Climate change can't be stopped, but we will adapt

Julia Gillard is half-right.  The world is acting on climate change.  But not acting to stop it -- to adapt to it.  In the 1920s, an average of 240 people out of every million died every year from extreme weather events:  drought, flood, windstorm, landslide, earthquake, extreme temperatures and wildfire.

According to data from the International Disaster Database, last decade that figure dropped to just three per million.

Actually, the numbers are even better than they first look.  The 20th century saw a 99.9 per cent reduction in the risk of death from drought.  And the risk of death from floods came down almost as much:  89 per cent.  Floods and drought -- two of the most commonly mentioned consequences of climate change.  We're getting much better at managing and surviving them.

The causes of this remarkable decline in mortality are many.  Better transport and communications help move food to where it's needed, quicker.  Globalised trade gives producers an incentive to do so.  Hardy modern agriculture can survive not just long-term climatic shifts, but the more pressing problem of bad growing seasons.

Better flood control and prevention, weather forecasting and more responsive emergency services all help reduce the damage from floods.  Never have we been better at protecting ourselves against nature.

If the past is any guide to the present, that's how we'll deal with further changes in climate (whether caused by human activity or not):  through adaptation.  Especially considering there's next to no chance of serious international action to reduce carbon emissions.  Sure, if Australia introduced a carbon price now, we would not be ''leading the world''.  Other countries have introduced their own.  But there's action on climate, and then there's ''action on climate''.

The only purpose of carbon pricing programs is to achieve deep emissions cuts.  By that measure, they've been a dismal failure.  Those jurisdictions that have introduced them have been slowly backing away from serious reductions.  The coalition of 10 American states acting on climate that Gillard often cites will soon be nine:  New Hampshire is planning to withdraw.

European climate policy is pushing bravely ahead.  But if nuclear power is off the table after the Fukushima scare then cutting emissions there will be a dead end.  As George Monbiot wrote in The Guardian last week, ''the energy source to which most economies will revert if they shut down their nuclear plants is not wood, water, wind or sun, but fossil fuel''.

And China has been increasing its carbon dioxide emissions by an average of 12 per cent every year this century.  By 2020, China will be emitting nearly 500 per cent above its 1990 levels, even after their highly publicised emissions reduction efforts.

The goal of public policy must always be to increase human welfare.  One lead author of the Intergovernmental Panel on Climate Change, Richard Tol, has pointed out that many studies of the economic impact of climate change have excluded the possibility of adaptation entirely -- as if potential sea level rises will be met by humanity with a stoic fatalism, rather than levies and insurance.  (Tol, it's worth pointing out, is no climate sceptic.)

Nor do enough studies consider the positive effects of temperature increases.  In a warming world, marginal land can become productive for agriculture, just as often as productive land can become marginal.

Given how we're getting better at coping with extreme weather events, there's reason for optimism.  Taking all peer-reviewed studies of the economic consequences of temperature rises into account, Tol estimates that climate change could cost just a few per cent of global GDP over the next 90 years.  That's about one year's economic growth.  The cost of climate change is the equivalent of a bad recession, spread over nearly a century.

With the economic cost of climate change so low, Tol suggests (at most) an optimal carbon price would be $2 per tonne -- a lot less than the $26 to $40 per tonne suggested by the government and commentators.  But at $2, the cost of collecting such a tax would seriously eat up its revenue;  hardly worth doing at all, and a bit trivial to be ''major economic reform'' on which Julia Gillard could build her legacy.

The most damaging consequences of IPCC-projected climate change will be in the Third World.  But developing countries aren't disproportionately vulnerable to climate change because they're in more dangerous parts of the globe, but because they're poor.

Wealth and sturdy institutions are critical for handling natural disasters and climatic changes -- as we've seen in the difference between the 2010 Haitian earthquake and the 2011 Japanese earthquake.  This makes the real climate change question a question about economic development.  How can the world's poor get rich quick?

If her government is serious about tackling the consequences of climate change, that should be the one question exercising Julia Gillard's mind.  Her carbon price is, at best, a distraction.

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Media Watch: Everyone loves it until they advocate censorship

On last week's Media Watch, host Jonathan Holmes called for the government to use a practically defunct regulation to restrict free speech because he disagreed with the content of that speech.

Two days later, GetUp -- the useful idiots of Australian politics -- responded to this call to action, launching proceedings with the government regulator, the Australian Communications and Media Authority.

That the speech in question was about climate change and the speakers were Alan Jones and Chris Smith is absolutely beside the point.

Media Watch conclusively demonstrated that, on the right to free speech, it's one of the bad guys -- asking for the legal system to intervene in a vigorous public debate.

The program opened with an extended discussion about the number of climate change sceptics hosting AM radio shows, their take on climate science, and the fact that they interview more sceptical scientists than non-sceptical ones.

Completely within Media Watch's brief, sure, and completely banal.  It's hardly news some radio commentators prefer to interview certain guests more than others.  ''Opinion maker has biased view'' would not stop even the smallest press.

Yet Holmes went one step further.  He argued the shock-jocks are in breach of the Code of Practice governing commercial broadcasters which mandates ''reasonable efforts are made ... to present significant viewpoints when dealing with controversial issues of public importance''.

And the reason the regulator hasn't enforced the code against Alan Jones and his fellow sceptics?  ACMA ''won't or can't enforce the Code unless someone complains it's being flouted.''

Nudge nudge, wink wink.

Defending his stance on Twitter, Holmes said on Wednesday that ''if you check you'll see I said stations shouldn't need to be told by [the] regulator''.  The key word there is ''need'' -- Holmes believes that broadcasters do, currently, need to have their speech regulated;  their freedom of expression limited.

The host of Media Watch would not respond to further questions.

Don't just read the transcript -- watch the show.  Smugness has always been part of the appeal of Media Watch.  But when tackling subjects with more weightiness than the NT News or an ABC 24 production error, complacent insinuation and innuendo are increasingly a substitute, rather than a complement, for argument.

Nevertheless, if Holmes believes that GetUp or his audience have misinterpreted his meaning and intent -- or simply if he thinks the government regulating public debate is a bad thing -- then he could say so on air.

The right to freedom of speech is meaningless without the right to choose that speech.  No-one should be forced to say something they do not believe as a condition of saying something they do.

In the United States between 1949 and 1987, the ''Fairness Doctrine'' obliged broadcasters to do exactly that.  The regulation compelled contrasting views to be presented whenever an issue was raised on the air.

And certainly, the doctrine resulted in balanced and civil broadcasting environment.  But it did so by exclusion.  It was easier to avoid controversial topics than risk a regulatory penalty for being perceived unfair.

Testifying in 1984, the broadcaster Dan Rather argued that ''Once a newsperson has to stop and consider what a Government agency will think of something he or she wants to put on the air, an invaluable element of freedom has been lost''.

The Fairness Doctrine quickly became a political weapon.  During the Kennedy Administration, the Democratic National Committee produced activist kits teaching party members ''how to demand time under the Fairness Doctrine''.

The Nixon administration also used Fairness Doctrine to threaten the licenses of hostile broadcasters.  Angered by The Washington Post's Watergate coverage, Richard Nixon is on record saying that ''the Post is going to have damnable, damnable problems ... They have a television station ... and they're going to have to get it renewed''.

The Fairness Doctrine is now widely recognised as having had a ''chilling effect'' on speech.

Compared to the Fairness Doctrine, the Commercial Broadcasters' Code of Practice is a model of restraint.  But, as Media Watch helpfully demonstrated, that is because it is largely defunct -- it has been interpreted benignly, and wielded rarely.

Monday's Media Watch advocated that this free speech status quo be overturned, and the Code of Practice be used as a political weapon.

After all, I doubt Holmes would argue that gay broadcasters should be compelled to air the views of homophobes, or Christian broadcasters to air the view of anti-theists.  Instead he called for the Code to be used solely against those discussing Australia's biggest, most controversial, political issue -- the carbon price.

Some claim a Code of Practice is the price broadcasters pay for using public spectrum;  that the rest of the media is free to do what it likes but there must be special rules for those using the airwaves.  The history of the Fairness Doctrine, and the egregious actions of GetUp and Media Watch, show just how slippery a slope that view is.  ''Public interest'' rationales easily become political interest rationales.

When not actively hostile to free speech, Media Watch is just missing in action.

Take, for instance, the most prominent and disturbing violation of free speech in recent years:  the class action lawsuit against Andrew Bolt under the Racial Vilification Act is as clear cut an attempt to silence a critic of public policy as this country has seen in many years.

So, unsurprisingly, the lawsuit has not been mentioned once on what is supposed to be the ABC's flagship program of media analysis.

Referring to George Bush's 2003 declaration to the Australian parliament that he loved free speech, Holmes' predecessor David Marr lamented to the Media Watch audience ''If only more Australian commentators shared his view''.

Indeed.  And if only Media Watch did as well.

We're in debt to Barnaby

Wayne Swan and Ken Henry owe Barnaby Joyce an apology.  A year ago Joyce, then the Coalition's finance spokesman, warned of ''economic Armageddon'' if the United States government defaulted on its debt.  He said the threat was ''distant but real'' and politicians should at least acknowledge the possibility of default, however remote it might be.

Treasurer Wayne Swan accused Joyce of coming from the ''reactionary fringe of our economic debate''.  Ken Henry, then the secretary of the Treasury Department, claimed that Joyce shouldn't be talking about such things because it would frighten people.

So on that basis Austan Goolsbee must be from the reactionary fringe too.  The trouble for Swan is that Goolsbee is a professor of economics at the University of Chicago, the chairman of US President Barack Obama's council of economic advisers and a member of the US cabinet.  Presumably for Swan and Henry it's OK when Goolsbee speculates on the US going broke, but it's not OK when Barnaby Joyce does.

In January Goolsbee contemplated the result of the US House of Representatives, controlled by the Republican party, not allowing the US government to increase its debt.  ''If we hit the debt ceiling, that's essentially defaulting on our obligations, which is totally unprecedented in American history,'' he said.

The context in which Joyce and Goolsbee spoke was different.  Joyce was talking generally about the sustainability of US government debt, while Goolsbee was contemplating the unlikely event of the Obama administration being unable to raise its debt ceiling.  But in essence Joyce and Goolsbee were talking about the same thing -- namely the US government running out of money.

In the US Goolsbee's remark was taken as a simple statement of fact.  In Australia Joyce's remark provoked outrage from Labor politicians and economics commentators.  It was one of the reasons Opposition Leader Tony Abbott subsequently removed Joyce from the fmance portfolio.

Goolsbee was not the first to talk of the seemingly unthinkable.  Last year the chairman of the house finance committee in the US Congress asked Federal Reserve chairman Ben Bemanke if there was ''any realistic prospect of America defaulting on its debt in the forseeable future?'' Bernanke replied:  ''Not unless Congress decides not to pay, which I don't anticipate ...'' The question was rhetorical but the fact that it was asked speaks volumes about what's preoccupying American legislators.

The treatment of Joyce reveals just how ignorant Australians are about the financial situation of the United States government.  Forty per cent of the money the US federal government spends is borrowed.  In five years' time the US will be spending more on interest payments than on the defence budget.

In August last year, Admiral Mike Mullen, the chairman of the joint chiefs of staff, said the biggest threat to the national security of the US was not from China or the Middle East, it was from the national debt.  A study released on Wednesday, the Sovereign Fiscal Responsibility Index, done in conjunction with Stanford University, ranks the US 28th out of 34 developed countries in terms of the sustainability of its financial position.

The US ranks below Spain and Italy, and just ahead of Ireland and Iceland.  The top three countries are Australia, New Zealand and Estonia.

The budget stand-off in Wisconsin between a new Republican governor and the public sector unions is a huge story in the US, not because anyone is particularly interested in Wisconsin, but because it could be a forerunner of what could happen in Washington.  Even though the Australian media seems obsessed by the Tea Party, the story has received almost no coverage in Australia.

National governments have an advantage over their state and local counterparts as they control the currency, which is why, technically speaking, the United States is unlikely to go bankrupt.  If a situation developed whereby the US federal government could not repay its borrowings, it would print more money.  The effect would be hugely inflationary, but at least bankruptcy would be avoided.

It's understandable that Swan and Henry, who presided over the biggest growth in Australian government debt since Gough Whitlam, didn't like Joyce talking about the consequences of government debt.  But it's Australia's policymakers -- who refuse to face the facts of the long-term consequences of America's financial situation -- who are the ones being irresponsible.

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O'Farrell has to get on board with trains

If there is one statistic which sums up the malaise that has gripped NSW in recent years, it is the patronage on the Sydney public transport network.

The position of Sydney compared to other Australian cities is startling.  The most recent census figures available show that for the period 1996 to 2006, while the four other mainland capitals saw public transport share of journey to work trips rise by between 13 and 22 per cent, the share in Sydney actually fell by 15 per cent.

Indeed, by the mid-2000s public transport patronage in most other major Australian cities was beginning to boom.  In Melbourne, the numbers travelling by rail increased by 22 per cent between 2006 and 2008;  in Sydney the comparable figure was a measly four per cent.  Things have only got worse since then, with figures released in recent weeks revealing that the number of trips taken on Sydney's trains fell by 2.5 million last financial year, while the number taken on buses went down by 1.5 million.

One part of the explanation of why Sydney is Australia's public transport laggard is the fact that demand has been suppressed.  Sydney has not experienced the degree of population growth of cities such as Melbourne, Brisbane and Perth.  Under Bob Carr's Premiership, the message went out that Sydney was closed, a position that also had a deleterious effect on economic growth, always one of the key drivers of increases in public transport patronage.

However, the bigger problems are with the supply of the service.  Public transport in Sydney will not attract new patrons in big numbers until the quality of the service improves.  And the key to improving the service is to address the fundamental problem that for too long the system has been run more for the benefit of transport unions than commuters.

Throughout the period that Labor has been in office, few of the inefficiencies in the system have been addressed.  One of the rationales for the metro, which was the preferred rail project when Morris Iemma was Premier, was that it would operate with driverless trains.  This was a lovely irony given that one of the worst inefficiencies of City Rail was that the network still operated with guards, as well as drivers, a rarity in modern train systems.  It was a tacit admission that reform in the present was just too hard.

As well as the operational side, the work practices in rolling stock and infrastructure maintenance need to be made vastly more efficient.  Both Sydney commuters and NSW taxpayers are paying the price of restrictive work practices and unnecessarily high subsidies.

Even before likely new Transport Minister Gladys Berejiklian turns her attention to the trains she can start on the ferries, where the endemic problems were highlighted in the Walker Report in 2007.  The Coalition Policy recognises that ''increasing the role of the private sector in service delivery'' is the best way to fix the problems.  As the policy points out, the ability of the private sector to provide ferry services has been well demonstrated by the Manly Fast Ferry since 2008.

Next in line for private operation should be the STA bus operations, which could be franchised out in selected geographic areas.  This model is hardly a radical proposition, having been undertaken in the majority of other Australian capitals in the past two decades.  In all cases, it has led to significantly higher patronage, with an increase of a third in Perth in the first few years, while in Adelaide a study found a 15 per cent increase in ridership, combined with a large saving to the state budget.

Of course, this sort of reform is likely to meet significant resistance from unions.  This was also the expectation when, in similar circumstances, the Kennett Government was elected in Victoria in 1992.  A broad suite of reforms delivered annual savings of $250 million, without cutting services.  The closing of one ancient inefficient rail maintenance workshop saved $80 million per annum on its own.

What was remarkable was that these reforms were achieved with the agreement of the transport unions, some of whose leaders were smart enough to accept that the Government was determined to achieve reform and that industrial action would not sway that resolve.  One can only wonder whether the incoming Government in NSW next week has established its reform resolve so strongly.  Certainly, an O'Farrell Government will need to be prepared for industrial unrest and ensure that it prevails.

Unions are not the only vested interest that the new government will need to address in the area of transport.  The level of dissatisfaction with taxis is just as great as it is with public transport.  Removing the pernicious effects of the current restrictive licensing system will be a real test of the reform credentials of the new government.

While public transport issues have played an important role in the NSW election campaign, the focus has not been on these core problems facing the system.  The Opposition has released a number of transport policies most of which are worthy in themselves but, apart from the promise to involve the private sector in ferries, they only scratch the surface of the fundamental structural issues.

If the commuters of Sydney are to get half decent public transport, without increasing the burden on taxpayers, the inefficiencies in the system need to be addressed as the major priority.  It is making the existing operation work efficiently that will be one of the biggest tests of an incoming O'Farrell Government.

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The costs of climate of confusion

A reason for voter disquiet about Prime Minister Julia Gillard's carbon tax announcement is there are so many unanswered questions about how the temporary tax, to be followed by a carbon trading scheme, will affect families and businesses.

What hasn't received great attention so far is the budgetary effect of carbon pricing.

In fact, the only certain outcome from a highly uncertain carbon pricing regime will be the rapid growth of the climate-change bureaucracy.

According to some reports, the Government is considering a carbon price of $26 per tonne, which could yield $12 billion in revenue annually.

Part of this revenue grab will be siphoned straight back to low to middle-income earners through financial compensation for almost certain price hikes.  This will create a new political constituency seeking carbon welfare, in turn ratcheting up the expenditure of government.

Another part of the revenue from a carbon scheme, or existing taxes, will be spent to permanently entrench new government agencies, whose objective will be to advise, monitor and enforce the artificial carbon pricing arrangement and oversee compensation.

Documentation for the deferred Carbon Pollution Reduction Scheme, which could form a basis for the Government's future plans, called for a broad-ranging regulator to decide how to auction pollution permits and select which emission-intensive industries receive compensation.

This regulator would also act as the national carbon police, with the monitoring, investigative and enforcement powers to walk into any business to check it is cutting back on emissions as claimed.

The proposed carbon price will only build on the massive bureaucracy already built up by governments in their efforts to cool the planet.

The federal Climate Change Department was funded by taxpayers last year for $134 million and employed more than 1000 staff.  This year a new Climate Commission advocate was established with $6 million over four years.  Numerous federal agencies with no direct climate change policy involvement have set up organisational branches, research activities and conferences, including a climate change summit for rural women, to secure more funding from a climate change-activist Cabinet.

State governments have already set up more than two dozen climate change offices, agency branches, special commissions and councils.  Each state over the past few years has prepared its own climate-change strategy.  Jurisdictions have gone beyond glossy brochures and websites to enact more than 200 climate-change initiatives, all at a cost to the taxpayer, including renewable energy subsidies, which also raise household power bills.

Many local governments have actively imposed climate change planning and environmental regulations, with implications for housing affordability.

The climate change state is already here, with government revenues channelled largely into make-work schemes for bureaucrats.

If the federal carbon tax becomes a reality, the climate change state will become a much larger beast for families to contend with and fund.

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Address to the Revolt Against the Carbon Tax

My focus is on the economic and political implications of the measures restraining carbon dioxide emissions.

First, the outcome on the climate, if any, as a result of Australia taking action alone is negligible.  Not only do we account for a trivial 1.5% of global emissions, but if we wind-down activities that are prominent emission producers -- in particular the one quarter of our electricity for smelting -- the effect will be fully offset by expansions elsewhere.  And we will be all the poorer as a result.

Secondly, the likelihood of international action is receding.  And it is not credible to imagine that Australia taking unilateral action will prompt similar measures by others.  The US is abandoning its efforts at the federal level and individual states are pulling out of previously agreed emission reduction commitments.  The latest ones are New Hampshire and New Mexico.

Of other countries, China is not moving towards emission restraints.  Japan stated at Cancun that it was not going to take further action towards promoting renewables and it would not introduce a carbon tax.  These attitudes will have hardened now that the events in Japan are closing off, at least temporarily, the prospect of a nuclear power resurgence.  Germany has temporarily closed older plants and it and other major nuclear power producers have put moratoria on new generators.  And even if new nuclear power developments resume, the tsunami will mean increased plant costs, thereby increasing the price premium on fossil fuels required to promote substitution.

Nobody outside green activists believes solar/wind have a realistic role.  Wind is and will remain three times as costly as coal with solar perhaps six times as costly.  Moreover, in both cases the unreliability adds further expenses.  And in spite of vast outlays, there is no prospect that coal power based on carbon capture and storage will get off the drawing boards.

Carbon tax or alternative action fails to pass a cost:benefit test for the world as a whole and still less for Australia.

For the world as a whole, the peer reviewed economic analyses suggests a doubling of emissions would bring costs over the course of a century in the range of +/-2.5%.  The major costs are associated with the IPCC forecast 20-80 cm increase in sea levels that economic analysts take as given.  Offsetting these claimed negatives are positives in the retreat of permafrost and increased growing seasons.  Many areas would make unambiguous gains from warming (e.g. much of Russia, China and north America) making an international agreement impossible.

The government financed studies like Stern and Garnaut have higher costs than these independent studies but lack credibility.

And when we think of these +/-2.5 per cent in costs or benefits we need to recognise that they take place in the context of a global business-as-usual doubling of real income over this century.  Measures which shut-off the cheapest forms of energy would seriously reduce this expected increase in global income levels.

For Australia, greenhouse action to ensure that global emissions are brought to a world average level entails a reduction of domestic emissions by 80 per cent.  Not only does it mean a direct cost to the households -- at least tripling electricity bills in the longer term -- but it means an abandonment of our existing industry structure.  The cost is colossal and would cut deeply into Australians' living standards.

Already we have a $3 billion drain on the economy through the budget for government agencies to promote climate change and subsidise carbon-reducing technologies.  In addition we have the renewable policy which requires 20 per cent of electricity to come from high cost renewables by 2020.  On conservative assumptions this will cost $2.7 billion a year.  A carbon tax at $30 per tonne levied only on electricity would raise a further $6 billion and $15 billion if it is on all emissions.

Such sums would add to the vested interests and government resources to promote increased action.  The Gillard Government already has a vast panoply of funding taken from the people for propaganda to persuade us that the measure is really in our interest.  The funding has different prongs including:

• Science funding with the existing funds to CSIRO, the Met Office, the Universities and the CRC's supplemented by additional funds from the Department of Climate Change $20 million a year
• The activities of the DCC itself and of other government agencies, all of which have dedicated units as part of the climate change propagation industry
• Funding of so-called independent bodies like the Garnaut review, the advisers to the MultiParty Committee, Tim Flannery's Climate Commission and bodies like the Grattan Institute.

This is a flagrant extension of the role of government and overshadows all previous nanny state measures.

With the latest series of papers comprising Garnaut's review of the Garnaut Review, Ross Garnaut has proclaimed himself right all along.  He is a long time servant of the ALP and an economist with impeccable credentials favouring increased government spending, higher taxes and using economic instruments to push buyers and sellers in his own preferred directions.  Because, as he explained to the ABC's sympathetic Tony Jones ''I can read English'', he maintains that the science is all cut-and-dried.

Garnaut is the Gillard Government's spear carrier on the issue.  His carbon tax would raise $11.5 billion in its first year.  He wants to parcel this out between bribing the poor and promoting R&D.  Although he also advocates some form of cushioning effect on the most vulnerable export and import competing sectors, he seriously misunderstands the complexities this entails.

And, to soothe concerns about loss of domestic competitiveness, he and other Government spokesmen are promoting the tax on the expectation that all nations will take similar action.

Even Paul Kelly, The Australian's long-time advocate of a carbon tax, raised an eyebrow at that one.

But Mr Kelly like others continues to see the carbon tax as part of a productivity-enhancing tax reform.  This discounts our experience that subsidies to bend spending in ways favoured by governments have always proven misconceived and wasteful in the past.  As the example of the Future Fund shows, Australian governments will inevitably direct such funding to political objectives that yield no productivity gains.

The carbon tax advocates clearly do not subscribe to the views of Winston Churchill who said

''I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle'' ...

Churchill's colourful description actually understates the absurdity of a tax as a wealth generator.  This is because, even without other problems a tax requires the deadweight of a bureacracy to administer it and to redistribute the funds it raises.

But in Australia's case the carbon tax is even more detrimental.  That's because it falls most heavily on the sectors that are most productive given Australia's resources.  It slams the competitiveness of industries like smelting that make use of the low cost energy we have in such abundance.

The ALP Green alliance now seeks to squander gains made in the past 15 years in reforms to electricity and gas that have delivered the low costs that the industries and households enjoy.  These reforms have done much to raise our living standards over recent years.

Australia's proposals would require the abandonment of Victoria's valuable brown coal resources and the progressive devaluation of our black coal reserves.  As well as providing cheap domestic energy, these provide one quarter of our exports.

Leaving aside a stepped fall in living standards, the claims that a tax once in place will restore the confidence of industry is Blind Faith.  How can a new tax that discriminates against a particular raw material provide confidence to invest in assets with 20, 30 and more years life?  A tax introduced is a tax that can be changed.  It may make gas based electricity cheaper than coal but would a firm invest unless it got the investment guaranteed against subsequent tax changes?  And providing such a guarentee would take us further down the role of socialist control of industry.

Hopefully, the current climate change proposals in Australia will prove a Last Hurrah.  The hard-headed response of Australia's energy market operator would seem to signal that is the case.  For this year's Earth Hour, the Operator has said, ''Historical evidence has indicated a diminishing impact on Demand due to Earth Hour and therefore no special arrangements have been made this year to increase the lower regulation requirement during the event.''

Actions by individuals speak far louder than the chanting of the zealots.  A new carbon tax is being promoted by hundreds of millions of dollars in taxpayer financed government propaganda.  It is people like us who need to ensure the disasterous effects of such a measure remain before the electorate as this is the only way to stop it.

Encouragingly, our own polling last month showed that only 34 per cent of people thought the world was warming and that mankind is contributing to this.

And, in a survey we undertook a year ago, only 6 per cent of respondants said they would be prepared to spend $1000 a year to contribute to preventing the alleged causes of climate change.  The present proposals bring Australia well on course to a $1,000 a houshold charge by 2020.

This taxpayer revolt is the reason why the Gillard Government is in serious electoral trouble and is contributing to the impending ALP defeat in NSW next Saturday.

Let's make no mistake!  It is not corporate Australia that pays the costs of the carbon tax.  Any such costs are passed on to the consumer or are reflected in lower levels of competitiveness of our industries and with this lower wages or fewer jobs.  The costs of the carbon tax, if it proceeds, will inevitably fall squarely on ordinary Australians.

I therefore leave you with this message.

Even if the entire world were to agree on a global emission reduction program, its benefits would save at best 2.5% of global income but cost many times that in a forced shift to higher cost energy.

More pertinently for Australia, a tax cannot have any effects on climate unless it is globally applied.  There is no prospect of that happening and trying to implement it in this one small country alone will seriously damage our economy and living standards.

West's history not complete without reference to Christianity

Julia Gillard's declaration over the weekend that she would like the Bible taught in schools seems odd, given she's Australia's most prominent atheist.

Mind you, it's more odd when you consider that in the incoming national curriculum for history Christianity barely gets a guernsey at all.  Gillard was the minister who oversaw the curriculum's development.

As Tony Taylor, one of the architects of the curriculum, helpfully pointed out in Crikey in January, when the curriculum does mention Christianity, it only sticks to the bad things -- like the Crusades, and the Spanish conquest of the Americas.

Still, she's right.  Julia Gillard may be an atheist but understanding the Christian roots of modern liberal democracy is important, even in a secular world.

In her Sky interview Gillard focused on the Bible's cultural legacy, saying ''it's impossible to understand Western literature without having that key of understanding the Bible stories and how Western literature builds on them and reflects them and deconstructs them and brings them back together''.

Familiarity with Christianity and the Bible is about more than understanding Shakespearean metaphors.

It is a historical truism that the development of liberal democracy, modern political philosophies, notions of human rights and equality, and our social institutions all owe much to Christian thought.

Almost all thinkers in the formative centuries of Western liberal democracy were convinced (or simply assumed) there was a God, and He was a Christian God.  The non-theist exceptions were ... exceptional.

Their religious faith couldn't help but shape their worldview.

Explicitly secular arguments for our modern world only appear with the Enlightenment, and by that stage the philosophical frame in which we understand liberalism and democracy had already been set.

Take, for example, the religious assumptions which underpinned the development of liberal philosophy.

The very modern-seeming idea of human rights comes from the concept of ''natural rights'' -- rights drawn from God.

No-one defined modern liberalism more than the 17th century philosopher John Locke.  Locke's vision of the three basic natural rights -- life, liberty and property -- set the political agenda for three centuries.  As did his arguments that all people are fundamentally equal, kings are just men, and power derives from the consent of the majority.

Locke came to these conclusions from an explicitly Christian mindset.

For Locke, humans are equal -- men, women, workers, shopkeepers, peasants, kings, smart people, stupid people, the physically strong and the physically weak -- because they are all capable of knowing God.

You don't need to agree with Locke's arguments.  Neither do you need to believe human rights or equality are inherently religious concepts.

But as the philosopher Jeremy Waldron writes in his 2002 book God, Locke, and Equality:  Christian Foundations in Locke's Political Thought, ''Secular theorists often assume that they know what a religious argument is like:  they present it as a crude prescription from God, backed up with threat of hellfire, derived from general or particular revelation ... With this image in mind, they think it obvious that religious argument should be excluded from public life''.

Thus we get ''Captain Catholic'', and the idea that teaching children some basic aspects of Christian thought is antithetical to secular democracy.

If the next generation are going to be taught history they should be taught good history.  That means fully identifying the religious origins of modern society.

It means discussing how one short passage in the Bible (''give to Caesar what is Caesar's, and to God what is God's'') put medieval Europe's church and state in opposition, and undermined the centralised authority characteristic of other civilisations.

It means recognising not just religious support for the Spanish conquest of the Americas, but the religious beliefs of those who also opposed it, like Francisco de Vitoria, Bartolomé de las Casas, and Antonio de Montesinos -- three 16th century theologians who bitterly opposed the enslavement and abuse of Native Americans on Christian grounds.

And yes, it means teaching how devout people did great harm as well.

This secular defence of Christianity should not be taken too far.

While liberal democracy was conceived in a Christian framework, one obviously need not be Christian to be part of liberal democracy.

That's the whole point.  Liberalism as practised in the 21st century is wholly secular and wholly pluralistic -- we don't need to rely on theology to justify universal suffrage or individual freedom.

And, of course, understanding the importance of Christianity in the development of Western thought does not mean we are required to design policy according to conservative Christian values.

Religious arguments for policy should be taken with the same grain of salt as other policy arguments.

The Prime Minister clearly doesn't want Australian kids to read the Bible out of some evangelical fervour.  Teaching children about Christianity is not the same as teaching them to be Christians.

Just as the history of the Middle East can't be understood without Islam, the history of Western Civilisation can't be taught without reference to the West's dominant religion.

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Progressive intellectuals have poisoned the well for Labor

The general consensus is that NSW Labor enjoyed one too many election wins in 2007, with regretful voters longingly wishing to put the governing party out of its misery ever since.

With every political poll and betting market pointing to an electoral apocalypse for Labor at the state election later this week, all signs point to a realisation for voters that, eventually, some dreams do come true.

It is clear that much of the blame for the expected defeat of the Kristina Keneally-led government, in which even Labor seats with healthy margins are now perceived as ''marginal'', can be sheeted home to a host of state-own factors.

Since the retirement of the long-serving Bob Carr in August 2005, NSW has endured the unedifying spectacle of Labor's internal factional warfare directly contributing to a revolving door premiership.

Morris Iemma took over from Carr and, to his credit, won the 2007 election that a tired Labor administration arguably should have lost on an ''it's time'' factor alone.  Yet any political capital that Iemma built for himself proved to be transitory, with a resounding rejection by the ALP state conference in May 2008 of another electricity privatisation plan signalling the beginning of Iemma's eventual leadership demise.

The political capital of Morris Iemma fully depreciated when the powerful Right faction later refused the Premier's not unreasonable wish to clean out much of the dead wood, including Right factional heavyweights, from Cabinet.  With his position made untenable Iemma felt no choice but to resign, the first NSW Labor Premier to do so in 117 years.

With the initial backing of the Labor Right, the left-leaning Nathan Rees replaced Iemma to become NSW's forty-first Premier.  However this largely forgetful stint only lasted about fifteen months, with Rees earning the undistinguished title as the only Labor Premier not to lead his or her party into a NSW state election.

The Right jumped off the Rees train as swiftly as they boarded, according Keneally the opportunity to successfully challenge for the Labor leadership, and hence the position of state Premier, in December 2009.

Compounding the revolving door of the premier state's political leadership was the seemingly endless litany of scandals afflicting the NSW Labor Caucus.  These ranged from the serious, including state political manipulation of local planning and development processes, to the downright salacious with numerous sex scandals revealed over the past few years

All of these issues reinforced doubts amongst the increasingly restive state voters about the capacity of Labor to manage themselves, let alone govern Australia's most populous state.

The crisis of NSW Labor has also been the product of a sustained period of its own poor policy performance across a range of areas.

Economic growth in the premier state has consistently lagged that of the national economy as a whole since the heady days of the 2000 Sydney Olympics, which in turn has prevented the overall Australian economy from reaching its full potential.

The NSW economy grew by a sluggish 2.2 per cent on an average annual basis since the Olympics, the lowest growth rate of all the states and well behind the national growth rate averaging 3.1 per cent.  So serious has the state's economic underperformance been that its share of national GDP actually fell by two percentage points from 2001-02 to 2009-10.

One of the contributing factors toward state Labor's underwhelming economic record has been its unpreparedness to dramatically improve the tax competitiveness of the NSW economy.  State business tax benchmarking analysis I undertook has shown that NSW is consistently ranked as one of the highest taxing jurisdictions in Australia.

Even taking into account NSW's status as a high taxing state, the state budget papers show that in six of the past eight fiscal years growth in government operational spending had outstripped growth in revenues (including commonwealth grants).  In addition, the government has failed to meet a number of financial sustainability targets, including in terms of net debt, that it had set for itself in legislation.

There is evidence to suggest that there also exists a significant degree of dissatisfaction amongst NSW voters in terms of the management and delivery of services by the Labor government.

These include an inability to deliver on commitments for significant new rail services in Sydney's west, concerns about the availability of policing services to prevent crime particularly in urban and regional areas, and chronic hospital waiting lists directly related to a sufficient lack of new beds in the system.

It is notable that NSW has suffered the greatest average loss of people to other states over the past decade, with economic concerns and service delivery problems surely playing some role in this regard.  Instead of waiting to register their disapproval of the Carr-Iemma-Rees-Keneally government through the ballot box this week an average of 24,000 people each year for the past ten have already voted in disapproval with their feet out of NSW.

Clearly the NSW Labor brand became political poison even prior to the Icarus-like figure of former Labor Prime Minister Kevin Rudd crashing back to earth in mid-2010.  However, given the presence of the major parties at both federal and state levels and the extent to which the commonwealth now interferes with state responsibilities, election outcomes at the state level do not entirely hinge upon regional or local issues alone.

While Keneally and her band of ministers and backbenchers were, according to the polls, already at a point beyond political redemption, it appears that the announcement of the carbon tax proposal by federal Labor has only reinforced negative, and growing, perceptions of Labor everywhere as the party of financial pain for ordinary folk.

Indeed, NSW Opposition Leader Barry O'Farrell has capitalised politically on the close association between Prime Minister Julia Gillard and the federal Greens in his continuing efforts to reach out to Labor's traditional working class constituency as well as the growing cohort of ''aspirationals'' residing in the outer suburbs of Sydney.

If the electoral coin is to fall in favour of the Coalition's Barry O'Farrell in NSW following Ted Baillieu and Colin Barnett in Victoria and WA respectively, and with Tony Abbott coming within a whisker of consigning Rudd-Gillard federal Labor to the dustbin of history, the next big question that will be asked in Australian politics is:  where to next for the Labor Party?

To help answer that question, it is necessary to consider the tectonic shifts that have transpired within the ALP across the board over the past three decades or more.

As discussed by Edward Shann in his 1930 classic The Economic History of Australia, the Labor Party originally emerged as a political contrivance so that the voice of labour, as opposed to capital, interests could be heard in the halls of assembly.  Similarly, Frederic Eggleston stated in the early 1950s that Labor was little more than a trade union class party in which union apparatchiks fashioned its policy and determined its machinery and personnel.

When Shann and Eggleston made their observations the union movement was substantially drawn from men working in the manufacturing sector, which in turn was largely shielded from the value-added logic of global market competition due to significant tariff and other trade barriers.

However, a range of cross-cutting economic and social changes were to play a significant role in altering the character of Labor's membership and operations, with spillover effects for its policy outlook over time.

Some of these factors included structural change in manufacturing, a strengthening services sector and growing government, rising female labour force participation, increasing access to university education, and the emergence of secular, post-modernist outlooks on issues concerning environmentalism, gender equity, citizenship and sexuality.

While the manufacturing union movement still plays its pivotal role in funding, party organisation and political preselection to this day, this traditional working class base within Labor has made way, to a greater or lesser extent, for an emergent, ''progressive'' intellectual class.

Some of the previous old guard viewed the rise of the intellectual classes in the Labor Party with suspicion or derision.  Clyde Cameron would sometimes compare his early years as a shearer favourably against those of services sector backgrounds, while Kim Beazley Senior once facetiously remarked, ''When I joined the Labor Party, it contained the cream of the working class;  now it contains the dregs of the middle class.''

But even the cynical old guard could do little but accommodate the new chattering kids on the ALP block.  After all, membership of major political parties has been on the decline over many years, so best to bring the bookwormish intellectual breed under the Labor wing.

In general terms the policy stance of the new Labor intellectual cohort includes the reinforcement of state control over economic activity, albeit dressed in the garb of market jargon (for example, a ''carbon price''), and a social agenda of cultural and social reprogramming of public attitudes through legislation, NGO funding or standardised school curricula.

This policy agenda of ALP's intellectual classes, which arguably has more in common with Bob Brown than Joe De Bruyn, is likely to come at the continuing cost of Labor losing political support from the mainstream working and aspirational classes of Australian society.  This is because workers and aspirationals alike prefer economic growth to stagnation, loathe policies that hurt the hip pocket, and resent political correctness and its enforcement through government law or funding.

To put simply, phenomena such as ''Howard's Battlers'' or ''Abbott's Army'', could represent a more permanent addition to the Coalition voting pool at both federal and state levels at the increasing expense of Labor the longer the noveau intellectuals hold sway within the ALP.

To a degree more significant than most realise, the long term fortunes of the Labor Party will also be conditioned by choices made by current and future Liberal National Coalition governments.

The progressive intellectual arm of the modern Labor movement largely accumulates its power and influence today largely as a consequence of its previous Gramsci-like ''march through the institutions'' of government administrations, hospitals, schools and universities, not to mention the union representative bodies for these respective institutions.

These personnel are largely paid by the taxpayer but are in a state of ideological animosity toward a serving Coalition government of the day.  This poses certain risks for non-Labor governments, and opportunities for future Labor governments, if left unaddressed.

If an incumbent Coalition government fails to take meaningful action to reduce the expenditure commitments and workforce of the public sector it compromises its ability to protect itself from potential leaks and other forms of subterfuge by hostile public sector workers of progressive ilk.  Further, a non-reforming Coalition would effectively leave the furniture of modern Labor's power intact for the benefit of the next generation of governing Labor politicians.

The signs so far suggest that the new batch of state Coalition governments seem too unwilling to reduce the size of government and, in so doing, defund the political left.

The NSW Labor problem of today, which incidentally appears to have caught on to federal Labor like a cold, is also a combination of inflating community expectations combined with an inability to deliver upon those expectations in policy terms, and the mastery of ''spin'' political rhetoric to conceal or divert voter attention to such failure.

However to portray Labor's problems as being limited to these issues of style, as important as they may be, is to ignore the underlying forces which risk shifting the party away from mainstream concerns and values.

How Labor over the next few years manages to bridge the gap between its increasingly assertive intellectual base and the economically powerful working and aspirational classes will be most interesting to watch.  If we know anything of the Labor experience, expect some fireworks ahead as it wages war with itself.

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Energy price increases: hiding behind treasury's Pollyanna forecasts

Lane Crockett of wind farm builder Pacific Hydro accuses ''people such as Richard Wood'' of blaming ''a soft target like (the Renewable Energy Target) RET or carbon pricing for increased energy costs when in fact a majority of these increases have been driven by the policy principles of deregulation''.

He takes refuge in ''official estimates by the Australian Treasury Department, the RET is likely to result in an increase in energy bills of just 2% to 4% by 2020''.

There are three issues here.  First, what are the facts on energy price increases;  secondly, what has caused the increases to date;  and thirdly, what are the likely effects of regulations and taxes such as the renewable energy target and a carbon tax?

Over the decade to December 2010, Sydney's electricity prices more than doubled, those in Brisbane increased by 94% and those in Melbourne and Adelaide, 80% and 64% respectively.  During that period prices in general increased about 33%.

Much the greater part of the increases in electricity prices was due to regulatory sanctioned increases in the line charges of the poles and wire businesses.  These businesses have near monopolies on this element of supply.

Some of that increase may have been regulatory catch-up but this is controversial.  Work by Bruce Mountain and Stephen Littlechild (the latter a former head of the England and Wales regulatory agency) indicates the increases were excessive in Australia.  Mountain and Littlechild assemble information that indicates excessive costs in Australian distribution, especially in the supply monopoly areas of government-owned companies in NSW and Queensland.  Price increases have been lower in Victoria and South Australia, where private ownership brings greater disciplines on costs.

Though line costs and charges have dominated recent electricity price increases, carbon issues will dictate future price increases.

While Australia has no formal carbon tax at present, we do have a range of measures that have a similar affect to such a tax, the most important being the renewable requirements.  The ''20% renewable by 2020'' program sets a de facto carbon price by requiring retailers to incorporate a growing number (45,000 gigawatt hours by 2020) of high cost renewable energy into the electricity mix.  There is also a requirement for a proportion of extremely high cost solar energy as well as for the more common form of renewables, wind, which has a premium cost over coal based electricity of around $70 per MWh.

Unless treasury's Pollyanna forecasts of some imminent technology breakthroughs occur, the 20% renewables requirement by 2020 increases the average wholesale price of electricity by 40%.  This works out at an average carbon tax equivalent on household electricity of $14 per tonne of CO₂.  This in itself is a tax rate on the current household bill that approaches 20%.

On top of this is the government's proposed carbon tax.  Eventually this will need to be in the hundreds of dollars per tonne if it were to accomplish the carbon reduction forcing job intended of it.  But even at $20 per tonne, when combined with the existing renewable scheme it means a doubling of the costs of generation.  For the household this translates into a 50% increase in electricity prices, and perhaps more than this as a result of the investment paralysis the debate has triggered.  In addition there are increases in prices resulting form the higher electricity costs entailed in producing the goods and services we buy.

I have a considerable level of expertise in the energy market and have published many well-regarded books, chapters in books and journal articles on the matter.  I am fully aware of the drivers of price increases to date and the causes of these.  Though businesses dependent for their success on regulations that stymie their competitors may make gains, the costs of the measures driving these particular firms' profits is a loss of income by the rest of the community.

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Natural disasters give economic growth a moral dimension

Between 1990 and 2002, globally 815,077 people were killed by 4,300 natural disasters.

Since then, an earthquake in Bam, Iran in 2003 took 26,000 lives.  The 2008 Sichuan earthquake killed 68,000, and the death toll from Haiti earthquake in 2010 could have reached up to 300,000.

Now Japan, where 10,000 are missing and likely dead.

These numbers are numbingly large.

But tragedy is not aggregate but individual -- the personal toll of lost family members, lost livelihoods, lost homes, peaceful lives violated suddenly and destructively.

So what we know about reducing vulnerability to natural disasters is pressing.

And the academic literature is unambiguous:  a richer country is a safer country.

Sure, some regions are more susceptible to natural disaster.  Asia, for instance, suffers more than Africa.  But rich countries are statistically as likely to be hit by nature as poor ones.

It's just the rich countries cope much, much better.

Between 1985 and 1999, 65 per cent of deaths from natural disasters took place in nations whose per capita incomes were below $US760 -- in other words, those nations in the absolute bottom ranks of economic development.

Wealth buys better technology, more money to spend protecting assets against risk, and the wider availability of medical care, supplies, and services.

One economist calculated if a nation with 100 million people as poor as, say, Laos became as less-poor as, say, Turkey, that nation would suffer around 800 fewer deaths from natural disasters a year.

Wealth is not the only factor.  Governance matters too.  Living in a democracy is safer than the alternatives.

Further, a study published in 2006 by two economists, Hideki Toya and Mark Skidmore, found education level, openness to technological transfer and foreign investment, a more developed and complex financial sector, and even a smaller government (in this case, a smaller public service) were closely correlated with reduced economic damage and reduced loss of life in natural disasters.

That final one -- smaller government -- is counter-intuitive.

Certainly, larger governments have more resources to deploy in an emergency.  But size usually comes at the expense of efficiency.  After the 1995 Kobe earthquake, the sluggish response of the prefectural government meant one of the first coordinated humanitarian relief efforts was conducted by the Yakuza.

(Indeed, private sector disaster relief is more important than commonly acknowledged.  Hurricane Katrina also saw firms with resilient logistics and a large distribution network provide supplies and transport quicker than the grossly underperforming Federal Emergency Management Agency.  The mayor of Kenner, a badly damaged New Orleans suburb, said Wal-Mart was the ''only lifeline'' for his town in the first few crucial days.)

Some have been quick to praise Japan's building codes for the country's relative resistance to earthquakes and their aftermath.

But the difference between the impact of the Haiti earthquake and the Friday's disaster in Japan is not the strictness of the two nations' construction regulations.

Societies can only buy stronger buildings if they can afford them.

A country with tough building codes but no money will either price everyone out of the real-estate market, or, more likely, see those codes ignored.  The widespread collapse of Chinese schools during the 2008 Sichuan earthquake revealed schools in the region had been in violation of building codes for decades.  Regulators were very likely complicit.

And construction firms don't make buildings safe solely because it's mandatory.  As The New York Times pointed out on Friday, ''apartment and office developments in Japan flaunt their seismic resistance as a marketing technique, a fact that has accelerated the use of the latest technologies.''

Strong building codes have a role.  They may have a vital role.  But to be at all effective, those codes require the wealth and strong institutions described above.  Crediting tough regulation for disaster resistance gets the thread of causation exactly backwards.

As Alan Kohler pointed out in The Drum yesterday, Japan recovered from the Kobe Earthquake quickly.

Less than 15 months after devastation, Kobe's manufacturing industry was producing at 98 per cent of its pre-earthquake capacity.  All debris -- all of it -- had been cleared within two years.  Fifteen years later the only thing which has prevented Kobe fully restoring its earlier economic achievements is the 100,000 residents who just up and left after the disaster.

Compare this to Haiti.  More than a year since the earthquake and only 15 per cent of the required housing has been built.  Debris is still abundant.  The country is struggling through a cholera epidemic caused by inadequate water and health supplies.  Much aid money remains unused.

Obviously, the developing world desperately needs to catch up to the developed world.

But the devastations of 2011 -- Queensland, Christchurch, and Japan -- must remind us rich countries are still extremely vulnerable.

With greater wealth we can increase our resilience to natural disasters -- we can save more lives and livelihoods.  After all, there's no reason the buildings of 2111 can't be much stronger than the buildings of 2011, if we can afford to buy them.

That gives our political focus on economic growth -- casually and smugly dismissed by so many -- a moral dimension which must not be ignored.

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Hands up if you're in favour of cheap milk ... anyone?

One would be forgiven this week for assuming low prices are bad.

Coles's January decision to sell house-brand milk for $1 a litre was followed by Woolworths deciding to do the same, which was, in turn, followed by cries from the dairy industry about monopoly and unsustainability.  Leading, over the past few days, to a Senate committee sitting in judgment over $1 milk.

But the controversy is little more than the cries of producers seeking a political solution to competitive pressure.

In its submission to the committee, Bega Cheese expressed great concern.  As did Clover Hill Dairies, Amalgamated Milk Vendors, the South Australian Dairyfarmers Association, and the Southern NSW Collective Bargaining Group.

All up, there were 116 submissions, from businesses, lobby groups, and politicians.  Only three supported cheap milk.

Coles's critics weave a terrifying story:  that the supermarkets together want to drive out small dairy farmers from the industry.

Some farmers and industry groups have even seriously suggested that Coles wants to eliminate fresh milk from Australian supermarkets.  Australians will then have to be satisfied with UHT, which is cheaper to store.  The dairy industry will collapse.  Rural towns will disappear.  Then, once the milk plan has played out, on to eggs.  Then meat.

But when has destroying your own product ever been a good business strategy?

Predicting the collapse of the Australian dairy industry is a long bow considering all that's happened is a sale on milk.

Coles says it is covering the cost of reduced retail prices itself.

But if the chain were to demand savings from producers in the next round of supply contracts, it would be doing exactly what it should be doing:  pressuring suppliers to reduce costs and to find ways to be more efficient.

There are buyers and sellers all down the retail chain -- from farmers and processors, to supermarkets and us.  Everyone should be trying to get the best deal.  And if Coles thinks it can buy milk for less than the cost of production, nobody will sell it to the chain.

People will always want fresh milk, no matter what dastardly strategy is cooked up in a boardroom.  Demand, meet supply.

And cheaper milk will lead to more milk sold, not less.  The dairy industry is booming -- in 2011 dairy cows are selling for 25 per cent more than two years ago.

There's a lot backwards about the rhetoric over milk prices.  For years we've been told supermarkets are a cosy duopoly;  that Coles and Woolworths were less competitors than a cartel in a conspiracy against working families.

But the point of a cartel is to raise prices, not decrease them.  If this is a cartel, it's the most counterproductive in history.

Not only that, but cartel-mate Woolworths has joined the chorus saying Coles's strategy is unsustainable.  Woolworths is trying to turn public opinion on its rival.

More likely, it's what it looks like on the surface -- Coles being competitive, and Woolworths being forced to follow.  Yet that's enough to get the wheels of Parliament spinning wildly.

So who's standing up for consumers?  Unfortunately not the Australian Consumers Association, known as Choice.

Choice claims ''to ensure the consumer voice is heard loudly and clearly''.  But its statement to the Senate says cheap milk ''is not a 'win' for consumers''.

Instead, it has taken this price cut to a household staple as a chance to push an ideological barrow -- a grand national food policy with which the government can sustainably and benevolently guide agriculture, rather than leave production to the market.

No surprise, perhaps.  Choice sees consumer interest as a side issue at best.  The self-described association of consumers is more interested in fashionable environmental mantras such as food miles and ''green living''.

Each to their own.  (Although the government thinks Choice represents all consumers.  The non-profit was paid to run Kevin Rudd's ill-fated GroceryChoice website.) With Choice off on a tangent, nobody is defending consumers against dairy producers who want protection from competitive pressure.  It seems the only body truly acting in the interests of consumers is Coles.

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Meeting CO2 targets via carbon price will hurt

It's astonishing that Ross Garnaut takes himself so seriously in the face of collapsing support in Australia and elsewhere for a carbon tax and other abatement measures (''Regrettably, I was right about climate change'', Commentary, 11/3).  He says his odyssey around climate change has led him to believe global warming is now occurring on ''a balance of probabilities'' rather than ''beyond reasonable doubt''.  And yet, it is clear that there has been no atmospheric warming for the past 15 years.

Whether or not that will continue is uncertain but Garnaut shuts out all evidence that contradicts his preconceived view.

In assessing climate change, Garnaut is elevating himself into a super-judge.  This is remarkable for a man who has no expertise in the science he is assessing, has produced lengthy reports on the matter that are riddled with absurdities and owes his role, indeed his career, only to his rusted-on support for the ALP.

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Unmaking history

March may seem a little early to give an award for 2011's silliest contribution to public debate in Australia, but surely, Monash University academic Tony Taylor has the prize securely in his keeping.

Associate professor of education Taylor recently commented on the historical significance of the English Civil War or, to be more accurate, commented on its lack of significance.  According to Taylor, it was ''arguably just a series of confused and confusing localised squabbles that may have a special significance for UK history, but not for anybody else (unless they like dressing up in period costume)''.

What turns Taylor's views from amusing wackiness to something of serious concern is the fact that over the past four years he has been a key player in the development of the three drafts of the new national history curriculum.  Under both the Howard and Rudd/Gillard governments, he has been happily beavering away on deciding what our children should be learning in school, as well as developing national professional standards for the teaching and learning of history.

Anyone with the slightest knowledge of world history would realise that far from being ''localised squabbles'', the Civil War produced a seismic shift in thinking on how the state should, or even could, operate.  Until the 1640s, it was surely inconceivable that parliament could revolt against the monarchy, that a monarch could be tried and executed and a republic would be declared in its place.  The impact on Britain and Ireland of Cromwell's Commonwealth, the subsequent Restoration and the Glorious Revolution, was clearly enormous.

However, these events also had a profound influence on Europe and North America in the following century.  At the time the English were chopping off the head of their king, the alternative model on the Continent was absolute monarchy, which came to be personified by Louis XIV of France.  Without the alternative thrown up in England, absolute monarchy might have had even greater resilience.

Indeed, if we indulge in a little counterfactual history, it is hard to imagine any of the French or Scottish Enlightenments, the American War of Independence or the French Revolution taking place without the explosion radical ideas unleashed by the English Civil War.  These ideas led to the development of the founding principles of liberal democracy, the political system which has spread throughout much of the modern world.

Further, without the political ferment in 17th century England, it is extremely unlikely that the Industrial Revolution would have taken off in the manner it did, so the Civil War can lay claim to be an important contributor to the modern world's dominant economic system, market capitalism, as well as its political system.  Yet, here in Australia, a person as influential as Taylor does not rate any of this, believing interest in it is confined to eccentrics wanting to dress up.

His curriculum work done, Taylor was off to enjoy the benefits of an Australian Research Council grant to ''conduct a comparative analysis of the political contexts for the development of history national curricula in Australia and Russia'' when he was rudely interrupted.  I'm not sure how this would be treated in Putin's Russia, but a bit of lively criticism of the proposed curriculum by shadow education minister Chris Pyne was enough to give Taylor a ''museli-choking'' moment at his breakfast table.  In response, he fired off a piece to Crikey defending his pride and joy.

He was particularly concerned by Pyne's claim that Christianity was a bit underdone in the national curriculum.  Au contraire, Taylor said:  Christianity is covered in Year 8 under ''the spread of Christianity'', medieval Europe under the Crusades (not so good, that bit), the medieval dominance of the Catholic church and the Spanish conquest of the Americas (another not-so-good bit).

Just to be clear here, the bits in brackets were also Taylor's words, effectively undermining his own case by admitting that Christianity only cracks a mention in its ''not-so good'' moments.  It is a bit hard to fathom how anyone could draft a curriculum so openly hostile to the West's dominant religion and expect to escape uncriticised.

So, there are some things that are not there because they are trivial (e.g. the English Civil War);  and some things that, despite critics' claims to the contrary, are there, although they are generally bad (e.g. Christianity).  Then, there is a third category, which is perhaps the oddest of all Taylor's defences.  These are the things that are not explicitly there, but are there implicitly.  Hence, of Magna Carta, Taylor says, ''not that it's explicitly mentioned but, as a teacher, you'd be daft not to spend some time on Runnymede''.  But, if we can trust the teachers to teach the right things, it only raises the question as to why we are having a national curriculum in the first place.  And this is, indeed, a very good question.

The genesis of the history curriculum goes back to the History Summit of 2006.  As with a number of other policy areas, the Howard government, perceiving a problem in the states with the poor quality of history teaching, tried to impose a centralised solution.  The futility of this approach was highlighted by the fact that even while the Coalition remained in power they did not manage to get an outcome they liked.  Worse, it apparently did not occur to them that, if you create a centralised power, your political and ideological opponents might use it in ways which create an even worse situation than the one you were trying to rectify.

The realisation that the education system was not providing the opportunity to understand our cultural heritage was one reason why the Foundations of Western Civilisation Program was created, which undertook the analysis of the national curriculum as one of its first projects.  All the feedback the program has received is that young people crave to learn about what is important in the past.  No wonder they feel they are missing out, if those deciding what they should learn can display as great a degree of historical ignorance as Taylor.

However, perhaps in one way at least, we should be grateful to Taylor.  With his impetuous response to Pyne, he made it clear just how fundamentally flawed the national curriculum is.

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Say no to wealth fund

Of all the bad ideas going around, the suggestion that Australia should have a sovereign wealth fund isn't the worst.  It's the third worst.  It's behind the carbon tax and the mining tax.  It's the possible third leg in a trifecta of policies designed to have the government squeeze every last cent from the resources boom.

At least the Gillard government hasn't yet said we're going to have a sovereign wealth fund.  But based on current form it is only a matter of time before we are told the government is a better custodian of taxpayers' own money than taxpayers themselves and that is why it should collect more in taxes than it spends and why that money should be squirrelled away until the government decides to spend it (or waste it).  That, in simple terms, is the rationale of a sovereign wealth fund.

Norway is always the example of a supposedly effective sovereign wealth fund.  It's vast North Sea oil revenues are deposited in government owned investment funds to cushion potential exchange rate shocks and provide a source of revenue when the oil runs out.  There's no problem urging Australia to follow Norway's lead as long as it is acknowledged that Norway is a semi-socialist country.

The tax collected by government in Norway as a share of the country's economy at 42 per cent is among the highest in the developed world.  The comparable figure for Australia is 31 per cent.  The average for advanced countries is 36 per cent.  Operating a sovereign wealth fund is exactly the sort of thing that socialist and semi-socialist regimes like doing.  That's why the biggest funds are from the Middle East, China and Norway.

In the Australian context the main rationale for a sovereign wealth fund is that our windfall gains from resources exports should be invested in productive assets providing long-term returns, instead of being given back to the population as tax cuts.

Following from this, the question to ask is:  who is more likely to make the better investment decisions, individual and corporate taxpayers investing their own money, or the government?

The advocates for an Australian sovereign wealth fund ignore the fact that one of the best incentives to improve productivity is to cut taxes so people can keep more of the fruits of their labour.

Any government really committed to improving productivity could start by recognising there are 349,000 Australians who have been unemployed for more than a year.  That is 3.5 per cent of the workforce.  And 800,000 Australians are receiving the disability support pension, of whom less than 5 per cent get work each year.  Cutting taxes and reducing the disincentive for people to find a job will do more for Australia's productivity than installing roof insulation.

There are two other points about sovereign wealth funds.  The first is that the investment decisions of such funds inevitably end up politicised.  Efforts to maximise investment returns are compromised by political imperatives.  Look at the rollout of the national broadband network.  Armidale, in the middle of the electorate of one of the independents on whom the Gillard government is relying to stay in power, was chosen by the government owned company responsible for the network as one of the very first places to get fast broadband.  Norway's sovereign wealth fund doesn't invest in Wal-Mart because of the company's alleged breaches of labour standards.

Individuals are free to invest their money according to whatever ethical guidelines they decide -- but governments don't necessarily have that luxury.  Whether a sovereign wealth fund should forgo an investment in a Libyan oil refinery returning 15 per cent in favour of New Zealand returning 3 per cent is debatable.

The second point is that Australian governments are unable to keep their hands off a bucket of money for more than five minutes.  In 2008 Kevin Rudd established the Building Australia Fund to finance long-term infrastructure spending.  Within a year the government had spent $10 billion of the $11 billion endowment.  It's the same story for the Rudd government's health and education funds.

A few days ago Greens leader Bob Brown said, ''This nation should have a sovereign fund -- like Norway's''.  It's no surprise the Greens want a sovereign wealth fund.  Sovereign wealth funds allow governments to avoid giving back to taxpayers the taxpayers' own money, and they're a vehicle for governments to accumulate even more economic and financial power than they already have.

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Australia's Carbon Warning for Obama

President Obama's Environmental Protection Agency is fighting a rear-guard action to accomplish via regulation what voters rejected via Congress:  ruinously expensive restrictions on carbon emissions in the name of fighting ''global warming''.  This is perhaps partly out of the administration's own convictions, but also because Mr. Obama knows that a large slice of his left-wing base is clamoring for such measures.  But before he goes much further down that road, he should take a look at how a similar political calculation is playing out in Australia.  In short, not well.

Prime Minister Julia Gillard, in office for less than a year, is pushing forward with a carbon tax Down Under.  The measure is hugely unpopular -- its announcement this week pushed Ms. Gillard's Labor Party to its lowest popularity ever in an opinion poll conducted for The Australian newspaper (owned by News Corporation, which also owns the publisher of this newspaper).  Labor shouldn't be surprised.  The idea of a carbon tax was so controversial before last August's election that Ms. Gillard promised not to enact one as a ploy to win votes.  Members of her administration have repeated that refrain, to proverbial applause, several times since.

Why, then, has Labor been so politically foolish as to revive the idea?  Because Ms. Gillard has been backed into a political corner by anti-carbon advocates on the far left.  Under her leadership, Labor failed to win a majority in the House of Representatives and the Senate in that August vote, so she governs in an uneasy coalition with a clutch of independent and Green Party legislators.

The leader of those Greens, Bob Brown, has used his kingmaker sway to pull Ms. Gillard steadily leftward ever since, including inducing her to oppose tougher border protection and to support same-sex marriage.  The new carbon tax proposal is part and parcel of that.

The situation bears some striking similarities to events in the U.S., although the details are different.  In America, voters have shown again and again their distaste for carbon taxation or cap-and-trade emissions regulation in the name of slowing global warming.  Enthusiasts' ambitions finally collapsed last year when the Senate, controlled by Democrats, couldn't agree to hold a debate on even the most loophole-ridden version of cap-and-trade.

Meanwhile, although Mr. Obama is not beholden to a small band of congressional swing voters who support carbon regulation in the way Ms. Gillard must heed the Greens, he's in a box of a different sort.  He actually did campaign in support of carbon regulation, declaring his nomination to lead the Democratic presidential ticket as ''the moment when the rise of the oceans began to slow and our planet began to heal''.  This suggests that among his electoral base, and among his supporters in Congress, is a small but potentially important minority who want him to follow through on the promise implied by that grandiose claim.

Mr. Obama at least has the luxury of going about it in a stealthier way.  U.S. law gives his EPA just enough of a fig leaf to try to push forward with carbon regulation despite congressional opposition, though even then by most accounts he is pushing existing laws to their limits or even beyond.  Ms. Gillard has to go to her parliament for an up or down vote on carbon taxation.  That might be one reason why her anti-carbon moves are generating more pronounced opposition now -- the Australian public is more aware of what their leaders are getting up to than are their American peers.

Carbon-tax supporters in Canberra will try to make their proposal more palatable with additions like a rebate on the electricity bills the tax would push higher or the like.  But this will only further complicate the politics by giving tax opponents more fodder.  For instance, they can skewer the rebate as an inefficient and theoretically inconsistent way to hand carbon consumers' money back to them.  And while the tax may yet pass, that could prove a Pyrrhic victory for Ms. Gillard and her coalition partners come the next election.

Still, the news from Australia suggests Mr. Obama is taking a big gamble if he figures the public will never catch on.  Ms. Gillard's recent experience shows what happens when voters do, and the result is a disaster-in-the-making for any leader facing a re-election battle.

Carbon Bob: Can he fix it?

I mean, take environmental progressive Bob.  Bob's a model citizen and busy man trying to save the world from the hundreds of big bad carbon polluters required by law to report their environmental vandalism to the government.

He starts by using his mobile phone as an alarm clock in his Canberra bedroom.  (Telstra:  emissions of 1.43 million tonnes CO₂ in 2009-10).  It's cold this morning, so Bob's gotta have an environmentally considerate 4 minute shower to get clean and warm for the trip up the hill (ACTEW Corporation:  219,000t CO₂).

And that lentil stew from last night didn't sit right in his stomach (Kimberly Clark Pacific Holdings Pty Ltd:  370,000t CO₂).

He has baked beans (Heinz Watties:  90,000t CO₂) on toast and a coffee (Nestle Australia Ltd:  208,000t CO₂) with a dash of milk (Murray Goulburn Co-operative Co Limited:  638,000t CO₂) while reading his favoured Sydney Morning Herald and The Age online (Fairfax Media Limited:  97,200t CO₂).

He resents the fact that he needs to read The Daily Telegraph and The Australian (News Australia Holdings Pty Ltd:  128,100t CO₂) to see how the enemies of the future are justifying the raping of the planet.  But it's all part of Bob's job.

It's actually too cold to walk to work today so he gets picked up by his chauffeur-driven Prius (Toyota Motor Corp:  170,261t CO₂ and Caltex Australia:  2.1 million t CO₂) to the big doors on one of the four sides of his office building.

After some early media commitments about how only he can be trusted to save the planet, Bob hosts morning tea with staff.

It's Christine's birthday so there are some celebratory Arrowroot biscuits (Arnotts Biscuits Holdings:  91,000t CO₂) bought from a local supermarket (Woolworths Ltd:  2.8 million t CO₂) and cheese (Bega Cheese Ltd:  136,223t CO₂) bought from Coles (Wesfarmers Ltd:  5.2 million t CO₂) at the nearby Woden shopping centre (Westfield Holdings Limited:  339,000t CO₂).

Bob doesn't like tea so he sips from a Diet Coke (Coca Cola Amatil:  185,396t CO₂) from his big leathery, Australian-made chair.

And the regularly hazed non-vegan staff member eats his cold cuts (Nippon Meat Packers:  113,257t CO₂) from another local store (Aldi Stores:  172,987t CO₂) in the dunce's corner.

After morning tea, his staff make arrangements for a business class flight to Sydney Airport (Qantas:  4.18 million t CO₂ and Southern Cross Airports Corporation Holdings:  92,935t CO₂) with a donor who'll pay for TV ads before taking another flight (Virgin Blue Holdings Ltd:  1.74 million t CO₂) to Melbourne.

In Melbourne he's the guest of honour at a cocktail party with green carbon investors including representatives from banks (Westpac:  194,300t CO₂), National Australia Bank (158,268t CO₂) and other investors (Macquarie Group Limited:  98,347t CO₂ and AMP 180,458t CO₂).

Those at the function help themselves to the beer (Lion Nathan National Foods:  391,949t CO₂), Pinot Gris (Fosters Group:  233,899t CO₂), and delicious chicken bites (Baiada Pty Limited:  305,049t CO₂).

But being environmentally conscious Bob prefers a soy yoghurt (Parmalat Australia Ltd:  103,390t CO₂) and tap water (Melbourne Water Corporation:  420,035t CO₂).

Bob gives an inspiring address about the importance of cutting global carbon emissions to a standing ovation from the supportive university faculty members (University of Melbourne:  135,493t CO₂) also in attendance.

He just hopes he was convincing while he wipes sweat from his brow (SCA Tissue Australia Pty Limited:  226,592t CO₂) because the lights were bright and the room was hot because the air-conditioning was a little too low (Origin Energy:  1.926 million t CO₂).

It's been a long day so Bob gets frustrated that his trip to the hotel (Mirvac Ltd:  246,707t CO₂) in a Holden Statesman (General Motors:  150,813t CO₂) is delayed, but was relieved to see the traffic jam was caused by an ambulance taking an accident victim to a nearby hospital (Ramsay Health Care:  166,330t CO₂).

The day ends where it started -- in a hotel room where he boots up his notebook (IBM A/NZ Holdings:  99,927t CO₂) and sends some emails, including one about a direct mail (Australian Postal Corporation:  309,999t CO₂) to his supporters.

Some dedicated volunteers drop by to discuss a forthcoming protest march against big polluters and order Domino's vegetarian pizza (Competitive Foods Australia:  142,187t CO₂) before then they realise there's a 24 hour ''restaurant'' serving fish burgers downstairs and go there (McDonald's Australia:  131,862t CO₂) as they leave Bob's room for the night.

Finally Bob's alone and can go to bed after a productive day realising he's part of the greenhouse gas solution, while the big bad polluters remain the problem.

Let market decide on board seats

In the lead-up to International Women's Day, the drums were again beating on the issue of women in company boardrooms.

Governor-General Quentin Bryce called for quotas by government to ensure more women are appointed to the boards of Australian companies.

Pointing to the persistence of the ''old boys' network'', Bryce said that ''the progress of women in business at the very highest decision-making levels is too slow''.

The call for more women on private company boards can also be heard on both sides of politics.

The Minister for the Status of Women, Kate Ellis, has stated that nothing less than Australia's economic competitiveness rests on having more women in senior positions.  Speaking on the ABC TV Q&A program, shadow treasurer Joe Hockey called for a 30 per cent quota for women on boards if companies don't toe the line on the issue soon.

One of the key catalysts for this current debate has been research recently published by the Equal Opportunity for Women in the Workplace Agency, a taxpayer-funded body charged with improving and monitoring progress on affirmative action.

The research, based on surveys of the top 200 ASX-listed companies, shows only about 8.4 per cent of board members and 3 per cent of chief executives are women.  By comparison, 30 per cent of federal parliamentarians and 45 per cent of Australia's employees are women.

In one respect, the discussion about mandatory quotas risks degenerating the debate into a statistical argument.

Some feminists might suggest that Hockey's 30 per cent quota proposal is too low, and Australia should seek a number such as Norway's 40 per cent or even higher.

More deeply, the arguments supporting mandatory quotas reflect a curious impatience with the very economic and social changes and reforms that feminists of previous generations would have applauded.

Unquestionably, one of the major contributions to Australian economic growth over the past 50 years, if not longer, has been the mass entry of women into the labour market.  The removal of discriminatory policy edicts like the public service marriage bar, and changes such as greater female access to tertiary education, have made the world of work a real possibility for women.

The national participation rate of women in the labour market has jumped from 44 per cent in 1979 to 58 per cent today, while rates for men declined.  Clearly, many women have firmly grasped the economic opportunities.

The Australian labour market has arguably never been more open for women, making discrimination much harder to flourish.  This suggests that the gender discrepancy in senior corporate positions is mainly driven by career choices and life aspirations, including time out to raise a family.

Those who criticise the relatively low representation of senior women in large companies also tend to overlook the 700,000 women in Australia actively running their own small business or, to put it simply, being their own bosses.

More companies are hiring more women in senior positions, but this is a gradual process reflecting in part the availability of skilled women for hire.

Top-down government regulations to install women at the corporate table would discount individual skills or aspirations and risks letting down the very people that a freer market is already helping.

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It's deluded to think we're the only apple of America's eye

This year marks the 60th anniversary in security ties between Australia and the United States.  To mark the occasion this week, Julia Gillard is in Washington, where she will address a joint session of Congress, following in the footsteps of only three Australian prime ministers -- Robert Menzies in 1952, Bob Hawke in 1988 and John Howard in 2002.

Like all her predecessors since 1951, Gillard is acting out of sincerity as well as expediency.  In international relations, the beliefs and interests of politicians are rarely allowed to collide.

But an awareness of the advantages of the alliance -- which include favourable access to US technology and intelligence, as well as the all-important security insurance policy -- has certainly shaped emotions on both sides of the political divide in Canberra.

All true.  But it is also important to recognise we're not the only apple of America's eye.  In January, Barack Obama said:  ''We don't have a stronger friend and stronger ally than Nicolas Sarkozy and the French people.''  In July, Obama hailed the ''truly special relationship'' between the US and Britain, telling David Cameron there was ''no closer ally and no closer partner'' than Britain.  A few weeks earlier, Obama told the Indian people that ''they have no better friend and partner than the people of the United States''.

The point is clear:  ours is one of many special relationships in Washington.

Not surprisingly, the Prime Minister will be giddy with excitement in the US this week.  She's hardly alone:  Menzies used to get ''sweaty palms'' before he'd meet the US president in the Oval Office.  In 1969, John Gorton promised a possibly bemused president that Australia would ''go a-waltzing Matilda with you''.  In 1973, a nervous Gough Whitlam told Henry Kissinger he was worried that he'd ''freeze up'' in front of Richard Nixon.

In American calculations, Canberra ranks as an important strategic ally, but we are deluded if we think Australia is a major player in Washington policy circles.  Australians of a certain vintage will recall with embarrassment Jimmy Carter's reference to ''John'' at a press conference with Malcolm Fraser.  Harold Holt pledged Australia would go ''all the way with LBJ'', but Lyndon Johnson, who visited here twice during his five-year presidency, said virtually nothing about Holt in his memoirs.

In his book Lazarus, John Howard dedicates numerous pages of praise, including a chapter, to his good mate George Bush.  In his Decision Points, however, the former president hardly mentions the ''man of steel''.  Nor did Bill Clinton write much about Paul Keating.

As the distinguished conservative intellectual Owen Harries argued in the ABC Boyer lectures several years ago:  ''For extended periods of time in Washington, one needs very good peripheral vision to see Australia on the world map.''

History, moreover, is littered with examples of Australian and American interests colliding.  Consider the different responses to the Chinese revolution of 1949:  Washington pushed for an economic boycott of the mainland whereas Canberra supported trade with the new communist state.

Or take the Suez crisis of 1956:  Dwight Eisenhower opposed military action against Egypt whereas Menzies sided with the British, French and Israelis.

Or take the Indonesian annexation of Dutch New Guinea (or West Papua) in 1962:  John F. Kennedy placated the anti-Western Soekarno, whereas Menzies and the Labor opposition initially opposed Jakarta's aggression.

Add in the numerous trade disputes over the years and it is clear US-Australian relations have not always been smooth.

One can acknowledge all this and still strongly believe in the importance of the US alliance.  It has, after all, been the sacred cow of Australian foreign policy since 1951.  On most vital questions of the 20th century, Australian interests have coincided with those of what Menzies called ''our great and powerful friend''.  There is no reason why this should cease to be the case.

It is just that, as Gillard meets Obama and senior US officials this week, she should remember that Canberra's support for Washington should not imply uncritical and unqualified agreement and support on all occasions.  The point here is an old one, variously ascribed to Palmerston or de Gaulle, about minor allies, however loyal, not expecting inconvenient loyalty from a superpower.

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