Result shows Liberal Party a broad church

Assuming Ted Baillieu pulls off victory following Saturday's decisive swing, both the new government and the Liberal Party will have to act quickly to position themselves for re-election.

They will face a similar challenge to that faced by Labor when it formed minority government in 1999 -- the political task will be to implement policy and gain momentum to deliver a deadly blow to their opponents in four years time.

Part of the terminal decline of the Bracks/Brumby government was its constant expansion of government at the expense of core areas of responsibility, such as transport infrastructure.

Unsurprisingly the seats that will deliver Baillieu power in the inner-city run along the major transport routes of the south and east of Melbourne.  The Liberals have promised big on transport, ranging from investigation of a high-speed rail link to Sydney and Canberra and an airport link, to the building of new Southland and Grovedale stations, and 40 new trains for the suburban network.

Based on his policies, Baillieu is more like Rupert Hamer than Jeff Kennett.  But to be a successful premier, he will have to take the occasional leaf out of the Kennett textbook.  Building the infrastructure promised will require reprioritising spending.

To make sure enough momentum is with the government as it faces the 2014 election, there will be only a short window to start turning sods and laying rail sleepers to turn promises into policy delivery.  And the same challenges are faced in health and water.

The Liberal Party also needs to start thinking strategically about its plans to renew its parliamentary ranks and find the best candidates to win the seats that escaped them on Saturday.

The election result has delivered fresh talent to swell the Coalition's party room, but most will need to spend the next four years solidifying their local vote to ensure they aren't caught in the backwash of the waves they rode in on.

Many of the continuing MPs have served since the Kennett government and this election victory has finally given them the chance of ministerial positions, but some are not expected to continue after this next term.

The party needs to start looking now at how it is going to attract quality candidates who can go into reliable Liberal seats and add further political firepower and policy weight into its ministerial ranks as it seeks re-election.

Coming so soon after the federal election, the state election result also delivers insights into the policy challenges the party now faces.  The divergence between the Victorian Liberals' electoral results at a state and federal level couldn't be starker.

Running on a conservative centre-right policy agenda at the federal election, Victorian Coalition MPs got a two party-preferred vote of 44.69 per cent and lost the seats of La Trobe and McEwen, and didn't retake Corangamite and Deakin.

On the same policy agenda, the Coalition secured 51.16 and 55.14 per cent of the federal vote in New South Wales and Queensland respectively.

Running statewide on a liberal centre-right policy agenda, the Coalition got a primary vote on Saturday night that could resemble their federal two-party preferred vote, while picking up the 13 seats it needs to form government.  The results have the potential to create tensions within the Liberal Party about the policies needed to win government.  But they shouldn't.

Last week academic Leslie Cannold wrote that anyone ''who wants the Liberal Party to remain a part of liberalism -- not religious conservatism -- has to look at Baillieu's Liberals this time around''.  But the philosophical divide between the conservative and liberal wings of the broad Liberal church are always overstated.  And it is especially true in Victoria.

Baillieu's public support improved when he took firm positions on traditional Liberal issues such as law and order.  But his personal branding as a more liberal Liberal has enabled him to deliver the message without alienating voters, and his Coalition with the conservative populist National Party helped build support in country Victoria.

The real message for the Liberals isn't to adopt a more or less conservative policy agenda.  It's to keep the doors of its broad church open and recognise that different policy solutions work in different states.  Pragmatic liberalism rooted in philosophical principles wins elections, not lurches to the left or the right.

The Liberal Party can only ever hope to govern when a large and diverse group of voters can identify their values in the policies the party projects.

Finally, the result affirms Baillieu's position and standing within the party.  He has never been without internal party critics, but the result solidifies his leadership and approach and a slim majority provides the opportunity for Liberals to unite behind him.

If they do, coupled with policy delivery, parliamentary renewal and pragmatic liberalism, their capacity to turn a slim majority into a re-election that could set them up for a possible third term as well.

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Set our universities free

Julia Gillard's government gets easily distracted.  The big issues for her this week have been things like gay marriage, sport on television and the national broadband network.  Only one of them could lay claim to having any long-term significance to the nation.

In 2011 the Gillard government could try a new strategy.  For a start it could stop taking the Greens so seriously.  Yes, the Prime Minister needs Green support, but that doesn't mean she has to be in complete thrall to them.  Realistically there's only one side in Parliament the Greens would ever support, and Gillard and her caucus should understand that.

Next, the government could try focusing on things it generally considers important.  Like education.

An immediate priority is to address the overseas students crisis.  A medium-term priority is to overcome the heavyhanded regulation of the country's universities.

Australia has a high-skill and high-wage economy.  Selling education services is exactly the sort of industry that we should be involved in.  It's also something we're pretty good at.  Education is the country's fourth-largest export earner after iron ore, coal and gold.  About 20 per cent of students enrolled at Australian universities are from overseas.

Yet in an effort to eliminate the abuse of the system by overseas students more intent on getting Australian residency than an education, the federal government has dramatically tightened the regulations applying to all higher education institutions.  It's an example of the ''one-size-fits-all'' regulation that Canberra is so fond of.

The problem is that the government is treating the country's elite universities in the same way as a hairdressing academy with a dozen ''students'' operating in the back room of a fast-food restaurant.

The situation has been made worse by the high exchange rate and the internationally publicised physical assaults on overseas students.

The result is predictable.  Monash University's vice-chancellor reckons a $17 billion industry could be halved.  Some universities will experience over the next few years a education in their total revenue of up to 30 per cent.

Australia is one of the few developed countries in which more than half of all funding for tertiary institutions comes from private sources.  This is a good thing.  But the government can't demand that universities become more self-sufficient while stopping universities from generating their own funding.

The fact that Australian citizens are not allowed to purchase from Australian universities the same product that foreign citizens can buy must be one of the most bizarre forms of discrimination an Australian government has ever enacted.

Overseas students can invest in their own education by paying full fees for an undergraduate course at an Australian university, but because of ''equity considerations'' Australian students cannot.

Ministers and administrators can't resist the idea that more university regulation produces better research and teaching.  University bureaucracy verges on the Kafkaesque, according to James Allan, a law professor at the University of Queensland.  Here's an example.

In an effort to assess ''research quality'', the Australian Research Council (ARC) measures the success of law school staff at getting their work published in academic journals.

The journals are ranked, with publication in the most prestigious journals indicating better quality research.  According to the ARC, publication in the Griffith Law Review or the University of NSW Law Review is of the same status as being published in the Harvard Law Review.  As good as our two local law journals might be, they ain't no Harvard Law Review.

As Allan says, ''no one outside Australia would treat the list as anything other than a joke, and most Australians would too''.

The ARC won't disclose who drew up the list or how they were selected.

Another measure of success for academics is now how good they are at getting government grants.

So according to that classic axiom of ''what gets measured gets done'', we're going to end up with a generation of university academics who are very good at getting government grants.

As we know, because she has continually told us so, the Prime Minister regards education as a priority and far more interesting than foreign policy.  Here's the opportunity to make a real difference, and fix some problems that (for a change) are not entirely of her own making.

The Ashes are important at any age

The old Jesuit saying ''give me the child until he is seven and I will give you the man'' could, in my case, be paraphrased as ''give the child something when he is seven and it will make him the man''.

Thirty years ago this month, my mother bought her seven year old son a copy of the ABC Cricket Book.  By the end of the summer, all the scorecards at the back of the book had been lovingly filled in, presaging a lifetime of recording sporting statistics when the boy, and the man, perhaps should have been doing something else.

Just as the receipt of the book sticks in the memory, so does the annoyance of the Grade 3 teacher at Chinchilla Primary School when she discovered on the last Friday of November, 1980 that the ABC's normal schools programs had been displaced by coverage of the Australian first innings from the Gabba.

For anyone much younger than 30, the thought of the cricket being televised anywhere other than Channel 9 must seem strange, but back in 1980-81 the ABC did the television coverage, as well as its perennial radio broadcasts and, of course, the ABC Cricket Book.  Perhaps because of this, conservative cricket lovers often seem a little more tolerant of the national broadcaster than others of the same politics who did not grow up with the two entwined in their consciousness.

Until I reached adulthood, ABC radio always meant Alan McGilvray running through the details of the previous day's play ''for those who have not got their morning papers yet'', lecturing those sitting near the commentary position to turn off their transistor radios and, unlike many modern commentators, studiously telling listeners the score every time a run was added.

On that first day in 1980-81, the third wicket partnership of Keith Stackpole and Doug Walters batted till stumps and then into the following morning, making 207 and 112 respectively.  Having reached 2-372, one might have got the impression Australia was going to dominate the summer.  The fact they collapsed to be all out for 433 was a truer guide to a series Australia ended up losing 2-0.

Unfortunately, I did not get taken to the cricket that summer, despite Brisbane hosting one test.  In particular, I would have always loved to be able to say that I was there on that famous Saturday when the spectator leaned across the fence and grabbed John Snow, an action which led England captain Ray Illingworth to take his team off the field.

This was not the only reason to remember the series.  It also saw the playing of the first ever Test in Perth, the complete wash-out in Melbourne, and consequently the playing of the first limited-overs international, plus the debuts of Rod Marsh, Greg Chappell and Dennis Lillee.  By the end of the summer, Bill Lawry had not only been sacked as captain, but dumped from the side.

As Australia slumped to defeat in the only Seventh Test in history, no one quite appreciated that new captain Ian Chappell would end up not only turning the Australian team into a dominant playing force, but also be a key figure in the radical reformation of the game via World Series Cricket.  A myth seems to have developed that Kerry Packer saved cricket from the doldrums whereas, in reality, the very reason he wanted to secure cricket for Channel 9 was that it was booming in the mid-1970s, and he was sure it would be a hit on commercial TV.

Some aspects of the ''establishment'' position now seem completely arcane in the modern sporting world, but in one sense it has held up remarkably well.  The Test matches, despite the weakened Australian sides which participated in them, remain part of the rich history that stretched back a century before them, and now stretches forward a third of a century after them.  The WSC games, despite their quality, are mere footnotes.

The longevity and regularity of Ashes series provide a profoundly reassuring presence as every four years a home Ashes series rolls around and one can take stock of changes in the game, society and one's own life.

Certainly, the game itself improved significantly in the 1990s and 2000s, as scoring rates returned to earlier quicker levels, rather than the funereal rates that produced too many draws in the 1960s.  The revival of spin bowling was another swing of the pendulum which one would not have predicted in the pace-obsessed 1970s and 1980s.

Technology has delivered advantages, an obvious one being replays on scoreboards, which helps spectators who miss wickets through momentary distraction, a fate which most famously befell Mrs Park, who missed her husband Roy's entire Test batting career when she bent down to pick up her dropped knitting.  Then there is the wonder of mobile phones.  In 1990-91, one member of our group did not show up at the appointed time.  The rest of us, keen not to miss out on the best available vantage point inside the MCG, decided to punish his tardiness.  After a solitary day at the cricket, he was none too happy when I spoke to him on a landline that evening.

However, just when mobile phones made rendezvousing easier, along came pre-booking seats, a decidedly mixed blessing.  Never have modern practices looked as inane as they did when an unexpectedly large crowd suddenly rolled along to the SCG for the final day of the January 2003 Test.  In such circumstances in the 1970s, we would have all just slapped our cash down and headed in to find a spot.  Now, ticket sellers were trying to satisfy seat preferences and process credit card payments, while the rest of us waited in scarcely moving queues experiencing the worst sound in sport, excited noise from inside a ground when one is stuck outside.

Most of the noise that day was coming from the Barmy Army as England surged to a rare victory.  Surely, no development would have surprised the mobs in Bay 13 or on the Hill in the 1970s than the fact that the majority of noise inside our grounds now comes from the English.  Without wanting to reflect on the Barmy Army, who can be quite an amusing aspect of a day at the cricket, one can argue that not only has Australia generally been better at cricket than England over the past 40 years, there is a fair argument that we have also done better economically and socially.

Of course, these days crowds have to compete with the constant noise coming from public address systems pumping out advertisements, superfluous music or, most irritatingly of all, statements of the bleeding obvious about on-field events.  One of the great beauties of the longer versions of the cricket is that they should allow reflection time, quiet moments between the exciting ones.  The availability of the dull draw as an option provides a whole range of shades of nuanced grey in a world which increasingly seeks black and white outcomes.

Yet, one only has to think back to the final day in Adelaide four years ago to know that Test cricket can always surprise.  At the start of the day's play, it was basically inconceivable that there could be any result other than a draw.  Yet the weight of history seemed to make England freeze;  their inability to score was far more captivating than any barrage of sixes in a Twenty20 game could ever be.  As the England batsmen crumbled to the will of Shane Warne, people who had happily made plans on the basis that the day's play would be routine suddenly forgot all about their work commitments, knowing that occasionally what is happening on the sporting field can be more important.

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Cato's letter 1: The grand old paradigm

The Global Financial Crisis -- first the US housing bubble, then the failure of investors to understand the instruments they bought, and then many authorities in many counties insuring that private investors did not bear the consequences of bad investments -- called to mind the South Sea Bubble, the corrupt behaviour of the Walpole administration and, of course, John Trenchard's and Thomas Gordon's Cato's Letters so long ago as 1720.

Then the outrageous behaviour of Australia's two major political parties bidding for office following the recent election brought again to mind Walpole's use of unwarranted privileges to gain and hold political favour and the brilliant protest mounted against corrupt government by these ''letters''.  Although we cannot expect to match the brilliance of those Cato's Letters circumstances demand a protest.  What better than their formula?

Cato's Letters 1:  The grand old paradigm

Scrutineering during the evening of the last Federal poll I was struck by the number of people who, ignoring the How-to-Vote cards, voted Labor 1:  Liberal 2 or Liberal 1:  Labor 2.  They must subsequently have been sorely disappointed by the depths both majors plumbed when bidding for the favour of the independents.

Yet surely they were rational.  After all, despite the National Broadband Network, carbon abatement, and other policies of smaller consequence, the major parties were not so far apart.  They were the only political groups that might attempt to govern on behalf of the whole community rather than by benefiting sections of it at the expense of the whole.  They and the National Party were the only ones with experience of the considerable difficulties that attend governance.  When people associated with the Liberal and Labor Parties had thought about such things at all, the relatively free, equal and fraternal Australia that each would like to achieve was similar.  There was a greater difference in the types of policies each believed would achieve that Australia but even this was moderate.

Hindsight told voters that both majors had quite recently governed unusually well.  Economic stimulus does not seem to have worked well enough elsewhere to credit it with much here.  Surely, Australia survived the Global Financial Crisis so well because of the textbook-approved reforms to the supply side of our economy and the fiscal rectitude of the Hawk, Keating and Howard Governments.  (I am not critical of the initial decision to attempt stimulus;  that was genuinely a hard call.  Implementation and continuing it after the evidence started to come in are other matters.)

In 1975, a so called Constitutional crisis did not even look like shedding blood and that is still the temper of Australian politics.  We are a very lucky people to live in such a nation and we should never forget it.  Fraternity is not an immediate problem.  Liberty is, but must be a topic for another day.  That leaves equality.

Should not politicians attempt to govern for the benefit of all with special consideration only for those least able to cope?  Should they not treat all Australians as of one class?  Is not privilege abhorrent?  If so, then after the election Australians experienced an unusually disgraceful political episode during which the majors bid for the support of sectional interests at the expense of the whole.

Take broadband.  My family farms, and we will have our internet connection cross-subsidised by people who are much less wealthy.  This cannot be dismissed as trivial.  $35.7 billion is a huge sum for an economy Australia's size;  one that private investors would not risk and a sum that in the unforeseeable future we may wish had yielded better returns.

Take Abbott's offer of a billion dollars for a hospital in Tasmania.  Did he really believe that such a distribution of health funds was equitable or for that matter efficient?  If that offer does not haunt him it should.

Winston Churchill observed that democracy is the worst form of government except all the others that have been tried.  De Tocqueville, who thought that Americans might vote themselves what they could not afford, observed that a democratic government is the only one in which those who vote for a tax can escape the obligation to pay it.  More recently James Buchanan described how concentrated vested interests will tend to prevail over dispersed interests.  Pitt the Elder and Lord Acton noted that power tends to corrupt.  And so on.  It is not as though democracy's weaknesses are unknown.  No politician familiar with the shenanigans within his own political party could be unfamiliar with the potential shortcomings of democratic process.  Recognising its strengths, our leaders should admit its weaknesses and lead appropriately.

The underlying problem is this:  majorities are not achieved by appealing to the middle ground but by putting together coalitions of people with enough at stake in some matter to let it determine allegiance.  If that were the whole story, democracy would be unworkable.  In the real world, however, there seem to be enough people who put aside self interest to prefer the interest of the whole (or a principle derived from perceived public benefit) for democracy to function much better than its alternatives.

A small illustration of what has become known as public choice theory may assist.  A tariff on clothing and textiles such as we had before Hawke and Keating removed it may transfer, say, $1 billion from 20 million consumers to, say, 100,000 producers organized in 100 companies and 1 union.  Then each consumer has $50 at stake;  each family $200;  each worker $10,000 and each company $10 million.  It is relatively easy for the union and employers to make life difficult for a Government, but the consumers cannot cover the cost of organizing to counter the lies and damned lies employed to defend the market privilege.  Only rarely have I heard a recipient of government favor say ''I know that what I take is unfair and inefficient''.  What is more damaging, many seem able to convince themselves of the truth of easily falsified rubbish.  I recall Richmal Crompton who wrote:  ''It is a great gift to be able to lie so as to convince other people.  It is a still greater gift to be able to lie so as to convince oneself.''

It is similar with thousands of issues, each defended by an organised minority beholden to self interest, emotion or fear.  We all would like a bigger share of whatever is for the moment the national wealth -- say, a better local school, hospital or communication service that people elsewhere pay for.  Wouldn't we all like others to subsidize our favourite hobby -- the arts, football, whatever?  It is so convenient to have our own employment protected from competition that we tend to forget consumers and the unemployed.  Those of us who live in favoured environments don't want coal mines and gas hubs and we don't want hoi polloi climbing the city-fringe hills or turning up as refugees.  When offered privileges by leaders who neglect the morality of their calling we can be a selfish lot and potential government favouritisms are almost endless.  Unless the recently appointed Minister for Delivery of the Pork, Simon Crean, finds substantial ''regions'' within the cities, the recent deals call for wealth transfers from city people to country people.  The privileges are of a type that Hawke, Keating and Howard much reduced.  They tend to be regressive which, since wealthy people find it easier to organise, is hardly surprising.  Fortunately they come after Hawk, Keating and Howard.

While such favouritism is obviously unfair and therefore immoral, it is not so widely understood that it is also inefficient causing national wealth to be less than it could be.  Privilege causes industries and professions to produce goods or services other than those most wanted at higher price than needs be;  it causes people to be unemployed;  it causes infrastructure to provide less benefit than it could if properly located or if the same expenditure were applied to other assets;  and it results in high levels of taxation and incompetent public sector delivery.  Recall the recent pink bats and school halls fiascos;  these were caused less by common-a-garden incompetence than by the government attempting what was never within its competence.  In short there is dead weight cost.

The parliamentary reform that featured much among the demands of the now notorious Three Amigos has undoubted popular support.  While, with one exception, I don't expect their ''reforms'' to do much good, neither do I expect much harm.  My exception is an office of budget management answerable to the parliament:  I suppose more-or-less along the lines of that recently adopted in the United Kingdom.

Parliaments do what they must do better than I think the public appreciates.  They do not, indeed cannot, govern.  For this they are too large and they have not the resources, nor even the calibre of personnel, especially after the Ministry is effectively taken from them.  First, without bloodshed, Parliaments choose the team that will control the vast machinery of government.  Then, what has been called the High Court of Parliament holds that team to account before the jury of public opinion.  Most importantly, despite nonsense to the contrary, by denying the ruling team their confidence or money they can, and sometimes should, get rid of it.  That power, much attenuated by Party discipline, is the threat that allows parliaments to compel governments to adhere more-or-less to principles of good governance.  First parliaments reveal and in the extreme they can sack.  There are other systems but ours works tolerably well.  Of course, Parliaments must sanction new legislation but I suggest that at least half of that we would be better off without.  The programs on which governing parties have been elected and the mandates they have claimed have proved mixed blessings.  Nearly all governance is conducted by the authority of statutes passed years before and the only new legislation governments really need is money bills.

The last thing that should be demanded of parliaments is consensus.  They are combative.  They are designed to be combative.  They fulfil their function, to the extent that they do fulfil it, by combat.  I concede that better manners and lest posturing would improve them, but those are concerns for culture, not standing orders.  The posturing reminds me now of past occasions when ministers reminded me of cockerels showing to their hens who sat behind.

What might we have anticipated of a Government that achieved office promising to misuse public trust?  What might we expect of an Opposition that tried to achieve office by the same?  What might we expect from the independents who seem to have had scant idea of the principles that ought to constrain the exercise of power, even less appreciation of what they didn't understand and certainly not the humility to place themselves in the way of learning from conventional sources?  What might we expect from Andrew Wilkie, Bob Katter, Tony Windsor, Adam Bandt and Tony Crook?  Bit by bit I am finding out, but I turn instead to some behaviour that might minimise damage.

Surely members of the Gillard Government would like future serious commentators to say as complimentary things of them as current ones say of the Hawke and Keating Governments.  Surely there is much that they can learn, not from past visions but from past quite-strictly-limited aspirations, practices and the determination to press on when sufficient support was hard to muster.  For instance, Hawke found in the Fraser Government's ''black hole'' an excuse to abandon or minimise the cost of his party's more reckless promises.  While breaking irresponsible promises will always attract criticism the real immorality is in the making of pledges that ought never to be made.  It is not within my competence to devise tactics for dealing with vested interests that have been promised too much but it has been done before and the need is great.  Julia Gillard might revitalise an old tradition of her party, opposition to privilege.  She might govern as though she meant it when she promised to govern for all.  Tony Blair may have some advice for her on how to deal with privilege within the labour movement itself.

The Coalition too might learn from its past.  Remember that the Howard and Peacock Oppositions actually supported Hawke's most difficult reforms, sometimes even leading the debate.  Some within its ranks might form another dry rump that will fit it for government in due course, prevent it aligning with undeserving vested interests, and popularise beneficial policies such as substantial deregulation of law and medicine.  Surely its members would like one day to form a government that was as favourably remembered by history as Robert Menzies and John Howard.  Some might settle for being favourably remembered even if they don't survive politics long enough to form such a government.

Right now this reads like an unrealistic pipe dream.  Why?  Australia enjoyed as much for about a decade and a half.  Are conditions today so much more difficult?  Just because media report politics like football with winning and losing teams is no reason for politicians not to think beyond the most immediate election.  They have done so before.

And the independents?  Should they care, they might start with a little theory, say, some public choice theory and, say, Walter Bagehot on Westminster etc.  The Parliamentary library and research service is, or was in my day, a superb tool.

Adam Smith said that there is a great deal of ruin in a country.  Perhaps there is, but once begun there seems always to be more to come.  Fiscal rigor and reform fell into serious disregard during Howard's final year and all of Rudd's years.  It has just been made even more difficult for the major parties to govern fairly and efficiently.  Equality deserves better than the lip service of political harlots.

In response to Graham Readfearn

It was very kind of Graham Readfearn to out me as one of a small group of ideologues who have frustrated climate change policy in Australia -- perhaps even the world.

Modesty, however, requires that I correct the record.  It is true that I am suspicious of climate change policy proposals.  I am suspicious of any politician who advocates increases in the size and scope of government intervention.  It is true that I argued against the Carbon Pollution Reduction Scheme.  After all carbon pollution is a stock pollutant -- the correct solution to that problem, if it exists, is a tax not cap and trade.

But it is the romanticism of Readfearn's argument that is wrong.  A small group of people took on the entire establishment and won.  That is really what he suggests in his article.  Being named as one of that small group is, of course, a great honour and yet the truth is more mundane.

Climate change policy in Australia imploded due more or less to its own success.  At the height of his powers and popularity Kevin Rudd gave an ugly, snarling speech to the Lowy Institute in November last year.  There he claimed that a small number of people (not including me) were gambling with our futures and with the future of our children and grandchildren.  But, we were told, his government would act.  His government would follow the science.  Several short months later he was crying on national television on his way out the door.

Today marks the first anniversary of the so-called ClimateGate scandal.

If we want to identify those responsible for the collapse of climate change policy we need look no further than Professor Philip Jones of the University of East Anglia.  Singling him out is a bit unfair -- he was one of many involved in the scandal.  His credentials as a climate scientist are impeccable.  He has published widely in the field and is held in very high regard.

He is also the author of some very unfortunate emails that were hacked or stolen or leaked but somehow came to be posted on the internet.  I am happy to concede upfront that various inquiries have exonerated him of any wrongdoing.  Officially.  Yet we live in a democracy.  It is not clear that Jones has been exonerated in the court of public opinion.

This is the man who bragged of using ''Mike's Nature trick ... to hide the decline''.  To be fair ''trick'' is a word with many meanings and usages and his meaning and usage is well within the scope of acceptability.  ''Hide'' can never be appropriate in academic research or in public policy making.  You don't need to be a highly trained climate scientist to think that hiding results is a bit dodgy.

Jones also undermined the very source of credibility that underpinned climate science.  It was all peer-reviewed.  Peer review was the gold standard of truth.  Actually, it isn't but lay-people don't know that.

All they knew was that the climate science had been checked and rechecked and checked again.  It was solid.  Yet Jones's emails showed him undermining the peer review process.  Official exoneration can only cover so many sins.  It didn't help when it turned out that the IPCC reports (also peer-reviewed over and over) contained factual errors and non-peer review material.

So a major cause of the collapse of climate change policy was the gap between what was promised and the inevitable disappointment when it turned out that the scientists -- previously lauded as saviours of the planet -- were all too human.

But of course Jones wasn't alone.  Here in Australia he had help in the form of the Australian Greens.  True to its promise the Rudd government introduced legislation into the Parliament for an emissions trading scheme.  It failed in the Senate despite Liberal senators crossing the floor to vote in favour of the ETS.  For all the anger and angst about the lack of progress on climate change we should never forget that the Greens voted against the policy.

To be sure, they had their motives but it is rank hypocrisy to blame anyone other than the Greens for Australia not having an ETS.

So Graham, thank you.  I'll be sure to show all my friends how important I am to promoting good policy in Australia.  But between us, I have to thank Phil Jones and the Greens for doing the heavy lifting.

If marriage is so good, why not invite everyone in?

It didn't take much for a wave of pro-gay marriage sentiment to echo through the socially liberal wing of the Labor Party.

A Greens motion that politicians should ''gauge their constituents' views'' on gay marriage (which you'd have thought was their job anyway) has led a growing list of Labor MPs to declare their support.  And Julia Gillard has brought Labor's national conference forward six months so her party can debate the issue next year.

That's Labor.  What about the Liberals?

You'd think conservative opposition to same-sex marriage would be a no-brainer.  Resistance to major social reform is seen as part of the DNA of Australian conservatism.  Certainly, no Liberal politicians have stuck their necks out.  Malcolm Turnbull, who you'd think would be the best bet, has made it clear he believes marriage is between a man and a woman.

Yet there is a strong conservative argument for legalising gay marriage.  Conservatives who decry the decline of marriage as an institution are right.  Straight people have been undermining the sanctity of marriage for decades.  This is a bad thing.

Marriage is a private form of social welfare.  Spouses insure each other against sudden loss of income.  Married couples are less vulnerable to financial stress than single people.

The benefits of marriage on mental health and wellbeing, income and happiness are widely acknowledged.  Married people tend to lead more stable lives.  Their relationships are more durable.

There's justified concern Australia is losing ''social capital'';  that the bonds of the community are weakening.  And the evidence suggests married people integrate better in communities and the workplace.

So extending the marital franchise to gay and lesbian couples would multiply the number of Australians who can join this crucial social institution, spreading the positive impact of marriage on society.

The most common conservative case against gay marriage is that the very idea is an oxymoron;  marriage, by definition, is between a man and a woman.  But this seems less about protecting the sanctity of marriage and more about protecting the sanctity of the dictionary.

Conservatism isn't opposed to change.  It simply seeks to make change manageable.  And if the symbolic value of the word ''marriage'' is important, then the social benefits accrued by that symbolism should be available to same-sex couples.  On the other hand, if the word is merely shorthand for a utilitarian contractual relationship between two rational, calculating individuals, then barring gay individuals from signing such a contract is obviously discriminatory.

Conservatives have one more question to be answered.  Doesn't gay marriage hurt straight marriage?  That's an empirical question we can measure.

In their book Gay Marriage:  For Better or For Worse?  What We've Learned From the Evidence, William Eskridge and Darren Spedale look at the effect that recognition of same-sex relationships -- marriage and civil unions -- has had on Scandinavia since Denmark introduced registered partnerships in 1989.  The authors found that after nearly two decades of registered partnerships in Scandinavia, social indicators, if anything, were getting better.  Total divorce rates were lower.  There were higher rates of straight marriage, fewer out-of-wedlock births.

Caution is worthwhile.  These changes aren't due to same-sex unions -- just because two women get married doesn't mean you're more likely to stay with your opposite-sex spouse.  But it does suggest gay relationships do not undermine straight relationships.

In the past few years, a number of countries have adopted gender-neutral definitions of marriage.  Opponents of gay marriage should reveal how they predict straight marriage will be harmed?  Early indications suggest it has not been harmed.

The conservative case for gay marriage is one that respects and venerates the institution of government-approved marriage.

A more radical answer to the gay marriage question would eliminate government's role.  There are, after all, two distinct aspects to marriage in Australia.  There's the religious and cultural aspect:  marriage is a sacrament, sanctified by religions, families and friends.  Then there is the legal aspect:  marriages are stamped and approved by the government.

Why do we need the latter?  Marriage could be privatised.  There's really no need to have any central authority deciding who is married and who isn't.

This is, of course, not an approach the Greens or the ALP are likely to adopt.  Nor is it the most conservative approach.

If marriage is so socially beneficial, why not encourage as many to join it as possible?  The choice is between excluding gay people from the foundation of strong families or inviting them in.

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Single authority no panacea for Victorian public transport

Despite scarcely rating a mention in the leaders' debate, public transport is clearly a crucial issue in this month's Victorian election.

It might be an exaggeration to say, as Paul Mees did in The Drum this month, that community discontent is at ''fever pitch'', but concern is clearly sufficient to create the impression that Labor may be one major meltdown of the rail system away from losing its majority in the November 27 election.

This makes quite a contrast with the situation when Labor came to power in Victoria 11 years ago.  In the 1999 election campaign, public transport in Melbourne scarcely rated a mention.  This fact is made more striking when one considers that the handover of Melbourne's train and tram services to private operators occurred just as the campaign was getting underway.

Paradoxically, public transport in regional Victoria played a crucial part in determining government in 1999.  Two of the seats which the Coalition lost, Gippsland East and Ripon, were ones in which, early in its term, the Kennett government had removed rail services.  After the 1999 election, it was revealed that Jeff Kennett had rejected a recommendation from his transport minister and treasurer to restore the rails services to these communities thereby passing up what seemed an obvious opportunity to demonstrate that more efficient delivery of existing services could free up funds for additional services.

Meanwhile, the more politically nimble Labor opposition not only pledged to restore axed rural services, but also promised fast trains to several regional centres.  They costed these at the ludicrously low figure of $80 million.  By the following year, the now Labor government admitted the actual cost would be $556 million, while the final cost ended up blowing out to more than $750 million.

Eleven years on, the political geography of public transport has largely been reversed.  All the high-profile public transport issues in Victoria relate to metropolitan Melbourne.  In their early years in power, Labor devoted most of its energy and financial resources to delivering its costly regional rail project and was content to let the metropolitan area slide along;  happily having the best of both worlds, taking credit for any successes, and blaming any failures on what they claimed was the flawed model of privatisation they had inherited.

What eventually forced the Government's focus to shift to the city was a massive patronage boom which has seen metropolitan train patronage almost double in the past few years.  This massive rise in usage was triggered by a combination of external factors (such as rising fuel prices and population growth) and the improved services provided by the private operators.

Critics of privatisation, such as Mees, tried to argue that all the patronage growth was solely the result of the external factors.  The flaw in this argument was that it did not explain why Melbourne experienced much quicker patronage growth than the other Australian cities which still labored under their government-run services.

The second claim of the critics was that the privatised system was actually costing taxpayers more money than the old Public Transport Corporation had.  While it is true that privatisation has failed to meet the bullish financial projections of the early bidders, it is clear that on a like-for-like basis, the service is certainly not costing more.  Of course, expenditure on public transport has now increased.  However, that is because the Government has had to start spending capital so the system can cope with the vastly increased numbers of passengers it is now carrying.

Also much of the criticism of the private operation of services in the past decade has failed to recognize just how bad things often were before the Kennett-era reforms.  Lengthy strikes were just one aspect of public transport in the past.  The system was nowhere near as rosy as some of the nostalgic now claim.

Fortunately, despite its earlier rhetoric, the current Government belatedly recognised that privatisation had virtue.  It chose to re-tender, rather than re-nationalise, when the existing contracts expired last year.  Ironically, one of the comments posted in response to Mees' Drum piece was that Melbourne should learn from Hong Kong as well as Zurich, the poster of the comment apparently being unaware that, since the most recent re-tendering, the operator in Melbourne is actually MTR from Hong Kong.

The oddest part of the critique of Melbourne's transport is the assertion that the key feature it most lacks is a single authority to oversee all public transport in the city.  There is an almost touching belief that, if such a body were created, the same bureaucrats currently derided for incompetence will overnight become fonts of all wisdom.  Zurich undoubtedly has an excellent public transport system.  However, the thought that a model from the unique Swiss political environment will automatically be a panacea in Australia stretches credulity.

While the two major parties differ on aspects of public transport policy, both at least now understand that private operators need to be part of the picture.  Yet, perhaps unsurprisingly, the Greens have swallowed whole the position of Mees and other critics.  Not only are they promising an extensive list of uncosted new public transport projects, they are also vigorously spruiking the single authority model.

However, more seriously, the Greens have said they will tear up the contracts with the private operators.  Not only would this be a retrograde step for public transport but, by its violation of the principle of sovereign risk.

It hardly sounds like a proposal that would hold much appeal in a great capitalist city like Zurich.

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Staring through the Greens' populist prism

In The Drum last week, Liberal shadow minister Kevin Andrews described the Greens as little more than Marxists for Forests.

The Victorian Liberal Party's decision to not preference the Greens in the state election, was, in part, because that view is widely held within the party's grassroots.  The decision seems to be the right thing by their supporters:  Liberal voters do not want to feel responsible for entrenching the far-left in a position of power.

But this presumes the Greens' policy views are driven by a bleak, terminally unpopular radicalism.

The recent political melee over banks and their stubborn insistence on making profits suggests otherwise.

Neither the ALP or the Coalition are the biggest populists in Federal Parliament.  The Greens are.

Compare the major parties' responses to the recent interest rate rises with that of this blossoming minor party.

Seeking to get a leg up over the Government on interest rates, Joe Hockey flirted with naked and obvious populism -- railing against the Government for not acting against the perfidy of bankers, and full of dark hints about "levers" which the Coalition could pull.

Yet when challenged on what those levers actually were, Hockey stepped back from the populist brink.  The shadow treasurer released a complex nine-point plan for regulatory reform of the finance system.

Wayne Swan has had great fun threatening the banks on talkback radio when they've callously raised rates, but the art of governing is managing competing objectives -- it wouldn't be prudent, or good policy, to directly stop them from doing so.

So the Federal Treasurer met the political opportunity of the Commonwealth Bank's interest rate rise with assurances he, too, would be releasing a detailed and complicated plan for regulatory change in the future.

But then there's Bob Brown.

On Sunday the Greens leader announced his party would prefer to simply ban banks from lifting their interest rates past Reserve Bank movements for two years.

In other words, Brown had no complicated plan;  no attempt to delicately balance the incentive structures of the banking industry with community dissatisfaction about those profitable institutions.  He proposed a bludgeon:  outlaw banks doing what the Greens think is a bad thing.

"It's time they gave something back to the average Australian," Brown said.

Then forcibly lower ATM bank fees, force banks to offer fee-free savings accounts, and forcibly limit mortgage exit fees:  all to stop, in Brown's words "excessive profiteering".

Helpfully, profiteering is defined.  "Banks continue to exploit this essential service to maximise their profit."  In other words, profiteering is exactly what all businesses try to do, all the time.

Of course, all parties are prone to blustery populist rhetoric.

A Google site search uncovers nine uses of the word "profiteering" on the Liberal Party website, (mainly about people smugglers, and, for some reason, lobster fishers) and two uses on the Labor Party's site.

But that's nothing compared to the Greens, whose website features the word "profiteering" 295 times.

And there's something deeply populist about a party which thinks it can give everything to everyone, at any price, at any time.

In Victoria, the Greens transport plan for Melbourne pours tasty infrastructure manna across the city.  Under the Greens' plan, the city would receive 10 new rail lines, nearly 40 new stations, 12 new tram lines, and 550 new trams.  (Why not 650? Why not 11 new rail lines? Why stop building stations when you get to your 40th?)

And, of course, the Greens promise to reinstate tram conductors, because, well, people say they miss the old conductors.

This plan will never, ever happen.  Not just because Greens won't win government in their own right.  But because there is no chance they'd ever be able to afford it if they did.

Understandably, the major parties have been a little miffed by the Greens' transport generosity.  Why should the Greens be able to shower the electorate with promises of gifts it will never be able to give, when Labor and the Coalition are so constrained by the tradition of pretending their policies are cost-effective?

In Victoria, the reluctance of the Greens to have their policies costed is a tacit admission that, really, cost-effectiveness isn't the point.  It's the thought that counts.  Their plans and policies are specifically designed to make the major parties look miserly.

When seen through the populist prism, the Greens' policy platform looks very different to their radical reputation.

They're the most vocal defenders of the anti-siphoning laws, which "protect" sports fans from having to get Foxtel.  (Sure, the anti-siphoning laws entrench the free-to-air television oligopoly, but that is a minor point when there is pandering to be done.)

The Greens want the Government to limit private sector working hours, which sounds appealing after you've worked a long day, but only makes sense if you don't believe government policies can have any unintended consequences whatsoever.

The Greens claim Australia has an expansive immigration program only because nasty "big business" controls population policy.

And, of course, there's no government service they don't plan on spending more on.  Governments have limited resources.  Popular expectations of what government should do are limitless.  This is, however, not a constraint the Greens feel applies to them.

Of course, there are many deeply unpopular policies the Greens support.  Parties should be praised for defending unpopular things.  Too often it's the only way we get positive reform.

And it's more noble than the alternative.

Better a party stands up for unpopular radical views it truly believes in than succumb to simple populist demagoguery.

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Has Australian Democracy Become Too Conservative?

A speech given at the ACCESS Annual Debate,
15 November 2010

If Australian democracy is getting too conservative what does that mean?

In a speech just before her death, the radical freedom novelist Ayn Rand described contemporary conservatism as the ''God, family, and tradition swamp''.

I'll only speak for myself here but I am far from a conservative.

No conservative would believe in the total and immediate abolition of all industry subsidies and trade barriers, getting the government out of the marriage business, and opening the borders to almost all immigrants who wanted to come here.

That's where I stand.

But the idea that Australian democracy has become too conservative is wrong.

On the first, it seems clear that Australian democracy has little interest in conserving anything.  The last few decades have seen rapid and overwhelming social and economic change -- much of which has been propelled by governments liberalising the legal framework governing individual relations and the structure of the economy.

Every year, the federal government passes more than 6000 pages of legislation.  This is not conserving at all.  This is continuous change.

Yet in these most unconservative times, it seems as though everybody is bending over backwards to claim the mantra of authentic Australian conservatism.

Kevin Rudd famously described himself as an economic conservative.  One pillar of that conservatism was, apparently, a belief in balanced budgets.  We'll let belief through to the keeper, as he did.

Another pillar was a belief in an independent Reserve Bank -- a belief which every side of Australian politics shares and nobody had ever accused Rudd of doubting.

Tony Abbott is described -- and describes himself -- as the archetypal Australian conservative.  Certainly, Abbott's views do tend to what we commonly consider to be social conservatism.

But then he's a long time supporter of workplace deregulation, which, however you look at it, is a repudiation of a system of industrial relations that dates back nearly to federation.  Uprooting that system, for whatever reason, is hardly a ''conservative'' thing to do.

Ditto with the way Abbott, and the Howard government, sought to do it -- to shift industrial relations powers from the states to the Commonwealth government.

In other words, further eroding the structure of government which we have inherited from the Australian founders.

Abbott has described the states as ''Australia's biggest political problem''.  Not much conserving there.

Then there are the regular claims that the Greens are the true ''conservative party''.  This has a hint of truth to it, beyond the simple linguistic relationship between the word conserve and conservative.

On Twitter the other day the state Greens MP Greg Barber wrote that he believed ''we need a new political philosophy, where politicians see themselves as trustees, not liquidators of environmental inheritance''.  In other words, politicians should benevolently and selflessly safe keep the world for future generations.

It is hard not to see the shadow of 19th century Toryism in Barber's words.

In the 19th century, of course, conservative Tories were pitted against liberal Whigs.  But today's free market conservatives are more like the Whigs than the Tories of the past.

Don't worry -- I'm confused too.

A conservative in Russia in 1994 was a communist.  A conservative in Iran 2010 is a theocrat.

We describe evangelical Christians as ''conservatives'', although in their enthusiasm, they are closer to the French revolutionaries Edmund Burke criticised than the sober masses he defended.

We describe the advocates of the invasion of Iraq as conservatives, although there is hardly anything conservative about invading a country, eliminating its leadership, disbanding its army, and just hoping democracy will spring forth out of the sectarian strife which results.

My point isn't to say that conservatism is a meaningless word.  But just to say that simply describing someone or something as conservative is fraught with difficulty.

Of course, we're all guilty of this.  Conservatism is a convenient cipher for a set of policy views and attitudes we associate with people who willingly adopt the word.

But conservatism is a discrete and coherent philosophy.

There is a substantial body of political and philosophical literature which has defined and developed a conservative philosophy of government.

In fact, it's almost a misnomer to call it a philosophy at all.

Let's call it a disposition.

And, despite the contention of our friends in the affirmative, it is an exceedingly rare disposition in Australian politics.

Certainly few in federal parliament could justifiably describe themselves as conservative.

Here's why.

Conservatism is an anti-ideology.  Conservatism has no political program.  It is the only political movement that has no plan, no vision for the future, no picture in its mind of the ideal world.

Again, language here is hard.  It's not really fair to call it a ''movement'' -- a value system that rejects the idea that society should progress towards a goal can't be described as moving anywhere at all.

Conservatives have no use for grand principles.

By contrast, progressives -- of the left and the right -- imagine human nature to be mutable -- that the way we see and react to the world is a symptom of environmental factors, and that as a consequence, that environment can be changed.

Conservatives see human nature as immutable -- that there are constants which no government planner could ever change.  Some self-described conservatives may place the cultural and social norms of the past on a pedestal, but ''conservatism'' -- that is, the conservative disposition -- sees tradition as merely a reflection of these immutable truths.

Conservatives take the world as it is.  Progressives take the world as they would like it to be.

''When it is not necessary to change, it is not necessary to change'', said the conservative Viscount Falkland who tried, and failed, to keep England from descending into civil war in the seventeenth century.

The true conservative is not opposed to change.  Changes occur, outside the realm of politics, and societies have to adjust to cope.  Change can be regretted -- perhaps should be regretted -- it can even be restrained, but it should not be opposed.

Change must be organic.  It does not come from planners or idealists, but from below.  The conservative believes it should come incrementally.  It should be limited.

Just as conservatives resist visions of the ideal world, they resist plans to achieve that ideal world.

The intellectual Michael Oakeshott is the modern go-to thinker for conservative thought, a genuine heir to Edmund Burke.  Oakeshott gave the reasons for this resistance to planning as due to different types of knowledge.

Oakeshott said there is knowledge that can be learnt -- knowledge that can be contained in books, to be studied, to give us the impression that we have expertise in an area.

Government planners focus on this sort of knowledge.

If a planner wants to completely revolutionise a social institution, social science data must be studied, social experiments run, academic papers written, and conferences held to devise the perfect way to enact change.  This is technical knowledge -- like devising and reading a recipe from a cookbook.

But Oakeshott argued that there is other knowledge which planners cannot access.  He calls this ''traditional knowledge'' -- the knowledge inbuilt in those social institutions which planners are unfamiliar with.

As we all know, following a recipe is easy.  But if you do not have the knowledge built up from years of cooking -- like how to cut vegetables, how to sift flour, what parts of the chicken to discard -- your dinner may look and taste awful no matter how at diligently you follow the recipe.

It's not just a matter of developing more complicated recipes.  Much traditional knowledge resists being written down.  There is no formula for speedily chopping vegetables -- you have to build that skill up over years, learning the balance of your favourite chef's knife.

Planners may be able to write the recipe for social change.  But the recipe can never be comprehensive.  And, a conservative would argue, if you have the hubris to completely redraw the contours of society, you're inevitably going to make mistakes.  You're going to discard things which you might think are anachronistic, or out-of-date, but are, unbeknownst to you, the foundations on which that society is built.

You might think that this sort of thinking forms the mainstay of Australia's right of centre political thought.

After all, you've all heard the clichés about how governments cannot pick winners, and how government planning always fails.

Conservatives share a scepticism of central planning and government coordination with classical liberals, and economic rationalists, and radical libertarians such as myself.  The writing of Ludwig Mises and Friedrich Hayek were devoted to emphasising how little we know about what we think we can design.

But Oakeshott's conservatism and classical liberalism sharply diverge.  For those economic rationalists which dominate Australian politics, on the left and the right, and the Hayekians which Kevin Rudd believed had hijacked the Liberal Party, are motivated by a vision of an ideal future.

The ideal future of radical liberals is one which emphasizes individual liberty, and massively reduces state power.

That's my ideal world.  It's hardly conservative.

But even if a party or politician advocates a future of white picket fences and a small population -- it's still a vision.  The ultimate rejection of Oakeshottian conservatism.

Nostalgia is not conservatism.  Conservatism is about less than just pining for the past.

After all, to get back to the 1950s would be quite a journey.

And populism is not conservatism.  There's nothing inherently conservative about ''Stop The Boats.''

All sides of politics are animated by a vision of future Australia, whether it's a small Australia or a big Australia, a multicultural Australia or an ethnically-homogenous Australia, whether it's an Australia focused on manufacturing or mining, on services or industry, on wireless broadband or fibre-optic broadband, or one where the government is more involved in the economy or less involved.

This is quite different from the conservatism described by Michael Oakeshott when he writes that:

''To be conservative, then, is to prefer the familiar to the unknown, to prefer the tried to the untried, fact to mystery, the actual to the possible, the limited to the unbounded, the near to the distant, the sufficient to the superabundant, the convenient to the perfect, present laughter to utopian bliss.''

In Australia, all sides of politics are searching for a plan for the future.  All sides of politics are animated by a vision of a future Australia -- one shaped by the economic, social and political dynamic they prefer.  All sides of politics claim the mantle of economic modernisation.  They do not agree what the future should look like, but they agree that we should be striving to get there.

So is Australian democracy too conservative?  If the word conservative means anything at all, then no.

Self-doubt emerges to test US mettle

There are several explanations for the Democrats' loss in last week's mid-term elections.  Some attribute the shellacking to an anti-incumbent mood.

Left-liberals blame the economy or Barack Obama for lacking the courage to prosecute a true progressive agenda.  Many conservatives ascribe Republican success to the Tea Party movement, which is tapping into economic anxiety and political estrangement that voters feel across the nation.

But the most obvious explanation can be boiled down to two words:  cultural crisis.

Americans of all ideological and political persuasions are in a foul mood.  They suffer from a lack of confidence.  They believe the nation is heading in the wrong direction.  And no wonder:  The US is in the midst of near-double-digit unemployment, skyrocketing national debt, swelling home foreclosures and a deeply unpopular war.

All of this has given rise to rapid mood swings within the electorate, epitomised by the fall of Obama from adulation to contempt within two years.  For three consecutive election years (2006, 2008, 2010), the electorate has voted against the party in power.

As pollster Scott Rasmussen points out, this is a continuation of a trend that began nearly 20 years ago.  During the past three presidencies, Bill Clinton, George W. Bush and Obama won elections before their party lost control of congress.

But the roots of US despair go beyond ideology and any political brand.  They stem from expectations about the US's right to economic prosperity and global leadership that no administration or congress may be able to meet -- expectations that have deep roots in the US's past.

Since the first English settlers landed in the 17th century, Americans' understanding of their land had been shaped by their own exceptionalist vision.

For generations, Americans saw themselves as a chosen people destined to create a new English Israel (Cotton Maher) and the last best hope of Earth (Abraham Lincoln) that would make the world safe for democracy (Woodrow Wilson).

The same vision was echoed in the idea of the American Century, which shaped the national consciousness after World War II when the US enjoyed strategic and economic pre-eminence.  The collapse of Soviet communism reinforced the perception of American exceptionalism.

But many things in recent decades -- quagmires in Vietnam, Iraq and Afghanistan, Watergate and other scandals, mounting trade and budget deficits, Hurricane Katrina and its ugly aftermath, the collapse of the housing bubble, the decline of US unipolarity and what Irving Kristol warned were clear signs of rot and decay germinating in US society -- have shattered US confidence.

Suddenly, the dominant vision of Pax Americana faded without anything -- even the war on terror -- emerging to replace it.  The void means that Americans have oscillated between periods of clarity and purpose, and periods of intense doubt and uncertainty.

Can the US bounce back?  After all, the US has suffered several setbacks only to rebound:  think 1812, the Civil War, the Depression, Pearl Harbour, Vietnam and Watergate.

But the US has never endured a crisis quite like this.  It is not just that the US military is stretched to breaking point.  Nor is it just that the US is on the cusp of a double-dip recession.

It is more to do with whether Americans will gracefully accept a lesser role in an increasingly multi-polar world.  Americans are facing the prospect of lowering rather than raising their expectations.  Not an easy task for a people who have experienced centuries of rapid moral and material progress.  What last week's election really shows is that the US is in a seriously bad way.  Its famous capacity to rebound from adversity is going to be put to a severe test.

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Business asked for this

Commonwealth Bank chief executive Ralph Norris said last week Australia looked like it did not have ''a particularly business-friendly environment''.  He's right.  And business has only itself to blame.

Most of this country's corporate leaders have been complicit in the expansion and politicisation of government control over business.

When it comes to dealing with government, most company bosses prefer co-operation to opposition.  Executives pay lip service to the ideas of free markets but they will embrace greater government control of their business if it gives them a commercial advantage, or if they perceive it will increase their personal social prestige.  Most bosses of large public companies in Australia don't peer beyond the doors of their own boardroom.  When they do venture outside, it's often to talk about how government regulation should apply to every other industry except their own.

The story of business support for climate change is a nice example of the double standard that applies when it comes to regulation.

The banks enthusiastically supported Kevin Rudd's carbon pollution reduction scheme.  They were quite willing to have manufacturing and resources subjected to the 374 pages of legislation of the emissions trading scheme.  An ETS would have heralded unprecedented bureaucratic regulation of the activities of manufacturing and resources companies, and would have sent some companies broke.

One of Rudd's justifications for an ETS was that the community ''demanded action'' on climate change.

Today the banks face regulation of their own.  The community demands regulation to control huge bank profits and excessive executive salaries.  It's just like the sort of action the community was demanding on climate change.

The kind of financial regulation being talked about in Canberra would herald unprecedented bureaucratic regulation of the activities of banks -- just like the sort of regulation manufacturing and resource companies would have met under an ETS.  Now the banks have to explain why they think government should do what the community wants on climate change, but not on banking regulation.  Following public opinion can set dangerous precedents.

Banking was one of the first sectors to embrace the idea of corporate social responsibility.  Corporate social responsibility recognises and elevates the rights of stakeholders;  that is, those who don't own the company but who are in some way affected by its operations.

Taken to its logical conclusion, the application of corporate social responsibility involves companies adhering not only to legislation as passed by the Parliament, but also abiding by the opinion of the community.  Which is not very different to the suggestion of shadow treasurer Joe Hockey that there be a social compact between the government, the community, and the banks.  Treasurer Wayne Swan has labelled the notion as dangerous, but it is simply an extension of what the banks are already doing.

Part of the motivation for business adopting corporate social responsibility was to fend off more regulation.  It was a good idea in theory, but it hasn't turned out that way.

The bank bashing both sides of politics have engaged in is bad.  But when you look at what's actually happened, it's not much.  There have been a new nasty headlines, the banks have suffered some ''political jawboning'' (Norris), and they face the prospect of yet another parliamentary inquiry.  That's nothing compared with what's happened to Telstra, which was told it would be cut in half unless it complied with the whim of the Labor Government and co-operated on the broadband network.  The business community stayed mute and Telstra succumbed.  Telstra is big and unpopular.  No one wanted to be seen to be defending it, and no one wanted to upset the government.  No one is defending the banks, either.

Ralph Norris is correct.  Political attacks on the banks, on top of the resource super profits tax debacle, have harmed Australia in the eyes of international investors.  A potential international investor would be confounded by politicians assaulting banking and mining -- two sectors that were key to the country's economic resilience during the global financial crisis.  And bank profits as measured by return on equity aren't extraordinary.

But in the end, much of the time, politicians do as much, or as little, as they can get away with.  In recent years Australia's business leaders have allowed politicians to get away with far too much.  Business must take its share of responsibility for what's happened.

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Inconvenient Nonsense Infiltrates the Classroom

In 2006, former US vice-president Al Gore made a movie and companion book about global warming called An Inconvenient Truth.  Gore undertook many speaking tours to publicise his film, and his PowerPoint slide show has been shown by thousands of his acolytes spreading a relentless message of warming alarmism across the globe.

But while audiences reacted positively and emotionally to the film's message -- which was that human carbon dioxide emissions are causing dangerous global warming -- some independent scientists pointed out that An Inconvenient Truth represented well-made propaganda for the warming cause and presented an unreliable, biased account of climate science.

For nowhere in his film does Gore say that the phenomena he describes falls within the natural range of environmental change on our planet.  Nor does he present any evidence that climate during the 20th century departed discernibly from its historical pattern of constant change.

In early February 2007, the Department for Education and Skills in Britain, apparently ignorant that the film was scientifically defective, announced that all secondary schools were to be provided with a climate change information pack that contained a copy of Gore's by then notorious film.  Many parents were scandalised at this attempt to propagandise their children on such an important environmental issue.

One parent, school governor Stuart Dimmock who had two sons at a state school in southern England, took legal action against the secretary for education in the High Court, and sought the film's withdrawal from schools.

In a famous judgment in October 2007, Justice Burton, discerning that Gore was on a ''crusade'', commented that ''the claimant substantially won this case'', and ruled that the science in the film had been used ''to make a political statement and to support a political program'' and that the film contained nine fundamental errors of fact out of the 35 listed by Dimmock's scientific advisers.  Justice Burton required that these errors be summarised in new guidance notes for screenings.

In effect, the High Court judgment typed Gore and his supporters as evangelistic proselytisers for an environmental cause.

Fast forward to this month and many Australian parents have been surprised to learn Gore's film ''will be incorporated in the [new] national [English] curriculum), as part of a bid to teach students on environmental sustainability across all subjects''.

It is, I suppose, some relief the film has not been recommended for inclusion in the science syllabus.  Instead, Banquo's ghost has risen to haunt English teachers, doubtless in class time that might otherwise have been devoted to learning grammar.

Some Australian English teachers may feel competent to advise pupils on the science content of An Inconvenient Truth, but I wouldn't bank on it.  Of course, the same teachers have to feel competent also to shepherd their flock on to the green pastures of sustainability, that other pseudo-scientific concept so beloved by the keepers of our society's virtue.

Australian schools are being transformed from institutions that impart a rigorous education into social reform factories that manufacture right-thinking (which is to say, left-thinking) young clones ready to be admitted into the chattering classes.  This process is manifest in other aspects of the new syllabuses.

Two other biases in the public debate about global warming have occurred recently.  The first was the launching of the website Power Shift 2009, which describes itself as ''Australia's first national youth climate summit.  It's the moment where [sic] our fast-growing youth movement for a safe climate future [whatever that might be] comes together''.

In reality, this is simply another website aimed at indoctrinating children regarding global warming, and while it's not surprising to see Greenpeace and GetUp are involved, it is disappointing to see the involvement of persons with the mana of Ian Thorpe.

The second recent bias has been the broadcast on ABC Radio National of the George Munster Award Forum from the Sydney University of Technology.  Here, a panel of ''Australia's top journalists'' examined the proposition:  ''Telling both sides of the story is a basic rule of journalism, but should it apply to reporting climate change?''

Stellar contributions made by the journalists involved included the notions that carbon dioxide is a pollutant, that 97 per cent of all climate scientists agree that dangerous human-caused global warming is happening, and that there is no real debate about climate change.  Independent scientists who question these specious Intergovernmental Panel on Climate Change orthodoxies -- for the good reason that they are untrue -- were referred to as denialists, fruitcakes, clowns and fools who had ''invaded the ABC''.  Giving them airtime was said to ''attack the essence of journalism''.

The reporting of email leaks from the University of East Anglia last year was ''a terrible and wrong disturbance'' in the run-up to the Copenhagen climate conference, and the astonishing claim was even made that Fairfax and the ABC ''have delivered the objective, factual scientific stories on climate change''.

This farrago of nonsense was described by one US scientist who listened as ''probably the most horrifying and disturbing Big Ideas-Small Minds discussion by journalists I have ever heard''.  Book-burning parties for Ian Plimer's Heaven and Earth or Bob Carter's Climate:  the Counter Consensus can't be far away, and if the persons involved in the forum were Australia's top environmental journalists, then God help us all.

Australia is rightly vigilant about preventing child abuse and guarding the freedom of the press.  Why, then, are we so willing to tolerate the abuse of educational indoctrination of our children and the deliberate limitation on the scope of the media discussions they will be exposed to as adults?

Gore's movie and book are an embarrassment to US science and its many fine practitioners, a lot of whom know (but are often unable to state publicly) his crusade is mostly based on junk science.

If allowed in Australian schools at all, An Inconvenient Truth belongs not alongside Jane Austen and Tim Winton, nor with Charles Darwin and Richard Feynman, but with the works of authors such as Jules Verne and H.G. Wells in the science-fiction section of the library.

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There's a hole in the budget, dear Henry, with what shall we plug it?

This year's federal election was ultimately determined by economic credibility.  The independents determined Labor had more credibility than did the Coalition.

A hole in a projected Coalition budget surplus was enough to return a minority Gillard government.  The great irony, of course, is that a hole is now appearing in Gillard's budget projections.  And this hole doesn't just reduce the size of the surplus, as may have been the case with the opposition's costings if Treasury's assumptions were correct.  This hole will keep the government in deficit.  Further, this hole appeared because Treasury's assumptions about exchange rates were incorrect.

Of course, the ultimate irony is that the Rudd-Gillard governments have been unable to balance a single budget.  Both the Prime Minister and the Treasurer have been eager to say the budget is in surplus or will be returning to surplus.  This is the basis of their economic credibility.

Yet it is becoming clear that the promised 2012-13 budget surplus is in some doubt.  The resource super-profits tax and its substitute mineral resources rent tax were always pie-in-the-sky notions built on misinformation, dodgy assumptions and plain wishful thinking.

What we're seeing is an unravelling of government spin.

The story we're being told is that the high Aussie dollar is causing forecast revenue to decline.  There is a grain of truth in that argument, but it is unconvincing on the whole.  It beggars belief that Treasury does not undertake extensive sensitivity analysis around exchange rate assumptions.  In any event, it is unlikely the Aussie will remain at present levels for an extended period.  It is far likelier that government is simply unable to cover up the extent of its budgetary mismanagement.

The signs have been a long time coming.  Initially the Rudd government was able to postpone all tough decisions by claiming the Henry review would answer all questions.  When Henry reported, the government sat on the review for months before offering a very tepid response, the mining tax.  Unfortunately neither the Henry review, nor government, had really investigated the issues much.  It turned out that miners don't pay about 13 per cent tax, as a student working paper suggested.  The tax was incomprehensible to most people, including the prime minister, who couldn't explain what a super-profit was.

When the tax was replaced by the resource rent tax it turned out Treasury had changed its pricing assumptions (but apparently not the exchange rate) to ensure the new tax raised almost as much as the old tax.

To be fair, forecasting is a difficult task.  Treasury has a long and miserable history of poor forecasting.  That fact alone should ensure that any claims of miraculous recoveries and pots of gold just over the horizon, or even in 2012-13, are heavily discounted.  A new tax was never going to be the solution to poor budgetary management.  Fiscal discipline and maintaining a budget surplus requires tight spending controls.

Ironically, Kevin Rudd was exactly correct in 2007 when he said "this reckless spending must stop".  Right now we have fiscal policy still stimulating the economy at a reducing pace while monetary policy acts to slow the economy.  The temporary, targeted and timely stimulus has gone on for too long and injected too much into the economy.  That is why the government is so desperate for new sources of revenue.

Cutting spending is tough.  The British coalition government has started down that path while the US has to move down that road, too.  We are not in the dire predicaments of those two economies, yet we cannot be complacent.

Julia Gillard was claiming at the weekend that the present government has a record of savings, that $80 billion had been saved over their budgets.  That is a very misleading statement.

Not spending money in the forward estimates isn't cutting spending.  Spending less money this year than you did last year is a spending cut.  Spending less next year than we did this year is a spending cut.  Those are the kinds of spending cuts that will be necessary to bring the budget into surplus.

The ability to deliver that level of economic and fiscal discipline will make or break the Gillard government.  If all the government does is plan to reduce the rate at which government spending increases then the budget most certainly will not be in surplus any time soon.  Simply hiding behind dodgy assumptions and public servants will lead to ever-increasing levels of debt and deficit.

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Politics binds US over climate

As Hillary Clinton acknowledged in Melbourne this week, the Obama administration has abandoned its landmark legislation to combat man-made global warming.

Of course, the US failure to implement an emissions trading scheme, or a carbon price more generally, is hardly novel.  Other nations, such as Canada and Australia, have also shelved cap-and-trade proposals.

What makes Washington's failure so much more significant is that without its leadership, the prospects for a legally binding, enforceable and verifiable new international agreement are virtually zero.

The cap-and-trade bill that narrowly passed the US House of Representatives in June 2009 had been stuck in legislative limbo for more than a year.  But Senate Democrat leaders faced with near double-digit unemployment and skyrocketing national debt, recognised it represented political death for many colleagues.

Indeed many Democrats from midwest coal and manufacturing states ran specifically against cap-and-trade in last week's mid-term election.  Take Joe Manchin:  in one television commercial, the Senate candidate for West Virginia saved his campaign by literally shooting the bill with his hunting rifle.

As for the Republicans, only two out of the 48 primary candidates for Senate said they believed in manmade global warming during the recent campaign.

If Congress, with Democratic super-majorities, could not pass a climate bill so weak that it consisted of little but loopholes for the so called big polluters, the President has no chance of persuading a new group of more sceptical lawmakers riding an anti-tax wave to Capitol Hill.

To be sure, Barack Obama hopes to unveil other climate initiatives such as multimillion-dollar subsidies for renewable energy projects.  But most green lobby groups concede that direct-action proposals are insufficient measures to combat global warming.  Obama could use the US Environmental Protection Agency to override Congress and unilaterally impose regulations under the 1990 clean-air laws.  But such action would be deeply unpopular in several bellwether, recession-plagued states in the lead up to the 2012 presidential election.  In any case, administrative regulation would almost certainly be tied up in litigation for years.

Which brings us back to a global treaty to succeed the Kyoto protocol which expires in 2012.  China, India and Brazil have made it clear they won't sign.  In the European Union, an ETS has done to little to reduce emissions.  And Canada is hitched to the US.  Get ready for Cancun to be another Copenhagen.

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Houston, we have a housing problem

Adding up everything we own, the Government Statistician reckons Australian families are worth $5800 billion.  That's more than five times as much as the nation's annual income.

Houses comprise two thirds of households' measured wealth.

Real estate experts RP Data put the value of the average house in Melbourne at $500,000.

But in Houston, Texas, a metropolis at least as bustling with an economy at least as strong as Melbourne, the average house is bigger yet worth only $215,000.

How can the average Melbourne house be worth twice that of Houston?

As they say, "There are damned lies and statistics".

Housing's statistical twist is mainly caused by government regulations over supply of land.

A major reason why Houston's house prices are less than half those in Melbourne is because land there is not rationed by development controls.

By contrast, all Australian governments strictly limit land availability for building new homes on the edge of cities.

The consequent land shortage brings a fifty-fold increase in the value of that land which gets government development approval.

Yet the land is unchanged and there's no intrinsic shortage of it.  The higher value is caused only because the regulations limit supply.

And the regulatory-induced high prices on the city edge bring a knock-on effect for house prices throughout the city.

The planning control regulations at the heart of our high prices were originally a means of ensuring co-ordination between house construction and infrastructure like roads and schools.

Gradually, their goals have shifted to focus on stopping urban sprawl or redevelopments within the cities.  And added to planning controls have been other cost-enhancing regulations over density, parkland, and so on.

Other Australian governments are worse than Victoria's in preventing land being used for housing.  Even so, house prices throughout Melbourne are probably $80,000 higher than they would be without the rigid planning restrictions.

Those of us who own our home often look at its value and feel prosperous.  But it is an artificial affluence brought at the expense of those without homes -- and many younger people see home ownership as an impossible dream.

Housing regulations are already featuring in the coming state election.

The Liberals say they will open up the urban growth boundary and slash the urban planning red tape.

This would be an excellent start but will prove difficult to achieve given the decades over which the red tape has been amassed.  Worthy goals can easily be strangled in endless inquiries.

The ALP sees a much greater role for urban infill developments which are often resisted by neighbourhood groups who oppose inner city apartment building.

There is surely a role for both increased developments on the city edge and in suburbia.

Housing should allow buyers choice and neighbours cannot expect extended rights to control how other people use their property.

With both major parties focused on trying to reduce regulatory restraints to housing development, hopefully the coming election will mark a turning point in the long ascendancy enjoyed by those who seek greater controls and regulations.

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DCC briefing: a farrago of spin, obfuscation and exaggeration

Flush from its near death experience following the hung parliament, the Department of Climate Change and Energy Efficiency (DCC) has published its briefing to the incoming Gillard Government.

It talks of its mission to bring to the government advice of the ''highest quality'', which is ''integrated'', ''objective'', and ''well informed''.  Oh, and hiding its blushes, it promises to bring ''Quality outcomes through effective design and delivery of programs, services and regulatory administration.''

And as a euphemism for the agit-prop outfit that it is, the Department talks about ''bringing understanding of climate change risks and opportunities''.  It sees many quangos as supporting it in playing ''a central role in building community consensus for action on climate change'', including the newly formed Climate Change Committee, the proposed Citizens' Assembly and the proposed Climate Change Commission.  These add to the legion of agencies of government and NGOs dependent on government funding that are already out there using transfusions from the taxpayer to help persuade the taxpayer to accept further extortions.

Unsurprisingly, the Department's Strategic Brief is a farrago of spin, obfuscation and exaggeration.  It is also riddled with inconsistencies.

Thus it argues that a carbon price is the way to go since other measures are hidden ''and give a false impression of being cost free to households''.  Though less fashionable following Obama's post November 2 apostasy on cap-and-trade, a single economic instrument like a carbon price does have the merit of being neutral and transparent.  But having embraced this, the DCC brief goes on to promote additional measures, showing its support for a price on carbon is simply opportunistic.

Thus, the DCC brief also praises the renewable energy regulations that impose costs by forcing electricity retailers to incorporate more expensive renewable energy into electricity supplies, smearing its costs into bills hoping the consumer won't realise the price increase stems from government regulations.

DCC favours other requirements on product standards, to combat ''entrenched behaviours'' by consumers who don't have highly paid bureaucrats' sophistication and are unable to decide for themselves which products best meet their needs.

The area of briefing to incoming ministers that is particularly risible is when the Department explains that most people favour action on climate change but are wary about paying for it because of the spectre, ''often overstated'', of increased costs including electricity costs.

Though they neglect to say so, the policy they advocate cannot result in prices rising less than $1,000 per household.  Our research has found that only six per cent of people say they are willing to incur such an outlay and politicians' would have even more comprehensive data than that.

Though containing stacks of hype, the DCC brief offers no estimate of what warming would cost us if it were to take place.  And it suggests that the warming this century will likely be as much as 4 to 7°C (more alarmist even than the IPCC which puts the rise at 1.1 to 6.4°C).

One of the few cost numbers mentioned is that we will be 2.5 per cent worse off as a result of a need for new infrastructure.  This would be a gross understatement if the DCC meant we have to replace our low cost energy by the pie-in-the-sky new technologies it promotes.  However it has in mind new roads, ports and other hardware, meaning it predicts that these will increase in cost by over a quarter.  Obviously the fabricators of such a figure have not researched hotter places like Hong Kong, Singapore and the US Gulf Coast to validate whether these climates mean a higher infrastructure spend.

Nowhere does the briefing come clean on what the costs are likely to be if nothing is done.  That's because the costs are likely to be trivial.  The dozen available peer reviewed studies put the costs of warming, should it occur, at around +/- 2.5 per cent.  This cost (or benefit) takes place in the context of a growth in underlying incomes for Australia of 70 per cent (200 per cent for the world at large).

As for the costs of taking the far-reaching action it advocates, DCC cites Treasury's hopelessly over-optimistic, assumption laden modelling.  It fails to understand that replacing efficient coal generators with high cost windmills would totally destroy the resource base of the Australian economy, returning the nation to some nineteenth century pastoralist past and hoping that we will all prosper in such an economy.  And even when it cites the Treasury projections it expresses them as forecasting a loss of 0.1 per cent a year without mentioning that even this means over 10 per cent this century.

Having people and even government agencies express views is beneficial.  But we have with DCC an agency that seeks to exercise leadership in thrusting its own view of the world onto the hapless Australian public.

Like previous such Vanguards of the Proletariat, the DCC is an affront to individual liberties.

In promoting the idea that government should become the master of the people not the instrument by which the people's preferences are translated into action, it would reverse the democratic principles on which our society is based.

The DCC is not the only taxpayer funded agency that treats the public and even its direct political masters with contempt.  Agencies established to be the handmaidens of the public now see themselves as legitimately nudging us and even deceiving us into directions they favour.  It was never meant to be like this and it will worsen unless such powers are rolled back.

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