational nation with efficient agricultural industries able to develop and adopt state-of-the-art technology.

On the basis of quasi-religious belief and prejudice, however, State Governments are now imposing bans on technologies that promise improved yields while reducing environmental impacts.  At risk is our international competitiveness.

If we want to stay technologically advanced, government research funding might be useful, but there is a more desperate need for leadership.


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Thursday, May 13, 2004

When Will We Ever Learn?

Backgrounder

"No person or department can be allowed to use the forest in such a way as to create a state of danger to others.  If conformity with this rule cannot be brought about, the offender must be put out of the forest ..."

Stretton Report on the 1939 bushfires

"The Inquiry considers that fuel management through controlled burning is the only practicable way of reducing the excessive build-up of fuel loads in the ACT's extensive areas of park and forest ..."

McLeod Report on the 2003 ACT bushfires


INTRODUCTION

Last year, more than 3 million hectares of South East Australia burned.  This was an environmental disaster on a giant scale.  Large areas of wilderness, including old growth forest, have been burned out and may never regenerate in their original form.  Rare, endangered and threatened species over those areas have been exterminated.  There was loss of human life and severe property destruction.

An environmental incident of a much smaller and less damaging kind, for example a major oil spill at sea or unauthorised logging in a forest, would have generated expressions of extreme outrage from environmental organisations.  The bushfire disaster produced little more than expressions of dismay and regret married to somewhat frantic pleas that the public not indulge in the "blame game".

A number of official inquiries into the disaster have since concluded their work.  It is possible to begin to see the truth about the fires -- why they started, why they were not stopped, who helped to create the conditions that fed them and why Australia, with its long experience with fire and much improved fire-fighting capability, seems to manage fire no better than it did decades ago.

Clearly, our policies with respect to bushfires have failed.  We cannot simply accept that huge areas of Australia will suffer highly destructive wildfire, people will die and fire-fighters will risk their lives every few years.


WHAT HAPPENED LAST YEAR?

What happened last fire season was an extreme fire event.  It included the following:

  • Vegetation and wildlife on a vast area of land were destroyed (Table 1).
  • The fires were of exceptional ferocity.
  • There was only limited success in containing them.

Table 1:  Hectares Burned in 2003 Bushfires, by State/Territory

State/TerritoryDamage in hectares
ACT and NSW1,595,000
Victoria1,324,000
Queensland115,000
Tasmania41,000
Western Australia31,000
Total3,106,000

(Source:  National Association of Forest Industries)


These are the bare bones of the story.


THE TOTAL COST WAS IMMEASURABLE

It is not possible to put a precise figure on the total cost of the fires, but some idea of the extent of the damage can be given.


DEVASTATION OF PARKS

We have seen the destruction of many of the environmental "jewels in the crown".  Three-quarters of Kosciusko National Park was burned.  Most of Namadgi National Park in the ACT burned.  Large areas of the Gippsland forests burned.

This compares with annual clearing rates of native vegetation of less than 20,000 hectares in total in NSW and Victoria.  Incidentally, wild-fires would fall within the statutory definition of "clearing" of native vegetation.  The fires can also be compared with average annual logging of 60,000 hectares in Australia.  The fires were the equivalent of 150 years of clearing or 50 years of logging, compressed into in a few weeks.


LOSS OF BIODIVERSITY

Perhaps more significantly for environmental policy, there was an immediate and enormous loss of biodiversity which must be of profound concern to all who love the Australian bush.  Billions of trees and other plants were destroyed and billions of animals and insects were killed.  It is also of profound concern that conservation land managers have given us no assessment of the severity of this impact.  Where are the reports/the transparency required of other land managers?

Valuing this loss of biodiversity is difficult, although some attempts have been made on the basis of trade-offs with potential commercial development.  At one extreme, environmental groups might put an almost infinite value on the loss of areas of such high conservation value.  Others might estimate the loss of amenity, timber resources or the cost of the fire-fighting effort.

Assuming a one-off virtually total destruction, then a very conservative, nominal value of $1,000 per hectare of lost biodiversity (less than infinite but more than the likely annual commercial timber yield), results in a biodiversity loss, in a few short weeks, equivalent to over $3 billion.

It is unlikely that conservationists would be happy to ascribe a monetary value of this kind, but a legitimate question then arises:  what do they think is the loss in conservation values from the wildfires?


CHANGE IN FOREST STRUCTURE

What we are trying to capture are the one-off losses.  Of course, the bush and forest will regenerate over time and they are already doing so.  But the time involved may be very long given the thoroughness of the destruction, and the resultant pattern may not resemble the original.  For example, the opinion of CSIRO scientist, Phil Cheney, was that it would take 200 years for the forests in the west of the ACT to recover.

Furthermore, this does not take into account the likely longer-term adverse effects of wildfire.  Very hot fires kill plants and animals, and sterilise the soil.  They destroy habitat.  They also expose the soil to erosion and damage catchments and aquatic life.  In the context of our national dialogue on conservation, this kind of destruction is much more complete and widespread than a controlled burn or a managed forest operation.

In the longer term, the ecology and landscape will be irrevocably altered.


ECONOMIC AND PERSONAL LOSSES

Property damage was extensive.  Five hundred and six homes were destroyed in the ACT.  Four people died.  The Insurance Disaster Response Organisation put the insured losses at $415 million and stated that the uninsured losses "cannot be estimated".  There were doubtless uninsurable losses, which cannot be guessed at.

There were further estimates of economic losses.  For example, it was estimated that the loss in four Victorian shires alone was $121 million.  Twenty thousand hectares of production Alpine Ash were burnt in Victoria.  The cost to tourism in the Alpine region has been estimated at $121 million.

It seems likely that the combined economic losses could be well in excess of $1 billion.


OTHER IMPACTS

The equivalent of 25 per cent of our total annual greenhouse gas emissions were released.  Some of this release, however, would occur over a more extended period with more moderate fire regimes.

There is massive soil loss and sedimentation of water storages with short and long term economic and environmental costs.

Smoke effects in urban areas were also substantial.


COULD THE FIRES HAVE BEEN MITIGATED?

A question that continually recurs is whether catastrophic fires can be avoided or at least mitigated.

Evidence was presented at the official inquiries by those involved in fighting the fires that bolder and more vigorous early attacks on the fires might have limited their severity.  Various reasons were given why this did not happen.  The increased awareness of health and safety regulation, the acute sensitivity to environmental disturbance and the well-grounded fear of legal reprisals for mistakes slowed the response and virtually guaranteed that the fires would run out of control.

The corollary of this cautious approach was an excessive degree of centralised control.  There were numerous anecdotes of the disjunction between the operational demands on the fire front and the instructions from the control centres.  Bureaucratic structures are cumbersome at the best of times, but are particularly ineffective in dealing with emergencies.

In this practical sense, suppression of the fires was bound to fail and the catastrophe was inevitable.  Repetition at some future time also seems inevitable unless there are significant changes to fire-fighting and fire-mitigation operations.

There is a larger issue here.  There has been a drift of public policy away from mitigation of fire risk towards suppression of fires.  But suppression is not an effective long-term policy on its own.  If the fires had been successfully suppressed last year, that would simply have preserved the accumulation of fuel waiting for the next set of conditions favourable to ignition.

More effective suppression will always be important but something more than suppression is needed (see below).


DID WE WANT THIS TO HAPPEN?

This is not as absurd a proposition as it may seem at first sight.  Its premise is that any significant build-up of fuel on our continent will eventually burn.  Any expressed preferences must be based on this historical certainty.

Australia is a fire-prone continent.  Yet there is a strong reluctance in the natural psyche and the national public conversation to look at the Australian bush as two things -- a complex ecology and fuel.  It has been said that the rural bush is becoming an exurban bush, subject to a fire protectorate that projects urban and industrial values.  The aim becomes the preservation of all vegetation -- living and dead -- and hence, permanent suppression of fire.

Most people would undoubtedly have preferred to avoid the loss of life and property that the fires caused around the urban areas.  Most would also have not wanted the destruction that occurred in farming areas.  Many would also have liked to save the Parks and forests.

But preferences of that kind have no meaning unless they are accompanied by practical action to give them effect.  If that is not done, then the declared preferences are, at best, empty or, at worst, diametrically opposed to the real preferences.

So, if we choose to live among fire hazards, as it is apparent that many urban residents want to do, and we enact regulations or pursue behaviours that make hazard-reduction difficult or impossible, then can we really say we have a strong preference for damaging fires not to happen?  Australians cannot claim to be ignorant of their high eventual probability.

And if we create large new National Parks willy-nilly and then refuse to accept the need to reduce fuel build-up, are we not implicitly encouraging and sanctioning more extreme fire events over much larger areas?

We even have statutory forms of selective vision here (see Box 1).

Box 1:  Controlled Burns Are Threatening -- Wildfires Apparently Are Not

Why are wildfires not listed as a "key threatening process" under the NSW Threatened Species Conservation Act?  After all, the destruction of Threatened Species by wildfires is several orders of magnitude greater than most of the current listed processes.  Wildfires would then have their own "threat abatement plan".  And the need for a threat abatement plan would seem to be obvious and pressing.  It might include provision for substantial and frequent areas of reduced fire hazard as refuges for fauna and stores of seed.  Instead, the Act lists "too frequent fires" as a key threatening process -- a provision directed at hazard-reduction burning.


Conservation and local resident groups have expressed varying degrees of opposition to fuel reduction by controlled burning.  They may not want wildfires to happen, but they are, in effect, advocating policies that make them inevitable.

These are practical, not academic, matters.  They are at the heart of the explanation for the fires and the pessimism that many feel that nothing will be done to avoid the next disaster.


ON DENIAL -- OR DID THIS REALLY HAPPEN?

The outpouring of greenhouse gases in the bushfires was matched by an outpouring of denial by some groups.

The National Parks Association (NPA) rushed into print on 22 January 2003 proclaiming that there was "not a skerrick of evidence" to support the accusations of insufficient hazard-reduction burning.  On-ground experience and all subsequent official reports flatly contradict this.  The NPA also asked how a fire that was burning in the ACT could be blamed on a NSW department, apparently oblivious of the propensity of fires to travel great distances.  This was then followed by the routine furphy concerning failure to sign the Kyoto treaty.

The Nature Conservation Council (NCC) urged more focus on homeowner preparedness and development controls and less on hazard reduction.

The dissenting report from the federal House of Representatives Inquiry, by Michael Organ MP, repeated a number of familiar distortions of the case for hazard-reduction burning.  He stated that "you do not need to burn “a million wild acres” to save a house on a small acreage".  This ignored the fact that nobody was suggesting that.  In fact, the reverse is the case -- the purpose of hazard reduction was to prevent the loss of the more than 6 million wild acres that had just occurred.

The Australian Conservation Foundation has recently released on its Website a series of so-called "Myths", including a self-exculpatory piece denying any responsibility by "greenies" for the fires and a denial that more prescribed burning equals less bushfires -- which may be true, but does not address the problem of the much more damaging wildfires.

Regular media reports also appear whenever some isolated remnant of plant or animal life is detected in the desolate landscape of the burnt-out parks.

This rush to denial is partly self-justification and partly utter incredulity at nature's demolition of a carefully constructed but unsound belief that we can preserve biodiversity by suppressing fire.  With these fires, environmental dogma came face to face with ecological reality.


WHY DID IT HAPPEN?

Almost the whole of Australia is fire prone.  In the more remote areas, regular large-scale fires are a natural feature and part of land management.

In South East Australia, such large-scale burning is not part of the normal or natural pattern.  Moreover, as fire science and management improved significantly from 1960 onwards, for a period, particularly in the 1970s, major fires in the South East were the exception (see Table 2).

Table 2:  Major Bushfires

YearEvent
1951-524 million ha burned in NSW
— several lives lost.
1968-692 million ha burned in NSW
— 14 lives lost.
1982-83Extreme fires in NSW, Vic and SA
— 81 died
— 2070 homes lost.
1994800,000 ha burned in NSW
— 4 lives lost
— 200 homes lost.
2001-02Christmas fires in NSW
— 744,000 ha burned
— 109 homes destroyed
— 50,000 fire-fighters deployed.
2002-033 million ha burned in NSW, Vic, SA, WA, Qld
— most protracted fire season on record
— 103 aircraft used in a single day.

In recent decades, the advances in fire science and fire-fighting technology have been offset by changes in fire mitigation policies.  So better fire-fighting is not preventing more severe fires -- indeed, the reverse appears to be true.  The fires of last year illustrate this.

There are two immediate sets of reasons for the 2002-03 fires.  One set principally explains the occurrence of the fires and the other their intensity and destructiveness.

Beyond that are a number of underlying causes.  Many of these stem from human action or inaction.


THE PHYSICAL OCCURRENCE

The facts are relatively straightforward:

  • There was a large quantity of dry fuel present.
  • There were extreme weather conditions of heat and wind.
  • There were numerous natural and human ignitions.

This combination of factors is not unusual.  90 per cent of fires are unplanned.  Ignition was inevitable.


INTENSITY AND DAMAGE

The facts here are less obvious, but are reasonably clear:

  • The fuel build-up per hectare on the ground and vertically was very large.
  • The build-up of fuel on the ground in eucalyptus woodland over a five-year period, if not removed, can amount to between 25 to 40 tonnes per hectare.
  • This generated huge energy releases during the fire.
  • The higher energy releases led to uncontrollable spread and more complete destruction of the ecosystems.
  • Expanded Parks and less hazard reduction gave greater connectivity of fuel and greater geographical scope to the fires.
  • The inaccessibility and eventual scale of the fires made suppression difficult.
  • Early suppression efforts were often too tentative and risk-averse.

These facts are hard to dispute but some still try.  Even the Premier of NSW, in a radio interview during the fires, played down the influence of fuel loads.  Conservationists tended to stress the extreme weather conditions.  This is consistent with a somewhat fatalistic view of the fires.  But many fire-fighters emphasised the slow and inadequate start to operations, restricted access to the fires and the fuel build-up.

There are some ironies in all this.  The Kosciusko and Namadgi Parks were both initially promoted partly as catchment protection.  Intense wildfires seriously and adversely affect both water quality and the stability of the catchment.  Also, the ACT and Victorian fires could probably have been controlled earlier, but then the fuel and future fire risk would have remained.  Furthermore, the emphasis on fire suppression in order to protect biodiversity led to the build-up of fuel but, when the fires became extreme, much of the fire-fighting effort was for the protection of property rather than ecosystems.


UNDERLYING CAUSES

The description of immediate causes is not enough.  In the litany above, there are certain inevitabilities of weather, presence of fuel and ignition.  We cannot stop the regular occurrence of fire.

But what of the intensity?  The cause here is the massive widespread build up of fuel.

Fuel can be removed by two means -- either physical disposal by machine or prescribed burning.  The former is practicable only to a minor degree around cities.  Given the size, nature and inaccessibility of much of the bush, it is not practicable over wide areas unless allied with forestry operations (a practice being reintroduced in the USA).

That leaves the deliberate, controlled use of fire to reduce fuel loads before they become dangerous.  Something like this took place in pre-European times.  There is evidence that Aboriginal communities used fire extensively in all seasons for their own purposes.  Natural ignitions by lightning were frequent, and burns were limited only by fuel and weather conditions.

In more recent decades, the areas of reserved land in parks have been enormously extended.  At the same time, the policy towards fire has turned towards suppression of fire rather than use of fire to reduce fuel load.  In parallel, the management of public land has shifted from a more closely managed use focus (grazing and timber production) with generally good access, to a more laissez-faire amenity focus (preservation of ecosystems) with reduced access.  Restrictions on controlled burning have been extended to private land by new native vegetation regulations.

With this shift has come a change in the quantity and quality of fuel loads.  This is partly the result of Park managers reacting to a history of frequent burning that they view as unnatural and damaging.  It is also the fact that Parks' bureaucracies are stretched by rapidly expanding Parks estates, and mired in minutiae of government regulation relating to management of fuel on public land.  In other words, governments appear incapable of financing and managing their new commitments to conservation.

It is now clear that hazard-reduction burning in recent years has been grossly inadequate.  This was true across NSW, the ACT and Victoria.  The official reports all make this point.

The federal House of Representatives Select Committee Inquiry referred to the "... grossly inadequate hazard reduction burning ..." and the "... poor access ..." to the fire sites.

The Victorian Auditor-General called for "increased focus on strategic management of hazard reduction on public land ..."

Inadequate hazard-reduction burning had already been a major theme in the report of a Select Committee of the NSW Legislative Assembly on the 2001-02 bushfires.

The first recommendation of the McLeod Report on the ACT fires was that "... fuel management through controlled burning is the only practicable way of reducing the excessive build-up of fuel loads in the ACT's extensive areas of park and forest".

Even the Esplin Report, the most tentative of the official offerings, noted that "In recent years, areas that have been prescribed burned in the North East and Gippsland ... are below rates likely to be satisfactory either for fuel reduction for purposes of asset protection, or for the ecological needs of plant communities".  Esplin even recommended consideration of burning in spring.

Government agencies have shifted from a pre-emptive approach to wildfires to an emergency response;  from a policy of mitigating the risk to one of coping with the consequences of neglect.

Hazard-reduction still takes place, but much of it is the so-called "thin red line" around urban dwellings.  It is asset protection rather than biodiversity protection.

For example, the Victorian Department of Sustainability and Environment's official Website declared that only 45,000 hectares of bush has been subject to fuel-reduction burns in the 2003 season.  This amounts to 0.5 per cent of the 8 million hectares of forest land which the Department is responsible for managing.  According to the Victorian Association of Forest Industries, this compares to an average of 225,000 hectares in the decade from 1974-75 to 1983-84.

New South Wales is similar.  Table 3 shows the declining incidence of hazard reduction on public land and the substantially weaker and more restricted effort made by National Parks compared with State Forests.  National Parks now manages twice the land managed by State Forests (as opposed to one half at the beginning of the period), so the average rate of controlled hazard reduction in the parks is about 1 per cent of the area managed compared with about 4 per cent in State Forests.

Table 3:  Hazard Reduction and Wildfire, 1992-93 to 2002-03

Prescribed Fire AreaWildfire Area
YearSFNSWNPWSSFNSWNPWS
1992/199375,133 haNo record4,761 ha21,772 ha
1993/199495,424 ha47,816 ha131,956 ha382,897 ha
1994/199599,915 ha35,778 ha126,060 ha89,112 ha
1995/199695,395 ha25,572 ha23,904 ha15,192 ha
1996/1997144,226 ha15,866 ha17,578 ha12,670 ha
1997/199880,105 ha8,302 ha87,921 ha236,152 ha
1998/199960,275 ha12,876 ha4,808 ha14,195 ha
1999/200061,478 ha6,752 ha824 ha6,715 ha
2000/200135,989 ha19,733 ha76,498 ha217,980 ha
2001/200258,893 ha31,703 ha81,903 ha595,388 ha
2002/200354,509 ha42,827 ha167,112 ha1,002,068 ha
Annual Average78,304 ha/yr24,723 ha/yr65,757 ha/yr235,831 ha/yr

Source:  Adapted from Paul de Mar, 2000.


Table 3 also shows that less than half of burning in State Forests is uncontrolled, whereas 88 per cent in Parks is uncontrolled.

On this evidence, one would have to conclude that State Forests is a better friend to biodiversity than National Parks -- or at least that they know what areas they are burning.  The recent announcement by the NSW government of significant budget cuts in environmental programmes (including Parks) will make the disparity greater.

The financial resources applied to bushfire control appear substantial.  But the proportion applied to actual, in-the-field, hazard-reduction is a very small fraction of those absorbed by bureaucratic processes and the intermittent bursts of enormous expenditure in fire suppression, especially in emergencies.  You can buy a lot of mitigation for the $11,000 per hour paid for an Ericsson crane helicopter.

In effect, we spend most of our money on preserving fuel and fighting unplanned fires and relatively small amounts on controlled reduction of fuel.

We have lost appreciation of the fact that fire is a friend of the environment as well as an enemy.

Even if we were to accept that the 2003 fires were not exceptional in the long stretch of history (which is difficult to accept), we ought not accept that we can do nothing to mitigate them.  Advances in fire science, ecological knowledge and fire-fighting technology and operations give us the tools to do better.

The 2003 bushfires were greatly assisted by human inactivity and misallocation of fire control resources.  If governments have a "duty of care" for public lands, they appear not to have discharged it in relation to bushfire hazard-reduction.


WHO IS RESPONSIBLE?

It seems an incontrovertible baseline for policy that vegetation/fuel on the Australian landscape will inevitably burn and that larger quantities burn much more destructively.

To discover who helped create these exaggerated conditions is to discover who is really responsible for the severity of the bushfires.  Which were the human agencies that could have made a positive difference and, by their action or inaction, did the opposite?


POOR PRINCIPLES AND POOR POLICY

As far back as 1994, Greenpeace was blaming the weather for catastrophic bushfires that year.  The ACF emphasises the activities of arsonists.  The National Parks Service has blamed the public.

The World Wildlife Fund's submission to the House of Representatives Inquiry declared, "Inappropriate fire hazard regimes can damage biodiversity ... Biodiversity conservation requirements need to be central to any fire management policy and practice ...".

Other conservation groups prescribe ecological sustainability, biodiversity and the precautionary principle as the governing principles in hazard-reduction.

The NSW Rural Fire Service Commissioner, Phil Koperberg, has also said publicly that the Fire Service's priority must be to preserve biodiversity, implying that hazard-reduction burning will be limited (but see below).

An allied theme is that we need to understand fire better, that we need more scientific evidence to justify active reduction of fuel loads.

There is nothing wrong with these elevated prescriptions.  As generalisations, most reasonable people would agree with them.  But they have been applied in a way that paralyses land management.  And they resulted in what nobody wants -- immense loss of biodiversity.

This has come about through a complex interaction of forces.  Both sides of the debate -- those who wish to leave the bush untended and those who see the need for active management -- can call on scientific support.  The latter group also often has experience in and responsibility for land management.

The referee is government.  It is aware that the political wing of the conservation movement holds the balance of power at elections and that the bulk of the population in urban areas is attracted to the general principles stated above and is not interested in the detail of how they might best be satisfied.

The facts that our knowledge of fire science and fuel management is probably unmatched and that our knowledge of ecology is confused (to say the least), swings the balance in favour of reactive rather than proactive policies.

Governments can also find support in that strand of scientific opinion that takes a "fine filter" to ecosystems -- the reductionist approach.  Focusing on individual ecosystems and their unique characteristics reinforces a "no disturbance" mentality, an extreme version of the precautionary principle.  Moreover, there is an immediate political bonus in declaring Parks and applying hands-off policies for native vegetation.  So the referee's decisions generally go one way.

Meanwhile, for the land manager, the fine filter approach is a nightmare.  It cannot be applied over large areas, as the interactions within and between ecosystems are unknown and attempting to preserve them results in enormous costs or, more usually, paralysis.  In action, the policy has some strange and perverse effects (see Box 2).

Box 2:  The Transgrid Wildlife Refuge

Some while ago the electricity transmission agency, Transgrid, lopped native vegetation under its power lines in Namadgi National Park.  There was a huge outcry from conservation groups at this removal of trees from a relatively small area of the park and the media made an extended fuss.  Transgrid was fined $500,000 and ordered to undertake remedial work.  In the fires last year, the area cleared by Transgrid was one of the few refuges for fleeing wildlife and will be one of the few areas with reasonable native vegetation cover in a park virtually cleared by fire.  A case for refund of the fine?


In the end, this precautionary policy is a policy of neglect.  This policy does not lead to reversion to some ideal stable state.  It creates unpredictable new conditions and new landscapes fashioned by wildfire.  No assessment is ever made of the long-term consequences of fire suppression.


POOR POLICY AND POOR PROCESS

By definition, hazard-reduction will cause some damage even though the longer-term effects may be benign.  For example, long-term studies by NSW State Forests have shown no reduction in the number of plant species due to regular burning.

However, the effect of applying ill-defined and general principles to practical land management is to stultify such regular prescribed burning by giving priority to short-term localised effects.  Overall, the result is inadequate and declining rates of hazard reduction.

The administrative processes enforce this policy of inertia and give added opportunity to the groups that seek to minimise hazard-reduction burning.  In a vain attempt to reconcile conflicting philosophies, we have established processes that ensure that failure to agree stifles action.  In these circumstances, inaction will generally triumph over action.

NSW supplies a practical example of what happens.

In NSW, the responsibility for bushfire risk management rests with the Bushfire Coordinating Committee, which sets out the model guidelines for the 100-plus local bushfire management plans.  The local committees prepare their own plans, which require approval from the central committee.

The central and local committees all allow for significant representation from the Nature Conservation Council of NSW (NCC) and the National Parks and Wildlife Service.  The NCC's bushfire policy gives overall priority to its interpretation of ecological sustainability.  Application of this principle has resulted in restrictive fire intervals for prescribed burning and heavily conditional licensing.

The NCC also sat on the Inter-departmental Committee (IDC) that established the processes for approval of hazard-reduction proposals in 2001.  It was the only non-government agency to do so.  Meanwhile, real stakeholders -- private land managers -- were excluded.  Nevertheless, the IDC recommended a streamlined environmental assessment process for hazard-reduction proposals.

The IDC was to deal with the so-called "perception" in the mind of the public that the regulations were too complex -- as if all that were needed was a better explanation of their tortuous content.  In the event, even the streamlined code is so complex that the Rural Fire Service now undertakes the environmental assessment for private landholders to simplify the process for them.

The ultimate irony is that NSW has inadequate prescribed burning even under the very restrictive fire intervals in the Code because there are too few resources applied to hazard-reduction.


AN ENGINEERED DISASTER

So, at the most basic level, we all share responsibility for the fires, in our failure to think clearly about the ever-present threat of fire and our unwillingness to contemplate the difficult solutions.  The guiding principles in bushfire control are impossibly vague and the capacity to act is increasingly constrained.

More crucially, the governments we rely upon to look after the public interest have allowed the formulation of policy to be unduly influenced by narrow groups with an interest in inertia.  Governments have translated this inertia into regulatory regimes and supervisory processes in which these narrow groups continue to exert influence at the expense of land managers.  They have continually expanded the National Park estate and failed to apply the resources to manage it.

At another level, the conservation groups bear special responsibility.  They have actively promoted the policies and been given privileged participation in their formulation and supervision.  We have, in effect, had their policies in force for the past two or more decades.  When disasters like 2003 occur, they are not called to account.  They sit on the numerous committees (sometimes paid by the public) and suffer no consequences for the results of their efforts to minimise controlled hazard reduction (see Box 3).

Box 3:  The Role of the Nature Conservation Council

The NCC has been given a privileged position in the formulation of policy for mitigation of fire in NSW.  It has sat on the central policy-making committee.  It has a seat on the central and local co-ordinating committees.  Yet the NCC represents a negligible constituency.  The bulk of its funding is provided by taxpayers.

Despite this, it has a position on a par with the politicians and government departments responsible for policy and with the State Forests and Parks agencies that manage the vast areas of public land.  It has influence beyond the tens of thousands of private landowners and managers who are responsible for managing most land in the State, who have enormous collective experience and depend on the land for a living.

The NCC suffers no consequences from the failure of the policies it advocates.  It does not have to clear up in the aftermath.

It is profoundly unfair and antidemocratic that a single unrepresentative group should have influence of this kind over the interests of those with most at stake.


National Parks is already subject to litigation arising from allegations of fire impact on private land.  If the public were to seek damages for lost amenity and biodiversity from destruction in the parks themselves, all those involved in engineering the increased fuel build-up would surely be culpable.  Here we could include:

  • the conservation groups advocating the locking-up of park land and minimal hazard-reduction;  and
  • governments and those agencies which have abdicated their responsibility to formulate and administer policy and have underprovided resources to mitigate fire.

If the bushfire central committees and their political masters were boards of private companies, they would surely have been sacked by now.


HOW DO WE DO BETTER?

First of all, we must accept that the Australian landscape contains native vegetation that is both amenity and fuel and that we are continually allowing the creation of a vast national bonfire of flammable material.

In this case, the question is not whether to burn, but what is the most sustainable way of doing it?  The existing policy of fire suppression is clearly inflicting unacceptable damage on property and the environment.

Can we modify the extent, intensity and damage of the fires?

Obviously, there is little that we can do about extreme weather conditions.  Even if we accepted the contentious case for the Kyoto Treaty, it is not a short- or medium-term solution.

There is also little we can do about reducing the area reserved in National Parks.  Indeed, this is likely to continue to grow.

We can blame God or National Parks or the public for wildfires, but ultimately only human agencies can reduce available fuel to prevent the creation of the lethal combination of conditions that makes such fires inevitable.

Indeed, reduction of fuel loads offers the only practical means available to us for mitigating the extreme fires.  All the arguments applied against controlled burning -- loss of biodiversity, weed invasion, soil destruction and erosion -- apply with greater force to extensive, high intensity fires.

But, if it is to be effective, we have to accept this solution without placing a host of qualifications and conditions on it.

Many approaches to controlled hazard-reduction have been suggested, ranging from scientific research-based (negligible) burning to unrestricted precautionary burns.  But two, more selective, versions are worthy of consideration.


1. LIMITED HAZARD REDUCTION

This would be close to what is now attempted (but not done).  It would focus on asset protection, that is the 3-5 per cent of bush surrounding urban areas or rural assets.  It would be a virtually continuous programme of removal of fire hazards.

This programme would be reinforced by strict application of new building regulations so that homeowners on the urban fringe would be subjected to the same rules as their rural counterparts (dedicated fire-fighting equipment and water supply for every dwelling, fire-retardant building materials, 50 metre fuel-free and fuel-reduced zones around buildings).

We should not minimise the cost and scope of the task here or the resistance it would meet from property owners whose much-loved plants are removed, lopped or burned.  The urban interface alone is many thousands of kilometres, so the active co-operation of thousands of volunteers from the community would also be needed.

If effective, this would reduce the intermittent devastating property losses, although no asset-protection zone will completely exclude a high intensity fire.

The rest of the bush and forest, mainly on public land, would be left largely untended except in the remnant, forest industry areas.  It would therefore suffer regular catastrophic fires, which would ultimately transform the landscape in a manner that is difficult to predict.  Most of the National Park area, however, is not used, so the impact on human activity and perceptions would be limited.  In effect, we would protect one set of assets and leave the rest to take its chances.


2. STRATEGIC FUEL REDUCTION

This would be a more active and extensive policy.  It is consistent with a number of submissions by forest experts to the various recent inquiries.

The policy would encompass the limited 3-5 per cent "thin red line" as described above.  It would undertake strategic burns progressively to another 15 per cent on a long (ten-year) cycle to allow access and fire control.  Broad-scale burning on a similar long cycle up to a further 40 per cent of the bush would replicate/complement the natural fire regime.

Thirty per cent would be untouched (except by unavoidable natural fires), covering sensitive areas of rainforest, fire-sensitive plant communities, regrowth forest and riparian vegetation.  This is not to say that they would not burn anyway -- especially if fire-fighting access continues to be closed off.

Nor is it to say that the areas subject to prescribed burns would not suffer some loss of biodiversity, but the loss would be much less than occurs in intense wildfire.  Indeed, the intention would be to mitigate and slow catastrophic fires.  In this sense, the burning should be regarded as pro-environment.

Thorough maintenance of access tracks and strengthening of the existing rural fire-fighting force would be required.

This would meet widespread criticism by fire-fighters of the management of fire-fighting operations last year and the standards of communications, maps and equipment.

This regime would recognise the probable extent of pre-European human and natural burning, but would be done progressively, in a controlled fashion and not during the summer months (which Aboriginal populations did do).

This would be a very ambitious programme, even allowing for the fact that most of the area of prescribed burning would be on a selective long-term pattern.  With a ten-year target, it would involve burning at least 4 per cent of the bushfire prone areas each year.  It would be impractical without very extensive and well-coordinated effort by private land managers and the application of considerable additional full-time resources to National Parks to effect a continual programme of burning.  It would also require a much less restrictive regime of permits.

Of the two options, this appears much the preferable alternative.  It would reduce the risk of catastrophic fires and the associated loss of biodiversity.

This alternative is also consistent with the thrust of the Joint Memorandum signed last year by the Commissioner of the NSW Rural Fire Service and the Director-General of National Parks, which stated that, in addition to burning for asset protection:

... both Services also recognise the need for extensive burning in strategic wildfire zones ... (and) As a matter of principle, both Services subscribe to the philosophy, that hazard reduction by prescribed burning is both a fire mitigation and environmental management tool.

It is consistent with the recommendations of the official reports.  And it is consistent with research undertaken by experienced silviculturists in NSW State Forests who have concluded that biodiversity is favoured by more extensive, low intensity fires.

It is consistent with a report of the United States General Accounting Office which concluded, in relation to fire management in the Western USA that

... the costs and risks of inaction are greater than the costs and risks of remedial action.

Hanging over both of these alternatives is the uncomfortable fact that prescribed burning has always been restricted to a relatively few days annually when the fuel is ignitable and weather conditions are judged to be safe.  This reinforces the need for a prompt approval process, preferably decentralised to local level.

Either of these alternatives would reduce the risk of a huge damage bill and loss of life.  The second one would also increase the chance of survival of species and thus the maintenance of biodiversity.

Neither would entirely prevent wildfires.

There are those who argue against the practicality of eliminating available fuel.  Any accurate measure of practicality would have to be weighed against the cost of doing nothing.  The combined cost of fighting the recent catastrophic fires and repairing their damage will be very high.

Other options have been offered which more or less closely approximate to the existing, failed practice.  The Additional Comments section of the House of Representatives report noted the change in land management practices towards prescribed burning being done

... on a strategic basis according to negotiated and agreed fire management plans, and on the basis of comprehensive research data ...

Given the size of the fire hazard area, the impracticability of gathering comprehensive (that is, very detailed) research data and the impossibility of reaching agreement between totally opposed philosophies, this formulation simply prescribes inaction.  In the light of last year, it is no more than irresponsibility masquerading as caution.


CONCLUSION

We need, first, a clearer expression of what we are trying to achieve with fire management and the conservation of fire-sensitive values, be they life, property, amenity or ecological.  On all counts we failed in 2003.  If the aim is to preserve biodiversity through the retention of vegetation cover and native fauna, then the 2003 fires tell us that what we are doing is not working.

While some of what happened was natural occurrence, the intensity and extent of the fires can be explained by reference to human activity and, more importantly, inactivity.

The broad credo of governments is to preserve all ecological values everywhere in a centrally planned ecology.  This is patently unachievable.  And governments have proved much better at creating parks than looking after them.  Protection of the National Parks is the responsibility of government.  It is a responsibility they have self-evidently discharged very poorly.  It is a responsibility they have for a long time delegated to groups and to processes that have utterly failed to achieve what they were set up for -- the preservation of the most precious parts of the Australian environment.  These delegated entities notably include the leading conservation groups, some of which are generously funded by government to advise on bushfire management.

In effect, we have had the fire policies recommended by conservation groups for many years now and they have failed.  We need to try a new way.

If the community has a duty to respond to fire emergencies, then the government has a duty to minimise the risks that are present.  Allowing massive fuel build-up is not a proper discharge of its responsibility.

Fires have been part of our landscape for aeons.  The question is not whether we will have bushfires, but what sort of bushfires we will have.

For the future, we have a choice on the basis of known facts.  We know that if we do not conduct more extensive hazard-reduction burning, we will have large-scale, intense wildfires.

More prescribed burning would have to be accompanied with dramatic changes to urban planning and lifestyle to prevent loss of life and property damage.  Urban residents can no longer enjoy unrestricted close interpositioning with the bush or forest.

For this to be effective, government must resume control of the policy processes and make them work effectively.  It implies giving greater weight to the advice of land managers and local bushfire brigades, whose property and lives are at risk, than to conservation groups, bureaucrats and committees.



REFERENCES

1. Australian Building Codes Board, "Strategy on Bushfires", Media Release, March 2003.

2. Australian Conservation Foundation, "Bushfires:  The Myths, The Reality", www.acfonline.org.au 2004.

3. Cheney, NP, "Bushfires -- An Integral Part Of Australia's Environment", Australian Bureau of Statistics, Year Book Australia, 1995.

4. de Kleuver, M, "Insurance:  Lessons learnt from the January Bushfires, Report to ACT Bushfire Recovery Taskforce" (undated).

5. de Mar, Paul, "Fire Management on State Forests", Paper to NCC Conference, 2000.

6. de Mar, P, "Unhealthy bent to suppression biased policies", Paper to 3rd International Wildland Fire Conference, October 2003.

7. Esplin, B, "Report of the Inquiry into the 2003-2004 Victorian Bushfires", October 2003.

8. House of Representatives Select Committee into the recent Australian bushfires, "A Nation Charred:  Report on the inquiry into bushfires", 23 October 2003.

9. Hessburg, PF and Agee, JK, "An environmental narrative of Inland Northwest United States forests, 1800-2000", 2003.

10. Institute of Foresters, Submission to Joint Select Committee of NSW Parliament, 12 April 2002.

11. Koperberg, Phil (Commissioner NSW Rural Fire Service) and Gilligan, Brian, (Director General, National Parks and Wildlife Service), Joint Memorandum, "Hazard Reduction" (Undated), Bushfire Bulletin, Vol. 25, No 2, 2003.

12. McLeod, R (AM), "Inquiry into the Operational Response to the January 2003 Bushfires in the ACT", 1 August 2003.

13. Murphy, Dean E, "An Oasis of Fire Safety Planning Stands Out", New York Times, 2 November 2003.

14. National Parks Association of NSW, "National Parks Not To Blame For Bushfires", Media Release, 22 January 2003.

15. Nature Conservation Council, Annual Reports, policy statements and media releases, www.nccnsw.org.au 2004

16. NSW Legislative Assembly, Joint Select Committee on Bushfires, Report on Inquiry into 2001/02 Bushfires, June 2002.

17. NSW Rural Fire Service, Annual Reports 2001, 2002, 2003.

18. NSW Rural Fire Service, Bush Fire Environmental Assessment Code, July 2003.

19. NSW Rural Fire Service, Bushfire Bulletin, Vol. 25, No. 1 and Vol. 25, No. 2.

20. NSW State Forests, Bush Telegraph Magazine, Winter 2003 and Summer 2003.

21. Productivity Commission, Interim Report on Impacts of Native Vegetation and Biodiversity Regulations, December 2003.

22. Pyne, Stephen J, "Fire's Lucky Country", undated paper.

23. Shields, James M, "Biodiversity Credits:  A System of Economic Rewards for Ecologically Sustainable Management", NSW State Forests, 6 March 1999.

24. Jurskis V, Bridges, R and De Mar, P, "Fire Management in Australia:  the lessons of 200 years", NSW State Forests (undated).

25. State Forests of NSW, Annual Report 2002-03.

26. State Forests of NSW, Bush Telegraph Magazine, Summer 2003 and Autumn 2004.

27. Sydney Morning Herald, "Bushfire blame pinned on public", 27 October 2003.

28. Victorian Auditor-General, "Fire Prevention and Preparedness", Performance Audit Report, May 2003.

29. USA Forest Service, "Protecting People and Sustaining Resources in Fire-Adapted Ecosystems", October 2000.

30. Worboys, Graeme, Deputy Vice-Chair Mountains, International Union for the Conservation of Nature, "A Report on the 2003 Australian Alps Bushfires", 24 March 2003.  E-mail:  g.worboys@bigpond.com


ABOUT THE PHOTOGRAPHS

Front cover:  Flaming cloud from the Broken Cart fire South Brindabella -- 18 January 2003.  One of numerous extreme fire effects.

The photographs on the front cover and on page 15 were provided by the Brindabella community.  They illustrate the extreme and freakish behaviour of the fire and the devastating after-effects.  The local community is convinced that the neglect of hazard-reduction burning was directly responsible for the extreme nature of the fire and the widespread total destruction of the environment.