Aunty will be proud of Maxine's candidacy

The Labor Party has decided that its secret weapon in John Howard's increasingly contestable seat of Bennelong is Maxine McKew.  It couldn't have chosen a better candidate to attack the Prime Minster.  After all, McKew has had years of experience doing exactly that at "our" ABC.

Indeed, the national broadcaster has certainly been a more reliable critic than the Labor Party, a fact Kevin Rudd now seems to appreciate.  Even after having apparently stacked the ABC board with conservatives, the public broadcaster remains more effective at landing body blows on a conservative government than the ALP has been for most of Howard's tenure.  But it wouldn't pay to get too excited about McKew.

Bennelong, which the Prime Minister has held since 1974, is demanding more attention.  Howard has won the seat in 13 straight elections but his margin has been steadily declining.  Since the Coalition's victory in 1996, it has dropped from 10.1 percentage points to 4.3.  The redistribution that moved Bennelong further into Sydney's western suburbs has merely sped up the decay in support.

Bennelong is also supposedly peppered with "doctors' wives", a group of voters whose concerns align perfectly with the concerns aired nightly on Lateline.  If they dominate the electorate as much as the ALP thinks they do, then merely writing "ABC journalist" on her resume should give McKew a landslide victory.

But presumably some of the people who have returned Howard for more than a dozen elections still live in Bennelong.  And the recent migrants to move into Howard's electorate may be more sympathetic to Labor than the Liberals, but they may also be more concerned with maintaining strong economic growth and employment than levels of arts funding.

So where is the evidence that McKew is a political genius who can topple one of the toughest political figures in Australian history?

The art of journalism does not necessarily translate well into the art of politics.  Success on the television screen does not imply success pressing palms and hugging babies.  But even as a media commentator her political judgment leaves a lot to be desired.  This is, after all, the person who said in the days leading up to the 2004 election:  "Yesterday [the day after then Labor leader Mark Latham's launch of Medicare Gold] for the first time I got a real sense of the inevitability of the Latham ascension ...  Yesterday, I saw someone who, if he does not make it on October 9 [the date of the federal election] -- and I think he may -- he will make it.  And he might make it within six months:  it may not be a three-year full term that he has to wait ...  I think Latham's time could be coming quite soon".

The financial recklessness of Medicare Gold stood in opposition to everything Latham had stood for as an independent-thinking backbencher.  The ALP was punished with one of its greatest electoral defeats.

Right now, McKew's appeal to the voters of Bennelong is largely theoretical.  She may warm the hearts of the latte Left, but since Paul Keating hired author Don Watson as his speechwriter, this has not necessarily been sound political strategy.

And rule No.1 of Australian politics is that one should never write off Howard.  Giving him the kiss of death always amounts to mouth-to-mouth resuscitation.  In 2004, despite McKew's confidence, Latham only strengthened the PM's lead.  In 2001, despite Kim Beazley's seemingly strong position, Howard easily held government.  In retrospect, it looks easy.  Howard has won more "certain losses" than any other Australian politician.  McKew needs more than her Lateline and The 7.30 Report credentials to unseat him.

This cannot help but reflect poorly on the ABC.  One moment McKew is an impartial, objective journalist with no political interest except the truth, and the next moment she is a hungry political campaigner, determined to unseat the head of the government.

ABC host Virginia Trioli refuses to vote at elections.  McKew has only just joined the ALP.  Although ABC journalists may make these symbolic gestures to assure the tax-paying public that they maintain a balanced objectivity, history suggests otherwise.  Barrie Cassidy, Kerry O'Brien, Mark Bannerman, Greg Turnbull, Alan Carpenter, Claire Martin, Mary Delahunty and Bob Carr, among others, have moved from the ABC to the Labor Party, probably to the benefit of both.  Indeed, on ABC radio Sydney yesterday morning, former Greens candidate for Bennelong Andrew Wilkie may have jumped the gun when he said that "it's great that Virginia [Trioli] is taking on Howard".  A slip of the tongue or a future Labor masterstroke?

The list of ABC journalists migrating into the Liberal Party is not nearly as illustrious.  Peter Collins, a former NSW Liberal leader, and Pru Goward, candidate at next month's NSW election, cut lonely figures against their former colleagues across the chamber.

The ALP is learning from its mistakes.  What use is a celebrity candidate if they don't contest the election?  After parachuting Peter Garrett into the safe seat of Kingsford Smith with a whirlwind of publicity, he largely disappeared during the campaign.  But putting McKew up against the seemingly impenetrable Howard, the ALP is signalling its confidence in McKew, and the Labor branches will respect her for it.

Perhaps this will translate into a stronger local campaign by the ALP;  it needs any strength it can get.

Howard said yesterday that the McKew challenge will only provoke him to work harder in Bennelong.  "When I get news like this it only steels my resolve to work even harder for the people I have had the privilege of representing for the last 30 years".

Only a fool would think otherwise.

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Battlers locked out of dream homes

Australians are heavily focused on house prices.  As well as being their home, nearly everyone's house is their most valuable asset.

The home-owning "haves" benefit from high house prices.  Those not owning their own home are mainly younger renters.

They are constantly looking at house prices that are depressingly receding away from their affordability horizons.

As renters, they also recognise the increased costs they are shelling out for a roof over their heads.

There are those who argue that it is only demand that is forcing up house prices.

The Age's property writers have been suckered into this theory which is being popularised by Macquarie Bank.

Macquarie Bank's Rory Robertson thinks the reason why house prices have gone up in some places but not others is because some places are "sexy" and others are "dull".

Australia is rather flattered by this perspective because on the Robertson gauge, all our capital cities are sexy.

They are joined by United States cities including New York, Los Angeles, San Francisco and Honolulu, as well as British cities like London, Bournemouth (Fawlty Towers territory) and Cardiff (which receives international recognition only when hosting the Wallabies or the All Blacks).

Those cities Macquarie Bank considers to be "dull" include bustling Toronto;  Houston, the world's space industry capital;  cosmopolitan Quebec;  and Dallas, one of the premier energy and high-tech centres in the world.

Like beauty, "sexy" is in the eye of the beholder.  What really allows affordable housing prices is the supply of land on which the authorities permit new houses to be built.

Despite growing faster than all Australian cities, Houston, Dallas and Atlanta have house/ land packages roughly half the price of Melbourne.  This is because their planners don't prevent land being used for housing.

It is no coincidence that Melbourne's recent price surge has been accompanied by building-lot supplies on the fringe that have fallen by half since 2003.

If there were no restrictions on land for building, it would cost $60,000 for a fully serviced block on the fringe of Melbourne.

Yet, according to the Urban Development Institute, the average price is $145,000, having doubled since 2001.

And Melbourne is not even the worst city in Australia for land releases.

In Perth, government restrictions have brought a four-fold increase in land prices.

John Howard has identified slow land releases around the country as the cause of higher house prices.

Higher house prices in turn push up rents.

The president of the Australian Council of Social Services has also recognised that the key issue for housing affordability is land availability.

It is common sense to most people -- including the Prime Minister and ACOSS -- that increasing the supply of something will bring prices down.

Unfortunately, the blindingly obvious is lost on Labor's housing spokesperson Tanya Plibersek.

Ms Plibersek does not believe scarcity of land causes high house prices.  Her solution is more levies on new houses to cross-subsidise low-income housing.

Such measures further punish the battlers trying to scrape enough together to buy their first homes.

They are at odds with the ALP's traditional championing of the less well-off.

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Not always the best interests

The potential takeover of Qantas couldn't have come at a worse time for the federal government.  Kevin Rudd is luxuriating in a seemingly endless honeymoon, while for John Howard, issues such as Australian troops in Iraq and climate change become more difficult by the day.

It is almost understandable that, in Canberra at the moment, there's little appetite for economic common sense:  $40 billion in new spending has already been announced, and no doubt much more will come in the budget in a few months;  there are hints of extra tariff protection for car manufacturers;  and the Nationals will probably win their battle to maintain the wheat single desk.

Given all of this, it wouldn't be a surprise if the coalition stopped the sale of Qantas.  The threat of lost jobs and reduced regional services provides enough of a "national interest" excuse to justify finding a way to prevent the success of the private equity bid.  Even if somehow the deal is allowed, such onerous conditions will be imposed that it will be almost impossible for the airline's new owners to turn a profit.

Blocking the sale of Qantas is bad policy, and good politics -- especially six months before an election.  And if the sale is in fact blocked, the people to blame won't be the Prime Minister and some noisy backbenchers.  The real culprit will be the Australian business community.

We expect our political leaders to resist short-term, populist solutions and to make decisions based on the best long-term interests of the country and its citizens.  Allowing the Qantas takeover to proceed falls into the latter category.  But in democracies there's a limit to what politicians can achieve on their own.  While sometimes they can defy popular opinion, they can't ignore the attitude of the electorate indefinitely.

Bob Hawke and Paul Keating, after pursuing economic reform against the tide of community sentiment, eventually retreated.  Malcolm Fraser is rightly chided for his years of missed opportunities.  What's often forgotten is that in the 1970s, business leaders weren't lining up to advocate the sort of wholesale change that would later occur under Labor.  The "dries" are remembered precisely because there were so few of them.

Myriad factors create "popular opinion".  What companies and their executives say and do has a big impact on popular opinion.  Look no further than to matters like the James Hardie saga for a partial explanation of the "anti-business" outlook expressed in much of the media.  But it isn't only a few cases of malfeasance that create such an environment.

Much of corporate Australia apologises for being in business.  The rush to embrace "corporate social responsibility" is an example of this.  Companies have abandoned support for free enterprise in favour of a system of quasi-regulation by government, non-government organisations and a miscellany of "stakeholders".

It's difficult to recall the last time a serving CEO of a major public company said unambiguously "free markets are good, competition is great, and government should get out of the way".  Our MPs cannot be expected to pledge themselves to free enterprise if its supposed beneficiaries do not.

The bidders for Qantas themselves have an uneasy relationship with competition.  They like it -- but only in certain circumstances.  On the one hand they want a competitive bid for the airline to proceed with as little government interference as possible.  At the same time they want the government to continue limiting competition from overseas airlines.

The best solution would be for the federal government to allow the sale of Qantas, impose no conditions on the takeover, and open Australia's skies to competition.  Of course, kangaroos might fly before this happens.

Even after decades of economic globalisation and business internationalisation, it is debatable whether the approach of Australian business has changed at its core.

In 1964, the then Liberal prime minister, Robert Menzies, was reflecting on the relationship between the government and its corporate supporters.  "It is, I suppose, natural [that] many men in industry should take short views and be affected by the prospect of some immediate advantage.  After all, very few of us look over the wall of our own garden to get a picture of the outside world".

And he revealed a few home truths when he said:  "The old-fashioned 'sturdy individualist' who told government to keep clear of his business, that he wanted neither help nor hindrance from it, is as dead as the dodo".

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Voting on the rules of business

Some claim that the March 24 election in NSW will be a major test of the federal government's Work Choices legislation.  At least that's the line being put by the NSW government.  The truth is that the NSW election won't test Work Choices, but it will test the entrenched processes of political and business deal-making under which NSW is run.  And at the core those processes depend on a tightly controlled network of industrial relations players.

NSW is unlike any other Australian state for the supreme power it has delivered to its industrial relations processes.  The NSW Industrial Relations Commission and Court is more powerful than the NSW Supreme Court and the Australian High Court.

People in NSW cannot appeal against decisions imposed upon them by the Full Court of the NSW IRC.  The IRC even prosecutes criminal cases under work safety laws.  And normal criminal justice is absent, with denial of trial by jury and denial of presumption of innocence.

It applies in commercial matters also.  Through the NSW IRC's unfair contracts provisions, normal commercial contracts are subject to control under rules quite alien to standard commercial law.  This has included leases and franchise agreements.  The commission's reach is unrestrained.

The IRC's intrusion into the detail of work relations considerably exceeds that of other states.  Even the NSW government is powerless against the might of the NSW industrial relations system.  For three years running the government's wages budget has blown out by 8.9 per cent a year because of IRC decisions on government employee pay scales and job classifications.

The system is designed this way.  It's supposed to deliver an orderly and secure deal-making environment through which NSW can be run.  At its heart is a belief that effective organisation of NSW only happens when unions, government and business cut deals to which they all stick.  But this requires discipline.

The NSW industrial relations system delivers that discipline.  The supreme legal authority given to the NSW IRC positions it as the institutional centre of NSW society.  Around it circulate legal, union, political, financial and business operatives who co-operate to cut deals.

Anyone not part of the system remains a comparative minor player in NSW.  Big players know the rules and don't break them.  Anyone who steps away from the system finds it can turn against them and impose financial pain.

Most aspects of how NSW functions are affected by the system.  This includes planning, transport infrastructure, health and education delivery, workers' compensation, superannuation, major financial deals and construction in particular.

When NSW was an economic powerhouse the system seemed effective.  Over the past decade the system's influence has been enhanced.  But with NSW now an economic deadweight this is under stress.  The players can't seem to mastermind the deals that will drive NSW forward.

Few people comprehend the domineering scale of the system because its processes are complex, sophisticated and involve sleight of hand.  Few voters understand that on March 24 they will be passing judgement not just on a long-serving government but on a process of deal-making to which the government is beholden.

Whatever the NSW election result, the implications federally are significant.  The Australian union movement looks to NSW as its desired federal industrial model.

A win for the ALP in NSW will increase union pressure on the federal ALP to maintain and enhance policies designed to implement the NSW system federally.  This is the real reason for the opposition to Work Choices.  Work Choices blocks union-business-government deal-making -- putting industrial relations in a more subservient position to normal rule of law.

An election loss for the NSW ALP would send shock waves through the unions and the ALP.  Even though no one believes this will occur, such an outcome could strain the relationship between unions and the federal ALP.  Why would the federal ALP want to replicate a NSW style deal-making system that created economic decline and delivered political loss?

Attention could turn to the Victorian ALP model, which has rejected state-based industrial relations system supremacy and still delivered ALP political dominance.

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As unfair as is it gets ...

Many small business owners don't earn as much as the people they employ

Why would Federal Labor soften its stance on unfair dismissal laws?  Wouldn't this be against workers' rights?  Recently Opposition industrial relations spokeswoman Julia Gillard said she understood why small business people worried about unfair dismissal laws.  She indicated a new policy was coming.

The Howard Government allows unfair dismissal action for workers only when a business has more than 100 employees.

Labor has said it will reintroduce unfair dismissal laws but why would the ALP signal a policy shift?  Is Opposition Leader Kevin Rudd leading Labor in a new direction?

Perhaps the most obvious reason for change is the ALP recognises it must appeal to the small business and independent contractor community.  This group has grown to more than 20 per cent of the workforce and probably contains high numbers of swinging voters.  If Labor's to have a chance of winning government, it needs support from these people.

But the issue must be more than just political self-interest.  Workers' rights are important.  However, for small business "workers' rights" involves a different idea from the one that the unions promote.

Unions say that a job is a "right".  And once you have a job, a business shouldn't take the job away from you.  Unfair dismissal laws are in fact a complicated and expensive legal process to secure job permanency.

In large business, it's easy to understand the logic -- they operate like government bureaucracies.  The people who own the business, who are usually shareholders, rarely run the business.  Managers run the business but they are in fact employees.  When someone is sacked in a big business, it's really employees sacking other employees.  Fairness becomes an issue.  It's reasonable to ask if the sacking followed a fair process.

And if an unfair dismissal payout is ordered, the managers who did the sacking don't pay the money.  It comes out of the potential profit of the firm.

But for small business the situation is completely different.  Even in a business that employs up to 100 workers, the person who owns the business is most often the one who runs the business.

The money in the business is their money and the bank loans they have are normally their personal liability.  Also, they will have a mortgage on their house.

In a small business the owner will usually be the one who hires and fires.  They have to make decisions based on circumstances that affect them in a very personal way.  They don't take those decisions lightly.

If they are sued in an unfair dismissal case, the payout they are forced to make comes from their personal pocket.

In the past where small businesses had to make unfair dismissal payouts, many had to extend loans on their homes to make the payment.  Where's the justice and fairness here?  Whose rights are being damaged?

If an employee owns a house with a $300,000 mortgage, what's the difference to a small business owner with a $300,000 mortgage?

Many people in business for themselves often don't earn as much as the people they employ.  The difference between profit and loss can be tiny.

Why should we have laws that enable employees to take money from small business people who may be no wealthier than the employees?

It ceases to be an issue of employee rights but rather unfairness being inflicted on small business people.  This is why the laws were changed.

So far Labor's policy shift only appears to be a promise to have quicker and cheaper unfair dismissal processes for small businesses.  But there is really another step.

If Labor is truly to appeal to small business, it must understand that small business people are workers similar to employees.  The difference is that small business people have their own money, mortgages and emotional energy committed to the business.

Unfair dismissal laws for small business impose unfairness on small business people.  Rudd probably understands this because he has a small business background.

In our modern economy, work is no longer split between bosses and the workers.  Far too often the workers and the bosses are the same people.

Trying to achieve fairness by using complex laws and legal processes too often creates unfairness instead of fixing unfairness.

This is why the Howard Government protected small business from unfair dismissal laws.  It was a good move.  It's a good move also that Labor is moving in a similar direction.  After all, every worker has rights, not just workers who are employees.

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Grand Plan Not to Trash Water Rights

Last week NSW Irrigator's Council chief executive, Doug Miell, said he feared the property rights of irrigators may be "trashed" under the new $10 billion plan for water.

The plan is perhaps little more than a grab for water at a time when irrigators are at their most vulnerable following years of drought.

But the Federal Government plans to enter the water market and buy water entitlements in the Murray-Darling Basin, not just take them, so property rights are unlikely to be "trashed" as such.

The plan involves $3 billion to buy water entitlements which some brokers estimate will deliver about 3,600 gigalitres of water entitlement.

Total inflow to the Basin historically has been in the order of 24,000 gigalitres with just under half this amount available for irrigation.

So, 3,600 gigalitres represents about a third of the water historically available for irrigation in an average year -- a huge amount.

Not surprisingly, Australian Conservation Foundation executive director, Don Henry, has welcomed the plan describing it as, "a good plan with adequate funding to do the job".

Indeed, Mr Henry has campaigned for years against irrigation and for increased environmental flows.

Just a few years ago there was an outcry from irrigators when it was proposed 1,500 gigalitres be given back to the environment under "The Living Murray Initiative".  But remarkably while irrigators now potentially going to lose more than twice this amount, there has been hardly a murmur from them.

Of course, if the worst predictions from the climate change doomsayers come true, and for example, inflows are permanently reduced by up to 48 percent, then many irrigators will be better off having off-loaded their entitlements -- entitlements that under such a scenario would never deliver much water.

But if the current drought is just a part of the natural cycle and wet seasons return with the weakening of the El Nino then this new $10 billion dollar plan is likely to result in a significant redistribution of water within the Murray-Darling Basin.

If environmental flows are increased by as much as 3,600 gigalitres, floodplain graziers benefit, particularly those in places like the Macquarie Marshes where wetlands are used to fatten cattle.

There is also provision under the new plan to dig a new channel to by pass the Barmah Choke and get water more efficiently from the Hume Dam to the Riverland and Sunraysia.  This may benefit the extensive new plantings of perennial tree crops.

The plan also sets aside $6 billion dollars to modernise irrigation infrastructure with the government expecting irrigators to contribute $750 million and perhaps install more lateral sprays and centre pivot irrigation gear or drip systems.

The Prime Minister, John Howard, has described the new plan as the biggest single infrastructure investment in water.

It's certainly a big plan featuring a lot of government intervention to rearrange things in the Murray-Darling Basin.

There will be some winner and some losers, with a lot of water entitlement likely to be sold rather than "trashed".

But whether this entitlement ever delivers any water will depend on whether it rains.

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Rudd's hollow words on war mirror Latham's

Kevin Rudd's announcement for a phased withdrawal from Iraq lacked all the pizzazz of Mark Latham's "troops home by Christmas" pledge.

It is the clear difference in style between the two men.

Latham was reckless and headlines-driven.  Rudd is presenting himself as considered.  Yet the costs of each of their pledges carry similar weight.

The difference is only in style.

Rudd has committed to a phased withdrawal of Australian troops.  He will not be drawn on exact deadlines.  Doing so is akin to passing the ball to John Howard when he is in full view of the goal posts.

Rudd acknowledged yesterday that deadlines would simply provide insurgents with a time line.  Howard would also find some evidence that the Iraqi administration or the US Government says they are unrealistic.

But does Rudd's ambiguous withdrawal statement alleviate him of responsibility for the consequences of his commitment?  They are significant.

He can't take the easy way out by saying he is "not in the business of providing a rolling external commentary".  Sorry buddy, when you are the alternative prime minister you are.

It is impossible to predict what will occur if Australia and the US withdraw before stability has been achieved.

The suggestion that the insurgency will disappear is naive.  It is more likely to turn the country into a bloodbath as US Ambassador Robert McCallum told the National Press Club this week.

Few are prepared to dispute this.  Yet Rudd needs to justify the likely number of Iraqi deaths.  He may argue that they are not responsible because they did not start the war.

This is true.  However, Labor does purport to have a plan to end it.

If withdrawal is his option, he should defend the likely body count -- in line with the expectations he places on the Prime Minister.

As the alternative prime minister, the consequences of his policies, not just the rhetoric, matter.  And the body count could be much higher on withdrawal.

Insurgents knew that the more they killed US troops, the weaker the Coalition forces would become.

The US mid-term election results and recent Australian polls show they are right.  After withdrawal, insurgents will just redirect that energy to Iraqis of influence to increase their control.

The insurgents' battle is about getting America out and dictating who will subsequently gain control.

Even if Iraq were not the epicentre of the War on Terror at the invasion, it is now.  The continued US presence provides impetus for insurgents from inside Iraq and neighbouring countries to maintain their fight.

Withdrawal is embarrassing to the US and damages its resolve to exercise its authority internationally.

Withdrawal will also hasten US action in future conflicts, even those they did not invite, despite the global expectation the US should use its military might to enforce resolutions in conflicts outside its borders.

Withdrawal will be akin to handing the country over to insurgents and their cause.  The outcome will be to create a new shelter for training terrorists that was lost with the removal of the Taliban in Afghanistan.

Long-term consequences for Australian, British and American security will be dire.  Terrorists will have found a new safe haven from which to launch their attacks.

In the short term, US and British troops may stop dying, but it will come at the long-term expense of citizens from Western countries at home and travelling abroad.

Should the US withdraw, there will be a void of authority in Iraq.

Rudd's phased withdrawal announcement is understandable.  He is not going to be skewered in the same way Latham was.  Howard is expected to quantify and justify the cost of his war policy.  This obligation extends to Rudd as well.

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The alliance is not the issue, it's about Iraq

John Howard's attack on US presidential candidate Senator Barack Obama was ill-conceived and ill-considered.  It was bad politics and bad foreign policy.  Few arguments are won by resorting to personal abuse.  Evidence, not emotion, is required for the Prime Minister to win his argument.

Opposition Leader Kevin Rudd was accurate when he said that the implication of the Prime Minister's remarks was that the Democratic Party of the US was effectively the preferred party of terrorists.

Good people with good intentions can, and do, differ over Iraq.  At a personal level a number of Liberal MPs would prefer the early withdrawal of Australian troops from the region.

But a vote for those MPs at the next federal election is hardly a vote for terrorism.  It is precisely because the Iraq war is so controversial that the Prime Minister must handle those who differ from him with sensitivity.  Howard is right when he says that withdrawal of allied forces from Iraq by March 2008 as advocated by Senator Obama would be a victory for al-Qaeda.  But by itself this analysis proves nothing.  It provides no guide as to how long the US should continue to occupy Iraq, nor what the measures of success in the war should be.  To maintain support for US and Australian troops in Iraq, George Bush and John Howard can no longer rely on the argument that "we can't afford to lose".

Some in the West would sacrifice the freedom of the Iraqi people for the sake of seeing the US beaten.  But this is a tiny minority.  The debate about radical Islamic terrorism is not whether to stop it -- it is about how to stop it.  It is a debate about means, not ends.

The war on terror could continue for a generation.  Over that time there will inevitably be disagreement over strategy, and even the definition of victory.  But simply because two sides disagree shouldn't be taken to mean that one side is "softer" on terrorism than the other.

The PM's dramatic lapse of judgement is out of character.  Although his critics won't admit it, he usually handles foreign policy and security issues with confidence and success.  For example, he still has not received the credit he deserves for securing the independence for East Timor, and then rebuilding our fractured relationship with Indonesia.

But all of this is in the past.  It is the future that counts.

The harm that John Howard has done is not to the Australia-US alliance.  The relationship is robust enough to withstand these sorts of tensions, regardless of whether Senator Obama, or Hillary Clinton, or another Democrat is elected to the White House.  It's unlikely that the US House of Representatives and Senate "may yet make Australia pay for this blunder" as claimed yesterday by Robert McClelland, Labor's shadow minister for foreign affairs.  What's in the perceived best interests of America at the relevant time will determine how a Democrat-controlled government treats Australia.  Actual or perceived personal insults won't determine US international policy.

Domestically, the political injury Howard has caused probably won't be significant in the long-term.  The ALP will continue their attack on the issue against the Coalition, and will attempt to prove that Howard's personal relationship with Bush has affected his capacity to determine what's in the national interest.  Labor is unlikely to sway anyone who does not already have an opinion about the worth or otherwise of Australia's special connection to the US.

The real and potentially long-lasting damage caused by the Prime Minister is to the very cause he is fighting for.  John Howard wasn't wrong when he claimed that "If America is defeated in Iraq, the consequences for the West will be catastrophic".  The danger is that the truth of this message has been lost.  Those who support democracy in the Middle East don't advance their argument by insinuating that somehow the US Democratic Party is less hostile to terrorism than George Bush.

Advocates of an early withdrawal, such as Senator Obama and the ALP, have no response to the question of "what happens next" if and when allied forces leave Iraq.  Whether Obama and the ALP would abandon the country to a civil war in which potentially hundreds of thousands would die is something they have left unanswered.

Withdrawal from Iraq within the next 12 months would very significantly reduce the willingness of America to involve itself on humanitarian grounds in future conflicts anywhere else.  It's a paradox that many of the people arguing for a retreat from Iraq at the same time demand that the US act to stop the killing in Sudan.

These are the real issues to which Senator Obama and the ALP must respond.  The Prime Minister's comments this week are a very unfortunate diversion from the challenges ahead.

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Drowning in regulation

Businesses constantly experience frustrations with government regulations.

But few areas of government are trying to do something about it.

One that is is the Federal Government's Productivity Commission.

The PC has issued a handbook for regulatory agencies on best practice regulation.

This sets hurdles over which new regulatory proposals must leap before they are even considered by governments.

Similar provisions have been introduced at the state level in Victoria.

But in neither case is there evidence of fewer new regulations, let alone a rollback.

The problem of regulations is compounded by over-resourced regulatory agencies like the Australian Competition and Consumer Commission (ACCC).

These agencies' self-interest makes them predisposed to amplify the reach of regulation.

At the state and local government levels some of the worst regulatory excesses concern planning.

Victoria has less restrictive land use policies than other states but zoning rules still add $100,000 to the cost of a new house in Melbourne.

Building regulations add thousands more dollars to the burden.

Zoning rules also devalue the worth of non-residential land, undermining its owners' property rights.

Commonwealth regulations (other than the tax code) mainly have an impact on larger businesses.

But the effect eventually hits smaller businesses, workers and consumers by adding to costs and reducing employment and business opportunities.

Take for instance the regulations on Telstra.

The ACCC refuses to allow Telstra to control the prices it charges for its planned new services and is holding existing line charges below costs.

While a short-term benefit to customers, this discourages new investment.  It has already led to the shelving of a new fibre optic network, meaning our telecommunications services are falling behind those of our overseas competitors and partners.

Businesses and consumers pay the price for this.  Sadly, Communications Minister Helen Coonan is focused only on trumpeting the immediate consumer upside.

She cannot understand the repercussions of governments taking control of private assets and forcing down prices.

Government regulation can always compel companies to cut their prices or offer more services than they are able to charge for.

But as Telstra is demonstrating, business cannot be required to invest in projects that regulations have made unprofitable.

Regrettably, some ministers have little understanding of the damage caused by regulations on investment.

This week saw a surge in greenhouse gas hysteria.

John Howard inadvertently contributed to this hysteria by picking a committee that chose Tim Flannery as Australian of the Year.

Mr Flannery is a greenhouse alarmist whose popularised work is well outside his area of scientific expertise.

The Prime Minister's Task Force on Emissions Trading foreshadows a new national carbon trading scheme.  This will build on the existing and costly array of federal and state government greenhouse gas regulations.

Interested parties claim that these regulations are good for us.  Some say they will bring benefits in stimulating the growth of new industries.

Others point to benefits in new jobs for commodity traders.

This is all propaganda -- such regulations will cost business and households plenty.

The only benefits will be increases in the numbers of bureaucrats and those trading in government-created greenhouse gas rights.

The public deserves better

Every once in a while, usually before federal elections, the country experiences a bout of particularly poor policymaking.  Although not yet six weeks old, there are signs that 2007 could be a bumper year for mediocrity.

In a sense, Kevin Rudd and John Howard have been as bad as each other.  From Labor we've had things like the promise to scrap Work Choices.  From the government we've had confusion over the future of Qantas and a water plan that looks like it was developed on a Post-it note.

Before the business community takes this as proof that there's no real difference between the parties and therefore there's no risk in them switching their emotional and financial support to Labor, it should remember one thing.  Rudd hasn't actually done anything yet.  And what he has pledged to do if he were prime minister would be a disaster for business.

The most important domestic policies of Howard's prime ministership (far more significant than the GST) and what's done more than anything else to ensure Australia's prosperity are the coalition's industrial relations reform -- which are an anathema to the Labor Party.  Business leaders are engaging in wishful thinking when they say things to the effect of "Rudd will be OK on everything except industrial relations".

While it's far from perfect, if Work Choices is undone all the productivity gains of the past decade will be at risk.

When stacked up against what Labor could do, the government's policy travails are relatively minor.  Nonetheless, they provide cause for concern.

If this week's comments from the Transport Workers Union are to be believed, nine out of the 10 coalition MPs lobbied by the union support government conditions upon the Qantas takeover that would limit job losses.

Even discounting this claim by 90 per cent, if even one coalition MP has sympathy for such a position, there would be a problem.  What's frightening is that it appears that ministers might bow to this pressure.

The whole reason why anyone would want to buy the airline is precisely so that staff numbers could be reduced and costs cut.  In the long term, those who benefit from a more efficient, better-run company are consumers.

It would be interesting to know if, before they pledged their allegiance to the Transport Workers Union, the relevant coalition MPs paused to ask themselves what they were doing on the non-left side of politics.

It would also be nice to know whether those same MPs have even a basic appreciation of how an economic system based on free enterprise capitalism is supposed to work.

The downside of such a system is that sometimes businesses go broke, sometimes businesses get taken over, and sometimes people lose their jobs.  The upside is that no other method of economic organisation has such a capacity to improve individuals' quality of life.

Trade unions have at best an ambivalent attitude to market economics and they can be forgiven for protecting the conditions of their members.

Coalition MPs, on the other hand, should have at least a nodding acquaintance with the concept of "the national interest".

Perhaps some form of government financial assistance for job retraining (structural adjustment) might be appropriate in the wake of a Qantas takeover, but for MPs to demand the government interpose itself in the commercial operations of a public company in such a way as is being suggested is entirely misconceived.

If, in the 1980s, Labor had taken the same approach to job losses in the clothing and textiles industries as coalition MPs are taking in relation to the airline, the tariff wall would never have come down and the cheapest pair of socks would now cost $60.

The Prime Minister's water package has seen the abandonment of one of the long-held rules of Canberra politicians and bureaucrats:  never use a large, round number, because people will automatically be suspicious.

There are many other reasons to greet with caution a promise to spend $10 billion of taxpayers' funds.  The development of the policy was at best cursory and there's been little or no calculation of the opportunity cost of this expenditure.

The water package might have fixed a political problem for the government;  however, it is far from clear whether it is in fact the appropriate policy solution.

In an election year perhaps we can expect little better from our political leaders -- but maybe we should.

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Principles trampled underfoot

Many politicians have made vigorous statements about the need for carbon taxes or setting tradeable rights to emit carbon dioxide.

The West Australian government is the latest, foreshadowing a new carbon tax of $25 a tonne.  This is below the $134 a tonne the UK Stern report estimated would be necessary.

The Stern report proposals would bring a $30 billion annual tax on Australian electricity production, quadrupling the wholesale cost of electricity.  The nuclear option would raise wholesale prices by "only" 50 per cent, though Kevin Rudd has said "absolutely not" to nuclear power stations.

These measures come on top of annual costs approaching $1 billion from existing Commonwealth and state schemes.  The most important of these are a trio of acronyms:  the Commonwealth's MRET (mandatory renewable energy target) scheme, NSW's NGAC (NSW greenhouse gas abatement certificate) and Victoria's VRET (Victorian renewable energy target).

Carbon taxes and tradeable emissions have similar effects.

Taxes set a direct carbon price targeted at a desired level of emissions;  tradeable rights set a required quantity of emissions, from which a price emerges.  Taxes push the impost into the government's coffers by, in essence, expropriating the profits of carbon-intensive energy businesses.  Tradeable rights give the revenue to the existing carbon emitters, with each emitter's rights being progressively reduced.

Politicians say they favour these "economic instruments" because price signals are a better means of facilitating reductions in carbon dioxide than the traditional command and control methods.

Those traditional methods provide ad hoc subsidies to certain activities or low-carbon power sources and forbid other activities.  They entail a considerable intervention and exercise of judgements by government agencies and are open to political manipulation.  So far, so good.

But for a start, no politician is saying we should abandon the mishmash of energy efficiency standards and subsidies to solar, and roll these and other interventions into a tax or tradeable right.

When push comes to shove, no government actually lets these neutral instruments operate.  No government allows markets to take the decisions on what industries suffer, what technologies get used or phased out and which income sector loses most.

BlueScope, before proceeding with a $1 billion Port Kembla steel plant, has obtained an indemnification guarantee from the NSW government that it would be exempt from requirements under any carbon tax the state might introduce.

This is in addition to its exemption under the existing NSW carbon trading scheme.

And in Victoria, negotiations for smelter expansions incorporate excluding Alcoa from requirements under the VRET and the MRET.

Both the Victorian government and Labor's then environment spokesman Anthony Albanese agreed to this.

Such market overrides are seen across the world.

In the UK, Chancellor Gordon Brown is wrapping tax increases on air travel in sanctimonious statements about the need to discourage carbon emissions.

The air travel tax, like the UK requirements on wind farms, is over and above the European Commission's policed tradeable rights system.

In Germany, Angela Merkel's government has realised that the European carbon tradeable rights system would mean no new coal power stations.  So the German government put forward proposals that new plants with state of the art carbon intensity would be exempt from the need to buy carbon credits.

The EC rejected this, pointing out it would frustrate the intent of the carbon trading scheme and place a greater burden on other emitters.

Among these are existing plants that would face a progressively reducing level of emission rights and would be disadvantaged against new plants in spite of their having been built without knowledge of the program.

So what we are seeing is politicians parading lofty principles about adopting efficient and neutral measures to bring about reductions in greenhouse gas emissions, but intervening in ad hoc ways when the outcome is not to their liking.

This opens the way to all the inefficiencies, lobbying costs and political corruption that the economic instruments are intended to counter.

One outcome is that the big developments dangling huge job numbers and political favours before politicians will prevail in obtaining exemptions.  Smaller developments will suffer.

In addition to the direct costs involved, this puts us back on the "winner picking" road that has so badly served us in the past.

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How much of climate change is hot air?

Almost every day some report or event is claimed as evidence of global warming.  Al Gore's recent movie An Inconvenient Truth went so far as to claim that we have a "climate crisis" right now.

Do we?

It can be hard finding the real facts on climate change among all the hype.

The United Nations Intergovernmental Panel on Climate Change has a mandate to deliver a comprehensive assessment of human-induced climate change every few years, and the Fourth Assessment Report, AR4, is due for release sometime this year.

You have possibly been led to believe, given all the media headlines, that this big report was released in Paris last Friday.  It wasn't.

Friday's document was just a 21-page summary of the first part of AR4, and doesn't even have a bibliography.

That's right, just a summary of a quarter of the big report.

Climate Change 2007:  The Physical Science Basis -- Summary for Policy Makers is nevertheless an important document, because it details the position of many global warming experts.  So what does it say?

For those who enjoy the thrill of the more extreme doomsayer predictions, the 21-page summary will be a disappointment.

For example, while Al Gore claimed that sea levels are about to rise by more than 6m, the IPCC summary indicates that sea levels have risen by just 17cm and may rise by no more than another 18cm, certainly no more than 59cm by 2099.

The IPCC scientists predict temperatures will increase by 0.2°C per decade for the next two decades, and that by the end of the century temperatures may have increased by as much as 4°C or as little as 1.8°C.

The 21-page summary indicates the world has warmed by 0.74°C over the past 100 years.  To put this in perspective, temperatures in Brisbane regularly fluctuate by as much as 10°C in one day.

The IPCC summary explains that at the Arctic temperatures have increased at almost twice the global average, while at the Antarctic there has been no warming.  That's right.  No global warming at the South Pole.

The IPCC summary indicates there is no clear trend in numbers of cyclones, but their intensity has increased in the North Atlantic since 1970 and on balance there are likely to be more-intense cyclones in the future.

The IPCC summary does not explain why regions such as southeast Queensland have missed out, but perhaps this and many other issues will be detailed in the actual report when it is published in May.

It is unusual for the summary of a scientific report to be released before the actual report.  Then again it is unusual for a report to be written by 600 scientists and reviewed by more than 113 governments;  the process so far for just part one of AR4.

Before May, all the contributing scientists are expected to refine the individual chapters in the report to make sure they all accord with the agreed summary.

Much has been written by philosophers about how scientists can get stuck within particular paradigms, unable to break free from the groupthink.  Indeed, while it is useful to have a consensus from the United Nations on global warming, there must also be a place for dissent and debate.

But the IPCC summary glosses over various anomalies.  For example, while the global trend has been one of warming, a plot of mean temperatures since 1998 shows that there has been no warming since then, now eight years later.

The IPCC summary does not acknowledge the current downward trend, which may or may not prove to be just a blip in the scheme of things.

All in all, the IPCC summary paints a picture of a warming world, but I couldn't find a climate crisis.

I am looking forward to reading the report in May, and let's hope it rains on Brisbane in the meantime.

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Waving goodbye? Fans will decide

Rather than jumping up and waving about, well, jumping up and waving, lovers of the Mexican wave can easily look at alternatives to the MCG's ban.

It's not the wave itself that causes the problem -- the wave is a fun example of the possibilities of spontaneous voluntary co-operation between thousands of people.  Management could target the real problem -- people throwing projectiles in to the air, disguised by everyone else's fun.

It would be relatively simple to do so.  Bags could be searched upon entry, and anything that could be thrown confiscated, including, presumably, the bags themselves.  Food and drink -- instant projectiles -- would not be sold at the ground.  The probably mythical cup of urine would be impossible with a ban on cups.

Security guards and video cameras could identify the culprits.

This method would be costly, and intrusive.  Fans might not be happy with paying dramatically higher ticket prices and then being told they cannot bring a drink bottle into the stadium, and once inside have to go hungry.

How important is the wave to enjoyment of cricket?  If it is the difference between having fun and not having fun, fans could set up a competing stadium where the wave is allowed.  This is a high-cost strategy as well, but entrepreneurs who sense this unfulfilled demand could make a huge amount of money supplying it.

This may seem flippant but it happens all the time in a market economy.  When companies stop providing what people enjoy, competitors fill the gap.  Private schooling, for instance, has arisen out of dissatisfaction with public education.

If the MCG has imposed too harsh a rule on fans, then they will stop going and start looking for alternatives.  The MCG is betting that the new rule will instead increase attendance.

Ultimately, the fans will decide whether the wave should be allowed.

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Exploring the path from discovery to business

The Australian winners of the Nobel Prize for Medicine in 2005, Barry Marshall and Robin Warren, have been honoured with Australia Day awards.  The pair belong to an exclusive group of DIY laureates.  Much of their prize-winning work was done in their spare time.

The ultimate DIY achievement was 100 years earlier.  In 1905 Einstein published three remarkable papers, one of which earned a Nobel Prize in 1924.  The papers were written in his spare time while he was a clerk in the Swiss Patent Office in Berne.

There are also 20 laureates from the private industrial sector out of more than 500 awards for chemistry, medicine and physics, another select group.

Is there anything to be learned about the path from discovery to business from the laureates of the private sector?

One would expect the industrial Nobel winners to be drawn from the great high-technology companies of their time.  That is indeed the case.  In the early years up to 1940, the few laureates came from IG Farben, Marconi, Bell Laboratories and General Electric.  In the second half of the 20th century Bell, IBM, General Electric and DuPont were all contributors.

Some of the awards are for quite staggering developments.  The invention of the transistor at Bell Laboratories by Shockley, Bardeen and Brattain (1956) was the first part of a transforming invention for the 20th century.  This in turn begat the second part:  the integrated circuit from Robert Noyce and Jack Kilby (2000).  Noyce did not live to share the award (he died in 1990) but he was one of the "Traitorous Eight" who walked away from Shockley's management and, with others, eventually founded Intel.  Kilby was at Texas Instruments.

There are other echoes of the past in the prizes.  James Black (1988) created the beta-blocker drug for ICI and then a drug to suppress acid causing stomach ulcers for SmithKline.  Marshall and Warren (2005) then challenged the wisdom of the origin of ulcers, modifying a successful treatment with a simpler one that threatened drug company revenue as well as medical teaching.  The "most remote from business" prize must be Penzias and Wilson from Bell Laboratories (1978) for their discovery of the cosmic microwave background radiation, the echo from 300,000 years after the creation of the universe.

In the past 15 years no more big prizes went to the big industrial research laboratories.  The culture has changed.

The big corporations used to reflect the US East Coast philosophy of corporations controlling everything relevant to their business with central research laboratories.  On the US West Coast the approach was more co-operative with technology spread over a number of independent companies, many acting as suppliers of equipment or components.  Intel, Microsoft, Cisco and others moved technical innovation to the West Coast.

Laureates have emerged from this distributed system with the integrated circuit (2000) and the polymerase chain reaction, invented by Kary Mullis (1993) from Cetus.  Few discoveries directly benefited their originating corporations.

What of the Australian government?  Should these events point to a new approach to national needs, distributed research funding and to reappraising the role of the CSIRO?

Corporations have corporate needs but scientific research frequently delivers to a wider community without direct or immediate benefit to the company.  Discoveries achieve technical utility through diverse pathways.

Finally, from the US West Coast there are signs that plurality is important in creating a more vibrant technical and business environment.  Little of this fits policymakers' linear model of discovery, giving rise to technology that in turn gives rise to business.

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Grand, but still no water in plan

Last week the Prime Minister, John Howard, announced a national plan for water security with a focus on irrigation in the Murray-Darling Basin and a $10 billion budget.

Indeed $6 billion has been committed for modernising water infrastructure and another $3 billion for addressing over-allocation including the purchase of water entitlements.

Living in Toowoomba I can't wash my car or water my garden because of the Level 5 water restrictions in place here, but there is no money in the new so-called "nation plan" to build or improve water infrastructure in Brisbane, Sydney or Melbourne.

The focus in the new plan is almost exclusively rural and the assumption is that by buying water entitlement from irrigators the Murray and Darling Rivers can be "saved".

If the federal government started buying water entitlements tomorrow, with $3 billion they could perhaps accumulate a whopping 3,000 gigalitres of water entitlement equivalent to about six Sydney Harbours of water.

But, as every irrigator knows, a water entitlement does not guarantee water and after spending the $3 billion the government could still have no actual water.

For example, there is about 1,500 gigalitres equivalent of general security water entitlements in the Murray Valley.  But most irrigators started this season with no water allocation because the dams are low.

Many were hoping to get through the season with water saved from the year before.

Then, just before Christmas, these irrigators had 52 percent of this carry-over water taken from them by the New South Wales government.

About 1,000 farms are now facing the prospect of no water, not even for "stock and domestic", for the first time since the beginning of irrigation in the region in the late 1930s.

While some may be under the impression that with $10 billion the Prime Minister can fix the water crisis nationally, in fact, he is only spending the money buying water entitlements in the Murray-Darling Basin and will still have no guaranteed water.

Rather than trotting out grandiose plans with a life expectancy way beyond the next election, it would be more useful if the Prime Minister focused on getting water to sheep and homes in the Murray Valley right now.

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Reef may benefit from global warming

On Friday in Paris the UN's Intergovernmental Panel on Climate Change will launch a new report, Climate Change 2007:  The Physical Science Basis, with an up-to-date assessment of likely temperature rises because of global warming.  Three related reports will be released later in the year, including a report on the likely effects of the rise in temperature.  The report on impacts is likely to include a chapter on Australia and a warning that corals on the Great Barrier Reef could die as a consequence of global warming.

The idea that the Great Barrier Reef may be destroyed by global warming is not new, but it is a myth.  The expected rise in sea level associated with global warming may benefit coral reefs and the Great Barrier Reef is likely to extend its range further south.  Global threats to the coral reefs of the world include damaging fish practices and pollution, and the UN should work harder to address these issues.

Most of the world's great reefs are tropical because corals like warm water.  Many of the species found on the Great Barrier Reef can also be found in regions with much warmer water, for example around Papua New Guinea.  Corals predate dinosaurs and over the past couple of hundred million years have shown themselves to be remarkably resistant to climate change, surviving both hotter and colder periods.

Interestingly, scientific studies show that over the past 100 years, a period of modest global warming, there has been a statistically significant increase in growth rates of coral species on the Great Barrier Reef.  There have also been periods of coral bleaching, but no conclusive evidence to suggest that either the frequency or severity has increased.

Coral bleaching is a breakdown in the symbiotic relationship between corals and the algae that provide them with food.  When coral becomes stressed from extreme heat or cold, the algae are expelled.  Some corals are more susceptible to bleaching than others.  Most corals can adapt to higher water temperatures.

There was damaging coral bleaching on the Great Barrier Reef in 1998 and then again in 2002, but at different hot spots.  The Great Barrier Reef comprises more than 3000 individual reefs extending for 2700km.  The bleaching was associated with extended periods of calm weather and less wave action, with the hot spots rising in temperature by as much as 2°C.  Extended periods of calm weather are not predicted with global warming;  when Cyclone Larry hit Innisfail last year, some claim it reduced the threat of bleaching at that time.

About 17 per cent of the world's reefs can be found around Australia and PNG.  According to the last global assessment of the coral reefs of the world, Australian reefs are among the best protected in the world.  And as a consequence of environmental campaigning there has been a significant commitment from the Queensland and Commonwealth governments to further reduce fishing and the potential for pollution from land-based activities, including farming.

In other parts of the world many reefs are under increasing pressure from blast fishing, illegal capture of live fish for the restaurant trade in places such as Hong Kong, coral mining, industrial pollution, mine waste and land reclamation.  In PNG, high sediment loads from uncontrolled forestry, with some of this wood probably ending up as furniture bought by Australians, has also affected coral reefs.  There clearly are global threats to coral reefs, but reef ecosystems have historically been resilient to climate change, and global warming may bring more opportunities than threats.

Corals grow up.  Interestingly, north of Cairns there are large areas of reef with dead coral because of localised falls in sea level.  A significant rise in sea level as a consequence of global warming could make these reef flats come alive again.  It will be the next ice age that will leave many of the world's coral reefs high and dry.

Global warming may be the big environmental issue of our times and the UN may feel compelled to include the world's main environmental symbols in its climate models and assessments.  But there are higher priorities for the world's coral reefs.

Australia's Great Barrier Reef may actually benefit from some global warming.  But other coral reefs are unlikely to benefit enough to survive the real and immediate threat from destructive and often illegal fishing practices and pollution.

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It's time for parents to pay fees to government schools

Today is the beginning of the 2007 school year, and as in previous years, the media is filled with stories about how supposedly "free" government schools impose "voluntary" levies that parents are effectively forced to pay.  These levies can total up to $1000 per student.

There are claims and counterclaims about principals applying unfair pressure to parents, and about how without these levies schools would struggle to provide even a basic curriculum.

There's a simple solution to the problem.  Education in government schools shouldn't be free.  Or, put another way, government schools should be allowed to charge compulsory fees from parents.  The level of fees could be means-tested so that those families genuinely unable to pay would not do so, but everyone who could afford to pay would be required to make a contribution.

The notion that government schools should be free, regardless of family wealth, is an accident of history and an idea whose time has passed.  In the 19th century, "free, secular and compulsory" were the defining characteristics of education provided by the government.  These principles might have been appropriate when they were enshrined in Victoria's Education Act of 1872, but more than a century later they are out of date.

The key role of government in school education is to ensure that all children are educated.  Over decades the community has come to accept that the requirement that there be compulsory education does not mean that students must necessarily attend government schools.

A third of students are now in non-government schools that are not free and are not secular.  Every year that proportion increases.  Clearly parents are willing to invest in their child's future, and they want an education that is not values-free.

The original purpose of "free" education continues to be laudable.  No student should miss out on an education because of family financial circumstances.  However, this objective does not conflict with government schools collecting fees from parents able to pay.

There are two key reasons why government schools should not be free.

The first is the basic one of equity.

Defenders of free education in government schools have never questioned why the children of millionaires should have access to 12 years of free education paid for by taxpayers, when the state's most disadvantaged students in our most disadvantaged schools are starved of resources.

There are few other public services that are provided free of charge to the rich and poor alike.  In principle at least, in Australia health services are provided through public hospitals equally to everyone.  But those who can afford to make a contribution to these services are required to do so through the Medicare levy.  Medicare is no less a "public" system simply because it is funded through both general taxation and a compulsory personal income-tested levy.  Similarly, government schools would be no less "public" if they were funded from a combination of government and private sources.  The test of whether something is public is not who pays for it, but who can use it.

The second reason why government schools should be able to charge compulsory fees is because it would improve the quality of education.  It isn't only that schools would receive a substantial funding boost and that principals would be freed from the obligations of pursuing recalcitrant parents.

More importantly, the conversion of education from a free service into one paid for by parents out of their hip pocket would dramatically increase the accountability of government schools.  Parents would insist on higher standards from the government education system and the system would be forced to respond.  If a service or a product costs nothing, or practically nothing, it is likely to be taken for granted.  (The best example of this phenomenon is our attitude to water).  On the other hand, if we pay a charge for something, we have higher expectations of what we have purchased and we will care about it more.

A traditional argument against compulsory fees in government schools is that middle-class parents would opt out of the public system into the private system, thus "residualising" government schools and leaving them as the place for the education of the poor and under-privileged.  The problem with this position is that such a process is already occurring.  "Free" education isn't keeping the children of the middle-class in government schools.  And those middle-class children in the government system are more likely to be in selective or specialist schools anyway.

The only thing that will attract parents back to government schools is the offer of a quality education -- and a quality education is something for which parents are willing to pay, regardless of what sort of school provides it.

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