Costly price to pay for taxes, regulations on energy

This week the Commonwealth Government's Climate Commission visited Melbourne.  Headed by master sensationalist Tim Flannery, the commission was formed by Julia Gillard to help sell the merits of taxes and regulations to reduce carbon emissions.

In its report on Victoria, the commission loyalists manage to torture the climate data to support the alarmist view that, unless carbon emissions are curtailed, we will experience more extreme weather and less rainfall.  It forecasts a half-metre rise in sea levels, a sober version of Tim Flannery's apocalyptic forecast which envisaged an eight-storey rise in sea levels.

Wind and other forms of renewable energy have seen the carbon tax on fossil fuels improve their competitiveness.  Wind is the Climate Commission's favoured energy form.

The carbon tax is not the only leg-up the government gives to renewables.  It builds on subsidies through the renewable energy target, which now costs Australian households and businesses around $1.5 billion a year, costs which are set to double by 2020.  In addition, the Commonwealth provides $3 billion a year in other taxpayer-financed green power subsidies with the new $10 billion Clean Energy Fund supplying a further trough.

The Climate Commission claims the cost of Chinese-manufactured wind turbines is falling 70 per cent a year (no longer is there any talk of the Bracks Government's Brave New World of Victorian-supplied turbines).

In spite of these vaunted galloping cost improvements, the commission rejects a removal of the subsidies that account for two-thirds of wind generators' revenues, possibly because it realises that forecasts of wind's imminent competitiveness have regularly been made over the past 20 years.

Like a constantly receding mirage, the forecast of affordably produced renewable energy never approaches reality.

Outside of Commonwealth bodies, wind has been losing support of late.  This is partly because it is recognisably expensive and partly because people living in rural areas close to wind turbines object to their visible and noise intrusions.  The Baillieu Government, like most others, bas responded by adopting tighter controls over new proposals.

One of the few remaining welcome mats for wind power is South Australia.  Last year more than $5 billion of capital investment was pumped into the state's wind industry, creating 222 ongoing jobs.  The wind subsidies attracting that investment are mainly paid by people in other states.

And the $5 billion has entailed $23 million per job for an electricity supply that is inherently unreliable and costs three times that of conventional supplies!  Not much of a bargain.

Even so, the alternative source of renewable energy to wind is solar, which is twice as expensive again.  Solar panels have seen an explosive growth over recent years on the back of a Commonwealth subsidy covering most of the installation costs and lavish state government tariffs, the costs of which are hidden in consumers' bills.  The Bracks Government set the price of electricity from solar panels at 10 times the market value.

This was reduced by the Baillieu Government and is to be largely eliminated.

Taxes and regulations preventing Australians from having cheap energy have high costs.

They have no benefits and all such measures should be repealed.

Don't hold breath for change in GST

Altering this tax has not worked well in other countries.

It is best to regard the GST as a sleeping dog best left untouched.  However, a growing number of economists and public policy commentators have proposed increasing the existing 10 per cent GST rate, or extending the GST tax base to currently tax-free items such as fresh food or education and health services.

Former Treasury secretary Ken Henry recently argued that consumption taxes need to increase to fund government spending as the population ages.

Others argue that a GST increase can provide additional revenues to be spent, and should also be used to switch the Australian tax mix away from distorting federal and state taxes.

The government-funded think tank, the Grattan Institute, released a study advocating a broader GST base, with cuts to income and company taxes in return.

Former federal opposition leader John Hewson recently nominated a preference to raise the GST rate to 20 per cent to help fund similar tax reform measures.

Various business groups, such as the Business Council of Australia, have called for increasing GST to compensate the states for any future cuts to stamp duty or even payroll tax.

These demands are motivated by the mantra of conventional public finance that low tax rates applied to a broad base will help ensure that government revenue collections are optimised.

If a broad base applies to a tax which is less mobile or manipulable by those to be taxed, then, the theory goes, all the better for revenue-raising potential.

Taxes on consumption are often seen as lucrative revenue sources because consumers need and want to feed, clothe, house, transport and entertain themselves, whereas capital and labour owners may avoid taxes by accumulating less capital or working fewer hours.

But this idea can only be stretched so far, with studies of European consumption tax increases showing that rising tax rates have, in fact, been associated with lower consumer spending and greater tax evasion and avoidance activities.

In other words, the ''Laffer effect'' of increasing tax rates eating away at revenue-raising potential applies to consumption taxes as much as to capital and labour taxes.

Even if hiking the GST rate or extending the base delivers sufficient additional revenues, the size of government increases as politicians use the extra revenues to extend existing programs and services or deliver new ones.

Apart from the distortionary effects of increasing taxation on economic activity, governments would likely spend their GST windfalls on labour-intensive, low-productivity public services which drag down on economic performance.

Knowing that governments can obtain extra revenues would also encourage special interest groups to lobby politicians for their preferred spending configurations, rather than spending their time on more productive activities.

Therefore it is unlikely that additional government spending based on increasing consumption taxation would foster strong economic growth in the long run.

An alternative perspective of taxation reform comes from the public choice school of economics, most commonly associated with the work of Nobel Prize winning economist James Buchanan.

If the assumption is made that governments seek to maximise their revenue take at every turn, it is then desirable to maintain some tax exemptions and loopholes enabling taxpayers to avoid paying extra revenue to big spending governments.

According to the public choice view it is also sensible for taxpayers to resist increasing the GST rate, or extending the base to fresh food, education or health, should they wish to constrain public sector growth.

In what could be best described as their ''Madisonian moment'', John Howard and Peter Costello originally legislated to lock in the GST rate and base so that any changes could only be made with the states' approval.

So far this scheme has proven successful in blocking consumption tax increases regularly seen in other countries, since the states' desire for more GST revenue is pitted against the federal government's reluctance to bear the political cost of legislating for a higher GST rate or broader base.

For as long as the Howard Costello legislative safeguards remain firmly in place, it is unlikely that Australia will bear the brunt of a heavier consumption tax anytime soon.

The obvious solution for governments expecting a tidal wave of increasing spending pressures over the coming decades is therefore to reduce this spending and reinvigorate private sector activity, rather than wait for a GST increase that may never transpire.

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The terrifyingly inscrutable minds behind mass murders

We still don't have a good grasp of what drove Eric Harris and Dylan Klebold to massacre 12 of their fellow students and a teacher in 1999.

The Columbine High School killing was one of the most significant domestic acts of violence in the United States in recent decades.  It remains an icon of savagery.  It has been studied continuously.

Every second of their killing spree has been recreated;  every biographical and cultural motive canvassed.  Yet as one book, Comprehending Columbine, points out, a decade later there remains ''no comprehensive understanding as to why it happened and why it happened where it did.''

No doubt each boy acted for separate reasons.  Harris and Klebold had markedly different personalities and different family backgrounds.  But despite the enormous amount of written material the killers left for investigators, what turned them from students to mass murderers is still somewhat of a mystery.

School shooters aren't all as enigmatic as Harris and Klebold.  When Evan Ramsey killed two of his fellow Alaskan students in 1997, his motives and pathology were clearer:  he had been bullied at school and abused at home.

Yet in the ranks of young killers, there are both bullies and the bullied (Harris of Columbine was in the former camp).  Some have been leaders, others followers.  Some shooters claim to hear voices in their head.  Others are desperate to prove they committed their crimes in perfect, clear sanity.

One recent survey of school shootings concluded that ''the particular circumstances of each shooter, each distinct from the last, contribute to a sense of disequilibrium''.  There is no clear thread which ties these acts together.  And this for a distinct phenomenon, united by a shared location (schools) and shared targets (fellow students and teachers).

Humans want to understand why things happen.  We think in terms of cause and effect.  But mass murders usually confound explanation.

It is unlikely we will ever fully uncover the ''causes'' of the massacre committed at the Dark Knight Rises premiere in Aurora, Colorado on Friday.  The attempts to derive meaning from atrocities like this are understandable but futile.

It's a 30-minute drive between Aurora and Columbine High School.  The suspected killer, James Holmes, would have been 11 at the time of Harris and Klebold's rampage.

Yet it was only his victims who lived in the shadow of Columbine.  Holmes was raised in California and moved to Colorado to enrol in a PhD.  He could not have felt the region's history as keenly as those he targeted late last week.

But wouldn't it be more comfortable to understand his actions in that frame?  To believe he was the product of a traumatised community, and therefore the shooting had a discernable explanation?

Just as it would be easier to understand Columbine if the killers had been inspired by the music of Marilyn Manson, or given political purpose by an underground neo-Nazi trench coat gang, or were the products of broken homes or bullying.

None of these common explanations hold up to scrutiny.  But even if any were true, there would still be Comprehending Columbine's question of why it happened and why it happened there.

Take one popular account.  Yes, Harris and Klebold were passionate fans of the video game Doom, where players shoot monsters from a first-person perspective.  And Harris said their upcoming massacre would be ''like playing Doom''.

But that's not much of an explanation for their actions.  An estimated 10 million people played Doom at one time in the 1990s.  Why did those two boys from Colorado feel compelled to re-enact it?

These little tidbits — we will no doubt hear many about James Holmes — are superficially damning but rarely have any explanatory power.

Yet immediately after word of the Aurora shooting dripped out, there was a long list of candidates for explanations.  Hurriedly cobbled together experts blamed bullying.  An American ABC News reporter blamed the Tea Party.  The Daily Mail blamed Occupy Wall Street.  One politician blamed the opponents of Judeo-Christianity.  An MSNBC talking head blamed Star Trek.

Those inanities have now ceded to a slightly more considered debate about gun control, but that too seems like an attempt to fill the gap with meaning — to draw a lesson, to impose a narrative.

Our cause-and-effect thinking flatters us that atrocities are problems to be solved.  Every shocking event must be followed by a debate.  Could tighter gun laws avoid such violence?  Surely the best case scenario is it could reduce the number of victims.

The desire to cause horrific violence is likely much stronger than the legislative strength of Washington DC.  The uncomfortable reality is these tragedies do not pivot on public policy, but rather on an insane choice, made by an individual, to kill strangers.

Mass murders are a global phenomenon (Wikipedia has a revealing list here).  Compared to the United States, gun laws are strict in Norway.  So Anders Breivik's spree killing a few months later did not spark a passionate debate about gun control, despite his shared use of semi-automatic weapons.

There, the story has been about Islamophobia — as Breivik intended it.  This is a narrative, imposed by the killer himself, to try to give the event a concrete meaning, and distract us from looking at Breivik's specific, unique, individual mental world.  James Holmes too may try to impose his own justification for his actions.

For some reason we do not seek to ''understand'' serial killers — who commit their crimes in private over time.  Yet like rampage killers, they too can be drawn to their actions by the thrill, or the notoriety, or power over others.

Evil is too easy a word.  Nevertheless, if there is an explanation for acts of violence like those in Aurora or Columbine, they will be found not in culture, law, or politics, but in the terrifyingly inscrutable minds of those who choose to murder others indiscriminately.

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Small government means better governance

Writing in the mid-twentieth century about the risks of collectivism, Friedrich Hayek stated, ''The more the state plans, the more difficult planning becomes for the individual.''

However, it could be equally said the more the state plans, or attempts to do so, the more difficult planning becomes for the state.

This has much to do with the fact that the increasing size and scale of government has created a mass of internal contradictions, wherein its varied activities conflict, causing a host of often unintended, yet harmful, consequences.

Consider the following examples.

The regulated minimum wage imposed for equity reasons leads to the continuing unemployment of unskilled workers.

But rather than abolishing the minimum wage and thereby eliminating a major cause of unemployment, the government spends on expensive and largely ineffectual labour market training programs and, even worse, shunts the unemployed away to receive passive welfare payments.

Federal Medicare provides taxpayer-financed universal access to health care, yet state governments respond to increasing demand for free public hospital treatments not through direct pricing mechanisms but by rationing the supply of beds and creating treatment waiting lists.

Worse still, governments increasingly react to growing health care costs under a subsidised system by enacting illiberal, paternalistic controls over what individuals choose to eat, drink and smoke.

Fiscally expensive rebates and subsidies are provided with the policy objective of making child care affordable, however, mandated staff-child ratios and staff qualification regulations render child care less affordable for most families.

Governments make housing less affordable for prospective first entrants into the housing market by restricting the supply of land available for development and taxing property transfers, while at the same time offering cash subsidies to first homebuyers that only fuel further demand.

The carbon tax is designed to force us to use less energy, or at least switch to costly solar and wind power, although the government subsidises selected households and industries to discourage them from making behavioural adjustments as required by the tax policy.

When financial institutions or other large corporations earn a profit, government assails them for supposedly ''gouging'' their customers;  when banks and major corporates earn a loss, government forces the taxpaying public to bail them out.

The list of illogical contradictions of modern government in a muddle goes on and on, as the left hand of state intervention increasingly works against the right hand while the overall size of government grows unabated.

The question that needs to be asked is, why does all this policy tomfoolery persist, with all the wasteful absorption of scarce resources that goes along with it?

Politicians in democracies tirelessly strive to gain sufficient voter support, selling policies to attract constituents whose votes could be captured and recaptured as new issues emerge.

But when the state becomes perceived as a vehicle through which everybody can live at the expense of everyone else, politicians can literally purchase votes through new and additional spending commitments, promising new regulatory privileges, or hand-on-heart guarantees of tax breaks or ''no new taxes''.

In this environment, all and sundry, from working-family members to crony capitalists and everyone in between, are transformed into mere petitioners for their slice of the favouritism pie.

Yet voters, bureaucrats and other political actors also strenuously resist efforts to reduce or eliminate their favoured existing hand-outs, regardless of the economic, financial or social costs of these upon the broader community.

The fevered doling out of new benefits, and the political reluctance to withdraw existing benefits, leads the public sector on a path of continuing expansion, distorting the market process and reducing economic growth.

But even the state has its own economic limits, because at some point its expansion reduces the private sector growth which governments ironically rely upon to fund spending and support its regulatory and tax administrations.

Achieving a substantial reduction in the things that governments do, and how much they do it, will have the significant payoff of removing the many internal policy contradictions at the heart of big government.

If much smaller government is achieved, politicians and government administrators can specialise in a few core issues, such as protecting property rights and keeping the peace, performing these limited tasks well rather than the presently unsatisfying situation of being the jack-of-all-trades but master of none.

Voters will find themselves more financially and economically empowered in a low-taxing, yet fast-growing, economy, discovering that cost of living pressures were largely an artefact of costly government interventions of the past.

Crony capitalism and special interest posturing become unattractive vocations, as governments have no useful favours to dole out and the public becomes more hostile toward efforts to again raise government size to unsustained proportions.

In simple terms, small government becomes coherent government and that means a substantial improvement in the quality of democratic governance as a whole.

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Let the cult begin

Olympic Games symbolism is steeped in fundamentalism, militarism and fascism.

The Olympic Games are creepy.  Sure, their creepiness isn't immediately apparent.  We have grown familiar with the pageantry that surrounds this sporting carnival.  But there's more to the Olympics than swimming, shot put and badminton.

The Games are steeped in ritual, all of which is designed to promote an unsettling ideology.  They are unlike any other international sporting event.  Games officials talk of an Olympic movement, an Olympic spirit, and an Olympic ideal.  Its five-ring logo is imbued with a quasi-mystical significance.  It even has its own ceremonial calendar:  an Olympiad is a period of four years.  It's hard not to conclude that the Olympic Games are a religion, and a bizarre religion at that.

The opening ceremony for the 2012 London Olympics is this Friday.  The official protocols dictate it will feature a sacred torch, which will carry a sacred flame, which will light a sacred cauldron.  The flame is supposed to represent purity — flames come from the sun and are untainted by our material world.  When the Olympic torch was lit in a Greek temple in May, there was a ceremony of dancing priestesses and men dressed as heralds performing feats of strength.

The flame ritual will be preceded by a symbolic release of pigeons.  An Olympic flag will be raised.  A hymn will be sung.  There will be oath-taking.  These rites are all very purposeful.  The founder of the modern Olympics, Pierre de Coubertin, said its basic idea was to convert athletics into ''a religion, a cult [and] an impassioned soaring''.

So the entertainments and frills of the opening ceremony obscure just how odd all the Olympic rituals are.

It is really only when totalitarian states host the Games (Berlin 1936, Moscow 1980, and Beijing 2008) that the cultish elements of the Olympics are fully assimilated into the opening ceremony.

For instance, what we call the ''parade'' of athletes around the ceremony would really be better described as a march.  Coubertin was explicit about the militaristic elitism of the Games.  He wanted to showcase ''an army of sportsmen''.  Olympic athletes are the peak physical specimens of all the world's nations.  They are young, fit and virile.  In Coubertin's view, physical perfection was a sign of moral purity.  He wanted athletes to devote themselves to sacrifice and an ''ideal of a superior life''.

No surprise when the Nazis hosted the Games in 1936, Coubertin embraced them.  Berlin was the culmination of his life's work.  It was the ultimate display of ceremony and strength.  Olympic ceremonies still combine a sort of fascist symbolism with Cirque du Soleil-style choreography.

Yet the International Olympic Committee is proud of Coubertin.  Our Australian committee even has an award in his honour, handed to the secondary school students who best epitomise the values of the Olympic movement.

No doubt the students don't understand how strange those values are.  Presumably they believe the Olympics are focused on peace and global harmony.  Because if there is one thing Olympic officials do well, it is soaring speeches about all the good they are doing for the world.

Jacques Rogge, the current Olympic president, told the United Nations in 2007 that ''in a world too often torn apart by war, environmental degradation, poverty and disease, we see sport as a calling to serve humanity''.  An earlier president, Avery Brundage, pronounced in 1968 that ''the essence of the Olympic ideal maintains its purity as an oasis where correct human relations and the concepts of moral order still prevail''.

Their words are cheap and self-serving.  Brundage made his lofty claim just five days after the Tlatelolco massacre, where the Mexican government killed dozens of students protesting the Mexico City Games.  Rogge gave his speech in the lead-up to the Beijing Olympics, described recently by the dissident Ai Weiwei as nothing more than propaganda for the Chinese Communist Party.

Their words are so cheap that in 1995 the Olympic committee even tossed ''sustainability'' into their charter.  Not content with saving humanity, they wish to save the planet.  It's not clear how flying 10,000 athletes around the world every four years will achieve that goal.  The sustainability platform is almost like a deliberate joke.  And it reveals just how vacuous the Olympic ideal really is.

The Olympics do nothing to achieve global harmony.  They arguably work against it.  If harmony was the goal, athletes would compete as individuals, not on behalf of nations.

Do the Olympic ideologists honestly believe the nonsense they spout?  The Games are a taxpayer-funded cash cow for all involved, and that's probably motive enough for many.  Yet Olympism offers a sense of mission.  It's not like the World Cup or the Commonwealth Games.  The Olympics is a cause.  It is a full-blown belief system.

'Rogge said in his UN speech he wanted to place ''sport at the service of mankind''.  Maybe he does.  But right now, sport is serving the weird ideology of the Olympics much more than humanity.

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Labor's two-edged sword

Right now, every federal Labor MP should ask themselves a question.  And it's got nothing to do with what they are all (understandably) obsessed about.

According to the polls, whether caucus keeps Julia Gillard as leader is neither here nor there when it comes to the likely outcome of the next election.

Rather, Labor MPs should ask themselves something different, along the lines of:  ''How would I feel if a conservative government did some of the things the Gillard government now wants to do?''

Labor MPs should ponder what their reaction would be if the Labor government established a news media council with the legal authority to enforce ''fairness'', and a future Abbott government appointed a chairman of the council who issued a decree ordering the media to give as much prominence to climate-change sceptics as to those who believe humans are causing potentially catastrophic global warming.

Labor MPs, particularly those who regard themselves as being on ''the Left'', should consider what their response would be had John Howard floated a proposal to have the government force internet service providers to keep for two years a record of all the websites visited by internet users.  There would have been outrage.  As there should be.  Yet such a policy is exactly what's being considered by the Attorney-General's Department.

Amid the desperate desire of some in the Labor caucus to launch revenge attacks against the media generally, and Rupert Murdoch specifically, it's been forgotten that the weapons with which the caucus arms itself will also one day be available to its opponents.

If Tony Abbott and the Coalition are really as dangerous as Labor has convinced itself they are, then it is strange that Labor MPs would hand over to him and his future government the tools by which he could impose their ideological vision on the country.

Even if Labor MPs aren't greatly worried by the principle of freedom of the press, for example, they should at least be aware of the political consequences of what they're doing.

The press censorship the Gillard government is contemplating is bad, but from the perspective of Labor backbenchers, the motives for it might be understandable.  They believe it's their chance to get back at a media that they believe has been biased and unfair.  But no such excuse is available when it comes to what the government wants to do about internet surveillance.

The Greens' communications spokesman, Scott Ludlam, was spot on when he said the idea of requiring internet service providers to keep internet users' records is like the government telling Australia Post to open every single envelope it receives, making a photocopy of what's inside and putting it in a filing cabinet ''just in case you turned out to be a terrorist down the track''.

Australia is facing a power grab on an epic scale by the bureaucracy and the security services.  Many other egregious things are also being considered.  For example, the security services want search warrants to be far easier for them to get, although so far the government has not provided any evidence that an inability to obtain warrants has in any way hindered the security services in doing their job.

The privacy consequences of keeping personal data for two years are enormous.  The only possible response to the supposed reassurance from the Attorney-General's spokesperson that the data stored ''would be metadata such as the time an email was sent, rather than its content'' is:  yeah, right!

Even if it started out as only keeping a record of the time an email was sent, there's not a politician in the country who could say that they genuinely believed this is where the government snooping would end.  Surveillance powers are never wound back — they only ever increase.

The Greens are wrong on just about everything.  But they're not wrong about how dangerous these surveillance proposals are.  It's just a pity that somehow the Greens see no contradiction in the way they oppose more government control of the internet yet support more government control of the press.  Speech should be no less free in a newspaper than it should be on the internet or on Twitter.

The Gillard government's diabolical situation is being measured in the column inches devoted to leadership speculation.

The willingness of Labor MPs to agree to any policy no matter how much it offends whatever principles they believe in, just to stay in power, is a better measure of how far this government has fallen.

Government and car industry like Robin Hood in reverse

The current package of subsidies for Australia's car industry should be their last.  At what point can foreign-owned car companies be described as thieves for accepting taxpayer subsidies to ''protect'' local workers while concurrently slashing jobs?

This week Ford said it was shedding 440 jobs.  In April, Toyota sacked 350 workers.  Holden cut its casual workforce in February.  Meanwhile, the industry has collected billions of dollars under successive governments to help it stay afloat.

The Gillard government is doling out $5.4 billion of our tax dollars to help the sector until 2020, selling it on the promise that it will ''protect jobs''.

In providing tens of millions of dollars of support, the Baillieu Liberal and Weatherill Labor governments have mounted similar arguments.  It was always a policy destined to fail.

The excuse for the lay-offs and falling profitability by local car manufacturers has been the high Australian dollar — it makes Australian exports less internationally competitive.  But the far bigger factor is that the sector is wed to producing cars that no one wants in Australia and overseas.  According to the government's own data between 2003 and 2010, the number of passenger motor vehicles sold in Australia has sat around 600,000 annually.  In the same period imports purchased by Australians have gradually risen from 60 per cent to nearly 85 per cent.  The trend began well before the dollar rose against other currencies.

With rising petrol prices, price-sensitive consumers are buying smaller, fuel efficient cars.  Ford, for example, makes large cars.  As a result of escalating subsidies the local industry has been insulated from the realities of the marketplace and hasn't built cars people want.

Since the 1980s, the industry has been forced to adapt as successive governments have progressively reduced tariff rates to make it more internationally competitive and outward looking.  But that objective has been compromised.  Governments have introduced and increased subsidies to reflect any loss by the industry with each successive tariff cut.

In his March speech to Wesley College, Paul Keating bemoaned how this process stopped economic adjustment.  But the Australian car industry was always destined to fail because it was built off the back of artificial government protection.  In a free market economy only an industry built off the level playing field of market forces can be sustainable.  The government has also imposed unjustifiable Australian specific standards that foreign car companies love because they lock out competitor models without expensive adjustment.

Similarly, state and federal governments have preferential Australia-made car purchasing arrangements that provide an indirect subsidy and demand for vehicles.  So long as an industry needs preferential trade, tax and regulatory arrangements to be sustained, it will always be unsustainable and turn to the government to be profitable.  The perfect example is Holden in 2011, when it reported a profit of $89.7 million.  That's the same figure Holden collected in subsidies.

When big government and big business get together, taxpayers should protect their soon-to-be-raided wallets.  And every dollar misdirected through tariffs and subsidies is a dollar lost towards creating and perpetuating sustainable industries.  These are sustainable jobs that could employ former car industry workers.  After helping workers move away from the sector, the most important thing for government to do is not repeat the mistakes of the past.  But they are, by now tagging subsidies as ''co-investment''.

In the past, subsidies were designed to help the industry adjust to a lower tariff environment.  Co-investment takes taxpayers' money and gives it to buttress the profits of multinational corporations.  It's reverse Robin Hood stuff.  Co-investment is also designed to perpetuate unsustainable business models.  Politically, co-investment is a complete repudiation of the Hawke-Keating legacy of structural adjustment to get the government out of the heart of the economy.

In light of the recent job cuts, the Abbott opposition has announced if it comes to power it will review subsidies and introduce benchmarks.  They are not enough.  Both sides of politics should commit to this automatic industry subsidy package being the last.

Committing to an end to subsidies would send a powerful message to a new generation of workers not to gamble their futures on an unsustainable industry.  Oh, and taxpayers win too.

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Making ''stuff'' doesn't cut it: why Australia shouldn't have a motor industry

Australia shouldn't have a motor car industry — well not an industry dependent on corporate welfare.  Many Australians struggle with that idea — after all shouldn't we be ''making stuff''?  When former prime minister Kevin Rudd said he didn't want to be prime minister of a country that didn't make stuff, he struck a chord with many Australians.

To be sure, making stuff is better than not making stuff, but there is much more to economics than that.  Australians need to produce goods and services that consumers want to buy at a price that covers the costs of production — including the cost of capital.

Making ''stuff'' just doesn't cut it.

A debate about the auto industry is really a debate about manufacturing in the Australian economy.  There is a widespread perception that manufacturing is dying and that this is an economic problem.  To my mind, the story is a bit more nuanced than that.  First, it isn't clear that manufacturing is dying.  Australian Bureau of Statistics data shows the profit margin for manufacturing to be quite stable (with a blip during the GFC).  That is an aggregate meaning that some parts of manufacturing are struggling while other parts, no doubt, are thriving.

Second, even if manufacturing was dying, it isn't clear that this is an economic problem.

Over the last 30 years, the total number of manufacturing jobs has decreased from over a million to less than a million.  In a growing economy with a growing population, the relative number of manufacturing jobs has certainly declined overall — yet the economy has continued to generate new jobs.  Both the participation rate and the employment to population ratio have increased over time.

That means that a relative decline in manufacturing hasn't yet adversely impacted the economy.

A dynamic growing economy creates new jobs and new job opportunities all the time.

The economy has not been generating net new manufacturing jobs.  The question we need to ask is:  do Australians have the right to a manufacturing job?  A moment's reflection indicates the answer must be ''no''.

Certainly, I can't see an argument for government propping up large-scale production line jobs that have little value-add and can be undertaken in any number of low-cost economies.  Given the time, effort, and money lavished on our education system, we shouldn't have low-skill manufacturing at all.

The bottom line is that we should concentrate of doing the things we do well — that are profitable — and trade for the things we don't do well (or are unprofitable).  Specialisation and trade is the key to future prosperity.  Propping up dying industries will not add to our well-being.

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Be sceptical of vague new ''national security'' powers

Any proposal by the government to increase its own power should be treated with scepticism.

Double that scepticism when the government is vague about why it needs that extra power.  Double again when those powers are in the area of law and order.  And double again every time the words ''national security'' are used.

So scepticism — aggressive, hostile scepticism, bordering on kneejerk reaction — should be our default position when evaluating the long list of new security powers the Federal Government would like to deal with ''emerging and evolving threats''.

The Attorney-General's Department released a discussion paper last week detailing security reform it wants Parliament to consider.

The major proposal — although explored little in the department's paper — is the Gillard Government's proposed data retention laws.  These laws would require all internet service providers to store data about their users' online activity for two years.  They have been on the table for some time.

But there are many other proposals.  The department wants the power to unilaterally change telecommunications intercept warrants.  It wants the threshold for those warrants to be significantly lowered.  It wants the ability for security agencies to force us to hand over information like passwords to be expanded.  There's much more.

These reforms add up to a radical revamping of security power.  They raise troubling questions about our right to privacy, our freedom of speech, and the over-reach of regulatory agencies.  And they suggest one of the most substantial attacks on civil liberties since John Howard's post-September 11 anti-terror law reform.

Public policy is like comedy — timing is everything.  The lack of timing here is revealing.

These proposals come nearly a decade after the first flurry of anti-terror activity, and long after most analysts have concluded that the serious threat of terrorism — keenly and rashly felt at the turn of the century — has subsided.

The government claims that a new environment of cybercrime and cyber-espionage necessitate wholesale reform of the law.  These claims are massively overstated.  Cybercrime exists more in the advertising of security companies than it does in reality, as I argued in the Sunday Age earlier this year.

Cyber-espionage too is worse in theory than reality.  In their recent paper Loving the Cyber Bomb?, two American scholars, Jerry Brito and Tate Watkins, point out that these claims have all the hallmarks of threat inflation driven by self-interested security agencies.

As they write in the American context, ''The rhetoric of 'cyber doom' employed by proponents of increased federal intervention, however, lacks clear evidence of a serious threat that can be verified by the public.''

Certainly, our Attorney-General's Department offers no such clear evidence.  Perhaps there is evidence.  But most of the Government's case is presented as innuendo and hypotheticals.

Brito and Watkins suggest this hyperbole has a parallel with the sort of threat inflation that led up to the Iraq War.  The conclusion — more power — leads directly from the premise — an evolving threat.  But we're a long way from the realm of evidence-based policy here.

Yet even if we took the government at its word about the dark and dangerous online environment, there would still be much to be concerned with.

Fairfax papers reported in April that ASIO now privately believes environmentalist groups are more dangerous than terrorists.  This surely says more about the diminished status of terrorism than the rise of green activism.  But it also underlines the often political nature of national security enforcement.

The line between lawful and unlawful political dissent is less clear at the margins than we like to admit.  Enthusiastic agencies and thin-skinned governments can easily forget there is any difference at all.  (During the Second World War, John Curtin's Labor government even directed ASIO's predecessor agency to investigate its ideological opponent, and an organisation that was urging the formation of a non-left political party.)

ASIO isn't the only agency we have to worry about.  There are at least 16 Commonwealth and state bodies approved to intercept telecommunications right now.  Even the scandal-ridden Office of Police Integrity in Victoria would benefit from these new powers.

Ministers in the Gillard Government have jumped to defend the Attorney-General's proposals.  And the Coalition is ''examining the issues carefully''.

Yet given the bipartisan submission to the previous government's expansion of the security state, it would not pay to be too optimistic.

This is largely because governments are usually passive recipients of the phenomenon of threat inflation, not the drivers of it.  Security agencies are easily able to convince politicians they need more support and power, and that any scepticism about pressing national security matters is reckless, even negligent.

The scepticism, unfortunately, has to be left to the public whose civil liberties are at stake.

Robust free speech should be encouraged in AFL

2012 is proving to be a bad year for free speech.  Not only do we have a Federal Government hell bent on restricting it, but now the nation's largest sporting body, the AFL, seems keen to get in on the act.

Not content with setting up its own media operation, AFL Media, to take a dominant role in the coverage of the sport, or sanctioning its players for causing offense on twitter, the AFL also apparently has its sights set on the fans.

The Age recently reported that AFL spokesman Patrick Keane had ''confirmed that the league took a dim view of supporters criticising opposition players'', which seems to be a fundamental shift in what has always been a big part of the barracking experience.

Keane's comments came in the wake of the recent game between Melbourne and Greater Western Sydney which presented the first opportunity for Melbourne supporters to voice their displeasure at Tom Scully, their number one draft pick who had deserted the club at the first opportunity to take the big money on offer from the AFL's expansion team on the western Sydney frontier.

Now, Scully is perfectly entitled to sell his services to the highest bidder but, if he does, he also has to accept the fact that long-suffering Melbourne supporters are hardly likely to greet his reappearance against them with polite applause.

So the Melbourne supporters turned up with signs and banners criticizing Scully and one chap amusingly pinned monopoly money all over his clothes.  For his troubles, this individual found himself surrounded by security staff, seemingly desperate to find some pretext to escort him from the ground.  There were apparently accusations that he had used bad language, denied by all those in the vicinity.

There is a tendency for sporting ground security staff to be over-zealous with minor misdemeanors.  Parents offering supermarket cola cans to their kids will quickly be surrounded (cans are of course banned from the modern-day sporting venue), as will obviously harmless individuals whose only crime might be to be barracking a bit loudly, or engaging in repartee with opposition supporters.  However, on the extremely rare occasions when there seems to be an actual threat of a punch-up starting, security always seem notable by their absence.

In many ways, football in 2012 is better than it was in the ''good old days''.  The skills of the average player have improved enormously and the intensity of the contest in the modern game is often superb.  For fans, the facilities are vastly superior, even if one does occasionally look back with nostalgia at having endured the outers at grounds such as Victoria Park and Windy Hill.

However, the AFL and ground authorities seem to be attempting to make a contemporary day at the football something which fans experience rather than participate in as barrackers.  There has been a growing trend for incessant announcements, advertisements and gratuitous music to fill breaks in play which once would have been solely devoted to fans having to do things like make conversation.

Now, as well as limiting fans' ability to express themselves quietly during breaks, there seems to be a push to limit what can be said loudly during play.  Obviously, there are limits on what should be said and, on the whole, fans themselves understand this.  It is now almost ten years since I last heard someone shout out a racist comment at the football.  The perpetrator was immediately given a stern lecture by several other patrons and, suitably chastened, shut up for the rest of the day.  However, there is a world of difference between making a racist comment and calling Tom Scully a ''mercenary''.

Oddly, these days, the worst criticism of players does not take place in football grounds at all, but in the anonymity of twitter and in blog comments.  Surely spirited barracking in public is a much healthier outlet for fans to express their views.  A key element of football's appeal is the belief that one's own club is intrinsically better than its rivals.  In a city like Melbourne football culture has been driven by generations of love of one's own team and hatred of its rivals, and yet, at the same time, everyone has friends and relatives who support those other teams.  We have all lived with the criticisms of our teams and our players.

In the aftermath of the Melbourne versus GWS game, one might have hoped the AFL would say that security had over-reacted and welcomed the fact that Melbourne supporters, often maligned for their apathy, had shown a bit of passion.  Even more, one might have thought they would be excited by the fact that some people were reacting to the AFL's expansion team with an emotion any stronger than mild indifference.

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Uncertainty erodes the outcome

Finally, some honesty.  In ''Carbon price floor crucial to its aims'' (The Australian Financial Review, July 5) four lead advocates of the government's emissions trading scheme acknowledged it ''is a policy tool created by government to achieve the objective of reducing emissions''.

Advocates have conveniently allied carbon pricing with the reforms of the 1980s and '90s.  The narrative has been that market-based carbon pricing is akin to free-market reforms such as tariff liberalisation.

They are nothing alike.  It is misleading to suggest ''free market'' and ''market based'' are the same thing.  Carbon pricing is not free market.  Both a carbon tax and an emissions trading scheme are government interventions in the economy, just like any other tax, tariff or regulation.  An emissions trading scheme just uses the technology of a market to impose the cost of a tax and regulation.

The major driver of emissions permit prices will be the legislated volume of supplied permits and the legally required number of market participants demanding them.

Both supply and demand factors will be controlled by politically influenced governments susceptible to the influence of rent seekers.

The reason markets are proposed is to ensure government does as little harm to industry as possible and adds another incentive for efficiency.

Depending on the abatement model used, it is generally accepted that the cheapest cuts will be achieved through efficiency gains first and buying transformative new technology later.

The same principle applies with international trading.  Since cutting emissions is a global challenge, international trading allows for cuts to be achieved in countries where it is cheapest first, and where it is most expensive later, such as Australia.

Despite being artificial, allowing for the use of the full flexibility of a market places downward pressure on a floating carbon price.  But that is not what Australia needs.

In the lead-up to the carbon tax, the argument from select industries was that we needed a carbon price to provide investment certainty.  This never stood up to scrutiny.

By introducing a price, we've swapped the uncertainty of whether we will have a carbon price for the uncertainty of its trajectory.

Based on its emissions profile, primarily from stationary energy, Australia needs a predictable, high carbon price.  This is because the margin between the commercial viability of established coal-fired power stations and new, lower carbon and renewable energy investments is so large.

Greens leader Christine Milne unintentionally identified on Channel Ten's Meet the Press the inconsistent nexus at the heart of artificial carbon pricing.  According to Milne, Australia needs a ''clear trajectory of where the price is going to go'' because ''a single-digit price doesn't drive change''.

Milne is right.  A low price won't drive substantial change.  ANU research concludes that to reduce its emissions by 2020, Australia would need a carbon tax rate of about $60.

Considering our emissions profile results from long-term energy investments, an uncertain trajectory compromises the efficacy of emissions trading.

With declining global carbon prices, the likelihood of Australia transforming to a low-carbon future within a reasonable horizon is low.

To lessen the downward pressure on the necessarily high carbon price, the government has included a 50 per cent cap on the number of foreign tradable permits into the scheme, and a floor price of $15 a tonne.  Reports last week that the floor price will be cut or scrapped would only increase any decline from the fixed price when it converts to a floating price in 2015.

Yet scrapping the floor price met with resistance from those who had argued for a market-based scheme, as it would be more efficient than other policy alternatives.  Their reason was that the market wouldn't deliver the predictability and high carbon cost Australia needs.

Removing the floor price would enhance the relative merits of using market-based carbon pricing to achieve cost-effective emissions reduction.  And doing so is crucial, since no other country has imposed such a high-cost and broad-based a carbon price as Australia, and isn't likely to any time soon.  Without a lower price, the scheme becomes politically unsustainable without equivalent action in other countries.

Since the only viable solution to cutting emissions is innovation of low-carbon energy technologies that can compete without a carbon price, the better solution is to scrap the scheme.  But so long as we keep flawed carbon pricing, we should at least ensure floor prices and restrictions on tradable permits are scrapped to minimise damage to the economy.

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Freedom of association lost in the moral panic

''You are the sort of man this act aims at,'' Magistrate Laidlaw told a 30-year-old Sydney man, George Harris, as he sentenced him to six months' hard labour.

The Vagrancy (Amendment) Act 1929 had been passed by the New South Wales Parliament just a year before.  Laidlaw thought the act was fantastic — a ''very desirable piece of legislation'', he said in a separate case.

George Harris had violated the act by ''habitually consorting with reputed criminals''.  He'd consorted with them at Central Station, and he'd consorted with them at Randwick racecourse.  Not only had Harris consorted all over Sydney, Laidlaw hastened to point out, but he had been observed consorting ''at various times of the night''.

So what sort of man was George Harris?  He had a police record more than a decade old, according to the Sydney Morning Herald.  That record was spread across Australia and New Zealand.

Yet his offences were relatively minor — theft, vagrancy, and ''being a suspected person''.  Harris may have been a bad sort, and may have hung around with other bad sorts.  But in February 1930, the state of New South Wales imposed six months' hard labour upon him for mere association.  No need to prove that he had stolen anything or assaulted anyone.  His relationships were crime enough.

Consorting with convicted criminals was made unlawful in the midst of Sydney's moral panic over the ''razor gangs'' — that era of crime luridly but forgettably depicted in Underbelly.

The tabloid newspapers had aggressively called for a crackdown on consorting in order to tackle the gangs.  Introducing the anti-consorting laws, the colonial secretary claimed it was a necessary tool to deal with the many people ''from other parts of the world'' who were ''engaged in an orgy of crime in this city''.

But the crime of consorting was, in reality, a catch-all crime that gave police discretionary powers to pull up whoever they liked.  The police had to give one warning and then that was it.  As the University of New South Wales' Alex Steel has written, ''once the police decided that a person was a criminal, they might proceed to arrest him or her for consorting on any convenient ground.''

This unjust law gave police the power to criminalise what should be protected under freedom of association.  It remained with its original strength for half a century, until the New South Wales government tightened up some of its excesses in 1979.

But consorting laws are back.  The O'Farrell Government amended them earlier this year to give them more bite.  They did so ostensibly to deal with bikie gangs and the recent drive-by shootings.  Now even regular email with someone who was once found guilty of an indictable offence is now considered consorting.

Certainly, the amended law offers a few defences against a charge of consorting.  For instance, it is legal to consort with someone if you are their lawyer or doctor.  But that's not much consolation.  The defences are extremely narrow, and the circumstances in which you could be found to have illegally consorted are extremely broad.

The NSW Young Lawyers society has pointed out consorting would even include football clubs where some members of the team have been convicted of assault.  Police could disband a club with one warning.  Any players that continued to fraternise with their team mates would face jail.  Even if you assume police are at all times noble and dutiful, such powers are obviously — ludicrously — excessive.

The first person was convicted under the amended laws last week.  Yet he was not a bikie, but a 21-year-old man the NSW police admits has no link with motorcycle gangs.

It was the same in the 1930s.  The police found consorting laws useful to clear the streets of prostitution, but not so useful in clamping down on razor crime.  Consorting laws are good for smoothing the wheels of prosecution — if you think the goal of a legal system is to maximise prosecutions.  But its ability to prevent or punish serious criminal activity is limited.

Consorting laws are clearly unjust for those accused of consorting.  But they are cruel for those who have been convicted and punished for a crime.  A malicious police officer could eliminate a released criminal's freedom of association simply by issuing his friends with a warning.

When governments face law and order problems, the urge to ''do something'' must be overwhelming.  The newspapers call for action.  Talkback radio calls for crackdowns.  Police call for more police power.

But police and prosecutors already have a long list of offences they can charge, and they have ample powers to do so.  Nobody seriously believes motorcycle gangs are an unprecedented threat that a modern legal system is powerless against, yet for some reason everybody acts as if they are.

Benjamin Franklin famously said, ''Those who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety.''

Freedom of association — a freedom that extends even to those who have in the past been convicted of a crime — is one of those essential liberties.

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Schools might as well tell students who to vote for

The draft shape of the National Curriculum's ''civics and citizenship'' subject was released last month.  It is blatantly ideological.  It displays its progressive, left-of-centre politics like a billboard.

The National Curriculum was announced by Julia Gillard in 2008 and is forecast to be implemented in Victoria and New South Wales sometime after next year.  The curriculum authority is rolling out one subject at a time.

But from the start, the curriculum's politics were obvious.  In its own words, the National Curriculum will create ''a more ecologically and socially just world''.  The phrase ''ecological justice'' is rarely seen outside environmental protests.  Social justice is a more mainstream concept, but it's also solidly of the left — it usually refers to ''fixing'' inequality by redistributing wealth.

Civics is a small subject in the curriculum, but a crucial one.  The National Curriculum wants to sculpt future citizens out of today's students.  So the emphasis civics places on certain political ideas will echo through Australian life for decades.

And when a group of education academics try to summarise the essential values of our liberal democracy, we should pay attention.  After all, they hope to drill them into every child.

So what are our nation's values?  According to the civics draft, they are ''democracy, active citizenship, the rule of law, social justice and equality, respect for diversity, difference and lawful dissent, respect for human rights, stewardship of the environment, support for the common good, and acceptance of the rights and responsibilities of citizenship''.

It's quite a list.  Some of the values, such as democracy and the rule of law, we all should agree on.  But most are skewed sharply to the left.

Where, for instance, is individual liberty?  The curriculum describes Australia as a liberal democracy but doesn't seem comfortable with what that means:  a limited government protecting the freedom for individuals to pursue their own lives.

Conservatives should be troubled that ''tradition'' is absent from the civics draft.  Our democratic and liberal institutions are the inheritance of centuries of experiment and conflict.  To respect tradition is to value those institutions.  Yet tradition only pops up when the civics draft talks about multiculturalism.  It's part of ''intercultural understanding''.  In other words, we are merely to tolerate the traditions of others, not value our own traditions.

And liberals should be appalled at the emphasis on ''civic duty''.  The curriculum could have said that individuals and families living their own lives in their own way is virtuous in itself.  After all, people who do things for others in a market economy contribute to society as much as the most passionate political activist.

But instead the civics subject will pound into children that they should work for international non-profit groups in order to pursue ''the common good''.

This may be uncontroversial to the left, but it is political dynamite.  Liberals are sceptical of the common good because throughout history it has been used to justify nationalism, oppression, militarism, intolerance and privilege.  It's one of the reasons liberals support small government.  But the common good has been tossed absent-mindedly into the civics draft, alongside that other vague and loaded concept, social justice.

It gets worse.  The suggestion we have a duty to be ''stewards'' of the environment comes straight from green political philosophy.  It reduces humans to mere trustees of nature.  This directly conflicts with the liberal belief that the Earth's bounty can be used for the benefit of humanity.

Politics drenches the entire curriculum.  Three ''cross-curriculum priorities'' infuse everything from history to maths.  They are:  sustainability, engagement with Asia, and Aboriginal and Torres Strait Islander histories and cultures.

Perhaps on first glance the priorities don't seem too political.  But the history curriculum will offer perspectives on ''the over-use of natural resources'' and ''the global energy crisis''.  The English curriculum will teach students how to ''advocate ... actions for sustainable futures''.  The ideology here is so flagrant teachers might as well just tell the kids who to vote for.

And imagine the priorities were, instead, material progress, the Australia-US alliance and British culture.  There would be an uproar.  Progressives would line up to condemn the curriculum's reactionary politics.  Remember the outrage over conservative bias in John Howard's citizenship test?  And that was just for migrants.  The curriculum is for every Australian child.

The irony is that this iteration of the National Curriculum wasn't Labor's idea.  The Howard government set the ball rolling.  The Coalition was unhappy about how terribly left-wing state curriculums were.

So people who are pleased with the curriculum as it stands should think how it could be when an Abbott government takes over.  We may hear again the same dark warnings about ideologues taking over the education system that we heard during the Howard years.

In theory, teaching all students the virtues of liberal democracy is a good idea.  But if educationalists can't do so without imposing their own political values, we may be no better off than when we started.

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Aunty looms too large

Two of Australia's three major media organisations are cutting costs and jobs dramatically and are being changed fundamentally.  Those two organisations, Fairfax Media and News Limited, are public companies trying to make a profit.

There is of course another big media organisation.  It's the Australian Broadcasting Corporation.  It's owned by the government, it's funded by the government, and it's operated by people picked by the government.

The business challenge for Fairfax and News executives is to get paying customers to buy their product.  The business challenge for ABC executives is to keep on getting $1 billion a year from the federal cabinet.

There's not much doubt who's got the easier task.  The Coalition is scared of the ABC, and Labor is satisfied with it.  Admittedly, extracting money from ministers takes skill, but the ABC has 80 years of practice.

Every Coalition politician knows, as the refrain goes, ''the ABC is our enemy talking to our friends''.  The ABC's huge reach outside of the capital cities ensures that at the slightest change to its budget, the cry of ''cuts to rural and regional communities'' goes up.

Labor may be annoyed to be invariably criticised from the left, but it would definitely prefer to have the national broadcaster maintain it's broad liberal/left perspective to any alternative.

Any discussion about the media in Australia must take account of the fact that of the three most significant players, two are privately owned, and one is government owned.  While the organisations have different market shares and operate across a range of the four different platforms of print, radio, television, and online, taken together they are the three dominant media voices in Australia.

Right now, on many measures, the healthiest media outlet in Australia is the ABC.  As the privately owned companies go through the turmoil of their restructures, the prospect is for the position of the ABC to keep growing relative to Fairfax and News.

The emerging dominance of a government-owned media company with its distinct political slant must surely be as important an issue in any debate about a free and independent press as any question about whether the proprietors of Fairfax are entitled to determine the editorial position of the company's publications.

Communications minister Stephen Conroy and his government are preoccupied with the second question but quite unconcerned about the first.

The problem with the ABC is not just its bias.  Just as big a concern is the way it is using its privileged, government-funded position to crowd out the market against its commercial rivals.

For example, the ABC recently started a 24-hour news channel.  It operates in direct competition to Sky News.  The ABC's online opinion website, The Drum, operates in direct competition with the online opinion pages of the Fairfax and News newspapers and myriad other privately run commercial websites and blogs.

The ABC's rapidly expanding online presence duplicates what Fairfax and News already provide, but with one vital difference — the Fairfax and News sites are, or soon will be, behind a paywall.  In the not-too-distant future, consumers will have a choice:  pay to get stories and commentary from Fairfax and News, or get them free from the ABC.

While Fairfax and News will inevitably attempt to compete with each other and against the ABC on the basis of quality, the difficulty they have is that the quality of much of what the ABC produces is very high.  As it should be, given all the money it gets.

The ABC is cutting up and eating Fairfax and News's lunch.  It's not Gina Rinehart and Rupert Murdoch that journalists should be worried about.  It's Mark Scott, the boss of the ABC, they should fear.

Critics of Murdoch like to prove their point about his power by quoting that 70 per cent of newspapers bought by Australians are from News.

Indeed, the ABC's Jonathan Green repeated this figure just last week on The Drum site as he lamented the decline of media diversity in Australia.  Nowhere in the article was there any mention of the ABC.  On the ABC's website is its own proud boast that ''74 per cent of all Australians use ABC services each week via television, radio and online ...''.  Then there's the threat of any government that wants to change this — ''87 per cent of Australians believe the ABC provides a valuable service to the community''.

Media concentration in Australia is all going one way — and it's in the direction of the ABC.

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Democracy sidelined in panic over chaplains

It is a basic tenet of parliamentary democracy that the decision to spend public money is made by the parliament.

The English Civil War and the French Revolution were sparked by this fundamental principle:  when the executive wants money, it needs the consent of representatives of the governed.

But an obscure bill passed by the Federal Parliament turns this principle on its head.

The Financial Framework Legislation Amendment Bill (No.3) 2012 was introduced by the Attorney-General, Nicola Roxon, in response to the Williams decision of the High Court last month.

The court found the funding for the National School Chaplaincy and Student Welfare Program constitutionally invalid.  But the decision had potential implications for Commonwealth funding more generally.  There are now serious doubts about any federal funding not specifically enabled by the constitution or legislation.

The High Court's decision should not have come as a surprise.  Its foundation was laid in 2009, when the court handed down its decision in the Pape case, and held that the Commonwealth can spend money only in areas where it has legislative or executive power.  It beggars belief that contingency plans were not put in place for a range of federal spending programs three years ago.

Since its inception under the Howard government in 2007 the chaplaincy program has been funded in accordance with government guidelines, not legislation.  Therefore it should have been clear in 2009 that the program was in danger of being struck down by the High Court.

The government's hasty solution is a piece of legislation that completely usurps Parliament's power to approve public spending.  It is radical, unnecessary, excessive and unprecedented.

The act lists 415 programs for which the Commonwealth may elect to spend money at any time.  Some of these ''programs'' include ''sport and recreation'', ''domestic policy'', ''payments to international organisations'' and the ominous ''electorate and ministerial support costs and parliamentary entitlements support costs''.

The act as a whole may be constitutionally invalid.  The High Court has a history of striking down legislation designed by governments to brazenly circumvent its decisions.  This is clearly such a case.

But more importantly, the transfer of power from the Parliament to the executive under this act is immensely anti-democratic.  It means we will not have a parliamentary debate on the school chaplains program, or any of the other 414 programs listed.

The new mechanism allows for spending relating to any regulations that fall under those programs.  But regulations are not subject to parliamentary debate, so government now has the power to fund almost limitless activities of federal regulators without any parliamentary scrutiny.  Section 32B even allows a minister to delegate their powers to make those regulations to junior bureaucrats.

The serious weaknesses of the bill were not lost on some MPs.  Despite being given no time to review the legislation, the Coalition suspected something was up and attempted to insert a sunset clause.  This would have allowed a lengthier consideration of the act, but their amendment was defeated.

The shadow attorney-general, Senator George Brandis, said ''the bill is a flawed bill that does not overcome the legislative gap or constitutional problem identified in Williams''.

He's right.  But it was obviously too much to ask that the Coalition have the courage of its convictions.  They supported the bill even after their amendment was defeated.

One after another our elected representatives got up to raise serious concerns with a bill they knew to be flawed.  And one after another they voted for its passage.

But the most bizarre player in all of this is the Greens.  One can at least understand the positions of the ALP and the Coalition, who both support the school chaplaincy program.  But the Greens completely object to the idea of school chaplains, have never supported the program and still passed legislation purportedly designed to save it.

One can only assume they are in favour of executive over-reach, no matter the issue.

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World's biggest carbon tax to become even bigger

Changes to global carbon accounting standards will wipe out the average 20c weekly ''over-compensation'' by the year's end and add $230 million to the nation's annual carbon tax bill.

The carbon tax is applied to more than just carbon dioxide.  Other gases taxed include the less prevalent but more potent methane, nitrous oxide and hydrofluorocarbons.

But not all greenhouse gases are equal.  Some linger in the atmosphere longer and trap more heat than others.

As a result they are treated as having a higher global warming potential than carbon dioxide.

To ensure their environmental impact can be properly compared, all greenhouse gases are converted to their potency in carbon dioxide equivalence.

Under the Kyoto Protocol Australia is required to use Intergovernmental Panel on Climate Change data to calculate its emissions profile.

At present the rate of carbon dioxide equivalence for each gas is based on data published by the IPCC's 1995 Second Assessment report.  Every country uses the same data so it can accurately compare its emissions.

Based on the IPCC's data, when methane is included in an emissions profile, a single tonne is calculated as 21 tonnes of carbon dioxide-equivalent gases.

Nitrous oxide is 310 times more potent than carbon dioxide.  Sulphur hexafluoride is 23,900 times more potent.

Rightly, all of the government's emissions and carbon tax cost analysis is based on these conversion rates.

But at the Durban UN climate change conference last December, governments, including Australia, decided to update the conversion rates for greenhouse gases.

In a seemingly irrelevant decision for the operation of the Kyoto Protocol after the end of this year the data will be updated.  Instead of using the 1995 IPCC Second Assessment report data to convert greenhouse gases, from the start of next year countries will use the rates in the 2007 Fourth Assessment report.

According to the updated report, the potency of some greenhouse gases has been revised down, but most have been increased and in some cases by quite a lot.

After carbon dioxide the two most emitted greenhouse gases are methane and nitrous oxide.

Nitrous oxide's profile was revised down by 4 per cent from an equivalence of 310 tonnes to 298 tonnes.

The highest upward revision was a 33 per cent increase in the comparatively poorly emitted hexafluoroethane.

But these gases are not as frequently emitted as methane.  Methane's environmental impact was revised upwards by 20 per cent from 21 tonnes of carbon dioxide to 25 tonnes.

Based on 2009 and 2010 National Greenhouse Gas Inventory data, a simple 20 per cent upward recalculation of the environmental impact of methane increases Australia's emissions by about 21 million tonnes.

The downward revision of nitrous oxide's potency reduces our emissions by only 900,000 tonnes.

Even when methane emissions from agriculture are removed from these calculations, the IPCC's revision increases Australia's carbon-taxable emissions by 10 million tonnes.

Once the upward and downward revision of other publicly available emissions data is included, the increase in taxable emissions is just shy of 10 million tonnes, adding nearly $230m to Australia's annual carbon tax bill.

An additional $230m adds an average $30 carbon tax impost per household annually, or 52c a week.  That may not appear to be much.  But considering the Treasury's overly optimistic fairytale carbon tax modelling concludes that the average Australian household will be ''over-compensated'' by $10.40 a year or 20c a week, a simple upward recalculation will wipe out any household overcompensation by the end of the year.

And this upward revision may not be the only one that occurs.

The 2007 IPCC report data is being revised for the 2013-14 Fifth Assessment Report, which could further increase each country's emissions profile and with it Australia's carbon tax bill.

It's technically possible that the government won't use the updated IPCC data because the Gillard government does not intend to ratify the extension of the Kyoto Protocol after the end of this year.

If so, the Prime Minister and Climate Change Minister Greg Combet would be following the position of the Howard government in rejecting Kyoto because it was not in Australia's national interest.

They'd be right.  It wasn't then and it isn't now.  But rejecting a legally binding international treaty to cut greenhouse gases directly contradicts posturing on Australia's leadership role in cutting emissions.

Irrespective, Australia will eventually sign up to these higher calculations in an international agreement increasing the cost for households.

And with every upward increase in Australia's emissions profile there's a reciprocal increase in Australia's carbon tax bill.

The Gillard government is already imposing the most expensive and broadly applied carbon tax in the world.

Once the upward revision of Australia's emissions profile is completed, Australia's carbon tax bill will still be the world's largest with an extra $230m on top.

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Abbott should focus on his second day as PM

On his first day of government, Tony Abbott will phone the president of Nauru to reintroduce the Pacific solution and will start repealing the carbon tax.

The obvious question is what he would do on his second day.

Not what he plans to do.  (If he runs the campaign anything like he did in 2010, the new prime minister will need a long sleep.)  But what he would do.  How would Abbott react to the unexpected?

The Labor Party and its supporters have been demanding the Coalition release a full suite of election policies immediately.  Their motives are transparent.  They are looking for something — anything — to tie a WorkChoices-style campaign to.  You can just see Hawker Britton itching feverishly to roll one out.  No surprise there.  Labor's friends are nostalgic for a time when their party wasn't despised.

But the art of governing is not simply implementing previously determined policies and then waiting until the next election.  George W Bush rightly described himself as The Decider.  When we vote, we are not voting for a dot-point list of new laws and taxes, but for a team we trust to make future decisions that we will have no chance to vote upon individually.

Labor should understand this.  The public's current disillusion is not solely because the government broke a promise, but because it turned out to be a very different beast to what was first offered.

Recall that Kevin Rudd's team promised in 2007 to be even more fiscally conservative than John Howard's team.  Rudd's attack on Howard-era economic management was ''this reckless spending must stop''.  Yet when the Global Financial Crisis struck, Rudd flipped, declared the end of neo-liberalism, and instituted one of the biggest stimulus packages in the developed world.

Julia Gillard suggested in 2010 she would slow Rudd's frenetic activity.  Among other things, she would shunt the carbon tax out of sight, out of mind to a citizens' assembly.  But her government has spiralled further out of control.

Voters can forgive a change in priorities.  They cannot forgive a change in character.

This is what Tony Abbott needs to be thinking about.

We've got a very good idea of what policies Abbott wants to implement.  He has spent the last two years in opposition doubling down on his 2010 election promises.  The Coalition will stop the boats, axe the tax — you know the rest.  But as for Abbott's philosophy, his image of Australia's future ... that's less clear.

If Abbott wants his government to be stable and successful — to avoid the trap which Rudd and Gillard fell into — he needs to spend the next year not talking about what he plans to do on his first day, but articulating what he thinks a good government looks like.  The opposition leader needs to give voters a vision of an Abbott government five years down the track, not one day in.  We need some hint of how the prospective prime minister will react to unforeseen events.

After John Howard's 2007 defeat, there was a belief in liberal and conservative circles that centre-right politics needed intellectual renewal.

A few dreary terms in opposition offered just that opportunity.  But events intervened.  Labor became disorganised and vulnerable.  Discussion about the future of liberalism was postponed indefinitely.

It's easy to proclaim the times suit a second coming of Margaret Thatcher or Ronald Reagan.  But the world those leaders faced is very different from ours.  Reagan and Thatcher had to dismantle the nationalised behemoths that had built up over the past half century, to close down the government industry cartels, and reintroduce competition into the biggest sectors of the economy.

Our modern world is the fruit of that labour.  Yet the great nationalised industries were not replaced with free markets but with a dense web of regulation and supervision.  Governments no longer run railways but instead prepare seven-step risk-assessment processes for street parties in accordance with joint Australian/New Zealand risk-management standards.  How a centre-right party navigates this new reality is something that requires serious thinking.

Abbott's book Battlelines seemed to suggest that he had done some of that thinking.  It wasn't a manifesto of small government libertarianism — quite the opposite — but it was, nonetheless, a sketch of what a modern, updated, yet distinctly conservative party might look like.

But Battlelines was written well before he became opposition leader.  In his current role, there has been little of the characteristic thought of his book.

Since the last election, Abbott has offered up a series of ''Headland'' speeches.  They have been disappointing.  He has just repeated his well-worn, itemised critique of Labor.  It's worth reading John Howard's original 1995 Headland speech again — it's about philosophy, not policy.  Howard talked about what he stood for, not what he was going to do.

Abbott's Headland speeches reveal little of what sort of prime minister he will be on his second day.  But there is still time for him to reveal that necessary vision of what a ''good government'' looks like.

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