Friday, October 28, 2016

South Australia's new home detention laws should not be about coddling criminals

Lindsay Bassani, a former Education Department bureaucrat and football coach, was sentenced to home detention after stealing almost $10,000 from the South Australian Aboriginal Sports Training Academy.  Despite being allowed to avoid prison, he is now complaining about his electronic tracking bracelet because of the stigma of being seen with it.

The fact that Mr Bassani is complaining is a good thing.  It means he feels like he is being punished, which is precisely the point of his sentence.

As reported in The Advertiser, Bassani is one of the first beneficiaries of sentencing changes introduced by the Weatherill Government in May.  These reforms gave judges more discretion in allowing certain nonviolent, low-risk offenders to serve their sentences in home detention, and they were introduced for very sound reasons.

The prison population in South Australia has grown by 75 percent in the last 10 years.  There is evidence to suggest that not all of this growth was necessary or desirable.

For example, the most serious offence of almost half of these prisoners was a nonviolent offence.  In many cases, locking them up is doing very little for community safety.  And it is known that prisons often fail to prevent criminals from reoffending.  Nationwide, 59 percent of prisoners have been imprisoned before.

South Australian taxpayers spend about $96,000 for each person in prison each year.  With prisons already at capacity, if this trend were to continue, taxpayers would soon need to pay for a new prison.

Instead of continuing to spend more and more money on locking up people who pose little threat to the community and for whom incarceration is unlikely to be rehabilitative, South Australia has rightly decided to try something different.

Bassani committed a nonviolent, relatively minor property crime, and has a stable job and home.  He is the sort of offender for whom laws like this are designed.

But even though this kind of reform has merit, policymakers and judges must not lose sight of the fundamental purpose of the criminal justice system:  the punishment of individuals who harm others or the community.

It is vital to the operation of the criminal justice system that criminals feel they are being punished for their actions.  And for victims, seeing a punishment imposed is essential to their sense of closure.

This means that offenders like Bassani should not be coddled.  Restrictions like not being able to consume alcohol, a curfew, and being confined to certain locations, are not only entirely reasonable but necessary to give weight to his punishment.  Incredibly, Bassani is suffering none of these hardships.  It is positive that he is employed but being allowed to travel to his workplace should be the limit of his mobility.  He shouldn't be playing footy, let alone worrying about how he looks on the field.

What this case illustrates is that the goal of punishment reform should not be to give criminals an easier time.  Instead, the goal must be to impose punishment more effectively, to reduce crime and recidivism, and more efficiently, to reduce government waste.

There is a common view in criminology that crime is a result of social dysfunction.  Rather than the traditional understanding of crime being a choice made by individuals, on this view crime is a pathology caused by social and economic disadvantage and so criminals are not really responsible for their actions.

In a perverse way, criminologists consider criminals to be victims.  And so they support reforms such as these because they do not believe in punishment at all.

This nonsense should not be allowed to discredit or discourage good faith attempts to rationalise criminal punishment consistent with a traditional emphasis on retribution.  The criminal justice system is not a tool with which to reengineer society or to redress social grievances.  It is the means by which our communities are kept safe and peaceful, and it achieves this end by ensuring that criminals suffer negative consequences for their wrongful acts.

It is possible to get the benefits of punishment reform — lower crime and recidivism, with less spending on prisons — without, in effect, letting criminals like Bassani off lightly.

But this requires policymakers and judges to insist on the need for criminals to experience their sentences as punishments.

Friday, October 21, 2016

Malcolm Turnbull must ignore the luvvies — he leads a centre-right party

Tony Abbott is right.  Australians are sick of the revolving door of prime ministers.  As Abbott said on Wednesday, there's not going to be a change in the Liberal leadership "any time soon".  Liberal MPs are still too bruised by last year's leadership contest and a close-run election to contemplate either going back to Abbott, or moving to the next generation of Liberal leaders like Christian Porter or Josh Frydenberg.

So at the moment, the federal Liberal Party is what it is and Malcolm Turnbull is its leader.  Given that many Australians would be hard-pressed to identify a single achievement of the PM's first year in office, other than breaking an election promise not to increase taxes on superannuation, the fact that according to the latest polling the Coalition is only four points behind Labor is no mean feat.

The question that Turnbull must deal with is the same one he confronted when he took the prime ministership.  What is he prime minister for?  And the question for his ministers is, "What sort of government do they want to be a part of?"

On the rare occasions when cabinet ministers have stood up to the parliamentary leadership group, it's been on the wrong things.  A substantial number were quite willing to play petty politics and prevent the nomination of Kevin Rudd for secretary-general of the United Nations.  Yet the Turnbull cabinet, just like the Abbott cabinet, consistently waves through higher taxes.  And meekly sits on its hands while university students and cartoonists are prosecuted by government officials for insulting and offending people.

The cabinet's refusal to confront the question of freedom of speech in Australia is made all the more galling by the knowledge that three of its members have previously spoken passionately and publicly about the issue.  In April last year, Julie Bishop went to the offices of Charlie Hebdo in Paris and delivered a moving speech about freedom of speech.


Strategy failure

According to many in the Canberra press gallery, the Labor Party and the Greens, Turnbull should move his party to the "centre", i.e. the Liberal Party should become more left-wing.  The problem with this analysis is twofold.

First, Turnbull tried the "Labor-lite" strategy and it didn't work.  All that Turnbull got for imposing higher taxes and refusing to cut government spending was a one-seat election victory.  The strategy is rarely successful, either at the state or federal level.  If the electorate wants a Labor government they'll vote for the real thing.  This is a point slowly dawning on the federal Liberals, but it's not something yet understood by every state Liberal leader.

Second, because most journalists, the ALP and the Greens have very little real knowledge of the Liberals, they all tend to forget one thing:  the Liberal Party, by it's culture and history, is a political party of the centre-right.  As much as Bill Shorten and Richard Di Natale might wish it otherwise, Malcolm Turnbull can't simply pledge his party to things like a free vote on same-sex marriage or the doubling of renewable energy targets.  Or to be more precise, Turnbull could try something like that, just as he did when he supported Kevin Rudd's emissions trading scheme in 2009.  And if he did he would come unstuck, exactly as he did seven years ago.

The alternative for Turnbull is to act as the centre-right leader of a centre-right political party pursuing centre-right policies.  Such a course has a number of benefits.  It would be good for Australia.  It would also help him win the next election.

The past month has proved such an approach could work.  The subjects of the political victories and the positive coverage the Coalition has enjoyed since the election are on exactly the things a centre-right government should be doing.  Eliminating trade union corruption, reforming the welfare system, and ensuring electricity is cheap and reliable (especially if you live in South Australia) are not favourite topics of Radio National, but they are important.

The best way forward for Turnbull's leadership is different from the path the Australian Broadcasting Commission would like him to take — but it provides him with the best chance of success.

Thursday, October 20, 2016

Je suis Bill Leak

The idea that a cartoonist should be answerable to a government body for making a political point is yet another low in the use of Section 18C of Australia's Racial Discrimination Act.  18C makes it unlawful to "offend, insult, humiliate or intimidate" on the basis of race or ethnicity.  It's under 18C that columnist Andrew Bolt has had two articles banned, and a group of Queensland University students is now facing court for questioning the decision to provide a separate computer lab for indigenous students.

Now Bill Leak, an Australian cartoonist, is in the firing line for a cartoon depicting the importance of parental responsibility in indigenous communities.  Leak is being investigated by Australia's so-called Human Rights Commission.  The cartoon in question depicts an indigenous police officer, presenting a child to his father.  He says:  "You'll have to sit down and talk to your son about personal responsibility."  The indigenous parent responds:  "Yeah righto, what's his name then?"  The notion that parents in indigenous communities must take more responsibility for their children is not particularly controversial — it's a point often made by indigenous leaders such as Noel Pearson and Warren Mundine.  Mundine, who is also a former national president in the Australian Labor Party, has defended Leak.  "If the allegations are that [Leak] has incited racial hatred, I don't support that at all," Mundine said.  "[The cartoon] has a black police officer and it's opening up a debate.  Cartoonists have always been in-your-face — and that's definitely in-your-face."

However, extraordinarily, the complaint against Leak was encouraged by the commission's race-discrimination commissioner, Tim Soutphommasane, which will most likely prejudice the commission's investigation.  A government entity has effectively told people to be offended and will accordingly be investigating.  Yes, Leak's cartoons are often offensive.  That's what a good cartoonist does.  They highlight topics of debate through confronting, hard-hitting and pointed imagery.  If you fall foul of their pen, it can be tough.  Leak recently portrayed same-sex-marriage activists as the "WAFFEN-SSM", made light of domestic-violence leave, and poked fun at fat, bald and transgender people to highlight the importance of freedom of speech.  And that's the key thing here:  the freedom of Leak and others to draw and say anything they like.

Leak's cartoons are not for the faint-hearted.  I often find them disagreeable.  But that's no reason to put Leak before a government tribunal.  Even if the case is eventually dismissed — by the commission itself, or later in court — it is still damaging to have gone through the process.  It is costly, and hurtful to the reputations of all involved.  The case also encourages people to stop talking about controversial issues, stifling freedom of expression.  The use of the law against someone you disagree with is always an authoritarian response.  The liberal, and far more powerful, response to encountering ideas you dislike is to use it as an opportunity to write — or draw — opposing ideas.

Australian politicians expressed sympathy when the controversial French magazine Charlie Hebdo was attacked.  However, "Je Suis Charlie" — the notion that while we may disagree with you, we will defend your right to freedom of speech — seems to have been forgotten.  Even Australian attorney-general George Brandis, who originally campaigned to repeal 18C, recently said repealing it is a "fool's errand".  It's a worrying sign that our leaders can't even be bothered to attempt to stand up for the fundamental value of freedom of speech.  However, there is growing cross-bench support, and backbench agitation, for repealing 18C.  Every government backbench senator has expressed support for amending 18C to remove the words "offend" and "insult".

The Leak case is sadly not unique.  A freedom-of-information request I submitted earlier this year found that there are 18 complaints currently under consideration under 18C.  The complaints we hear about in the news are just the tip of the iceberg.  And almost all of the complaints are investigated behind closed doors.  And, as happened in the case of the Queensland students, the investigations can go on for months (or years) without the accused even being told.  Leak's case is just another reason to repeal 18C.

Friday, October 14, 2016

Blue Poles:  sell this monument to madness

Jackson Pollock's Blue Poles must be sold.  Not because it's a bad painting or because it fails the Australian test, but because it of what has come to represent to the Left.

Last week, Senator James Paterson suggested that the painting, currently on loan to the Royal Academy of Arts in London, should be sold to the highest bidder in order to help with our national debt.

Given that the painting might fetch somewhere in the region of $350 million, its sale is unlikely to make much of dent in the country's growing $470 billion gross national debt.

Senator Paterson justified his idea by saying that although it was a "great painting", the nation could afford to lose it because it's not Australian enough.

While the canvas is no doubt "great" in terms of scale, Blue Poles is light years from away from being a great painting.  Rather, it is an anarchic assemblage of dribbles, splatters and droplets which leaves the gallery visitor wondering just what it's all about.

And if we were to apply the Senator's logic about the painting's foreign provenance to the entire collection of the National Gallery, then we would be left with very empty rooms indeed.

Blue Poles is the ultimate symbol of Gough Whitlam's progressive and politically modernist government, which the Left continues to praise and defend in equal measure.  What the canvas represents in reality is the financial, political and cultural ineptitude of the disastrous and irresponsible 2 years and 11 months of the Whitlam government.

The vast canvas has been gracing an equally vast wall of the National Gallery of Australia since 1973, when it was purchased for a whopping $1.3 million, which is about $11.5 million today.

James Mollison, the director's gallery at the time, had to apply for a special dispensation from Whitlam because he was only allowed to spend $1 million on any one piece.  Whitlam thus achieved the highly dubious world record of having bought the most expensive piece of contemporary American art work on sale anywhere at that time.

When it arrived in Australia, critics objected to both its appearance and its price.  The outrage and scandal caused by Whitlam's profligate decision was entirely justified.

Entitled either No. 11 or Number 11 (apparently naming the painting after an object such as "poles" was too distracting), the work was criticised as having been painted by "barefoot drunks".  This was not merely hyperbole but based on the story of its creation told by Pollock's close friend Tony Smith, who together with Pollock, proceeded to get drunk, unroll a canvas on the floor, empty tins of paint onto it, get even more drunk, lie on it, then walk around on it in bare feet.

Aesthetic value aside, it was the financial implication of the purchase made in the early 1970s which was as unforgivable then, as it is now.

The painting was acquired by the government during a period of "stagflation", in which the Oil Crisis, Britain's entry into the EEC and rising competition for Australian exports, combined with Labor's appalling economic policies, drove Australia into economic recession.

Australians were suffering from high unemployment on a scale unmatched since the Great Depression of the 1930s.  They lost their jobs, business and savings.  Inflation hit nearly twenty per cent, the highest since the post-war years.  It was by no means a happy or prosperous time for many, nor was it a time to be spending $1.3 million on second-rate American paintings.

The Labor government's coffers had become so depleted that there was simply not enough money to keep the country operating.  Facing defeat in the 1975 election, it attempted to unconstitutionally borrow $500,000 from Iranians connected to Saddam Hussein's regime to help pay for the campaign.

Blue Poles is a shambolic painting, purchased by a shambolic government.  It represents Whitlam's complete and utter failure as Prime Minister as well as the reckless spending of his government.  It is precisely because it has become the Left's monument to this failure, that it must go under the hammer as soon as possible.

Section 18C must go as it curbs freedom of speech

Freedom of speech is meaningless if all it entails is the liberty to express opinions approved by the state.  Freedom of speech is richer than that.

It's a fundamental human right — which is also vital to the proper operation of a functioning liberal democracy — that is breached whenever the state ­places restrictions upon it.

Section 18C is a law that gives individuals an avenue to punish others if they say things that may "offend, insult, humiliate or ­intimidate" a person on the basis of race.  As a clear example of a ­restriction on expression imposed by the state, it therefore breaches the principle of free speech.  Free speech advocates have sensibly called for the repeal of this law.

The debate has now reached a point where senators from a diverse range of parties — including the Coalition parties, Pauline Hanson's One Nation Party, the Liberal Democratic Party, Family First Party, and the Derryn Hinch Justice Party — have co-sponsored a bill that proposes a modest reform.

All that is proposed by the bill is the removal of the words which set the lowest bar created by section 18C — "offend" and "insult".

Some defenders of the status quo argue that section 18C does not breach free speech because "hate speech is not free speech".

This is the kind of vacuous statement you might hear while wandering around a modern university campus.  It's a peculiar argument because it is so incoherent.

Of course "hate speech" is not "free speech".  Free speech is a normative principle of liberal moral philosophy, and hate speech is a (relatively unhelpful) label for a certain category of speech.

For the sake of the argument, let's set aside pedantic arguments about syntax.  The argument defenders of section 18C are attempting to advance is that the principle of freedom of speech does not protect expressions that might be classified as "hate speech".

But the boundaries of what can reasonably be labelled hate speech are important.  Even leftists who favour restrictions on hate speech, such as law and philosophy professor Jeremy Waldron, recognise that it does not include conduct which merely offends or insults.

Waldron, in his 2012 book, The Harm in Hate Speech, wrote:  "Laws restricting hate speech aim to protect people's dignity against assault ... However, I do not believe that it should be the aim of these laws to prevent people from being offended.  Protecting people's feelings against offence is not an appropriate objective of the law."

In Australia, the list of supporters for change to section 18C is incredibly diverse.  Many on the political Left recognise that section 18C goes too far.  They include barrister Julian Burnside QC, journalists David Marr and Gay Alcorn, Professor Sarah Joseph and ABC chairman Jim Spigelman.

Another argument advanced by those against change is that section 18C does not breach free speech because there are a range of "defences" available to protect defendants against legal sanction.

Section 18D is the provision that outlines these defences.  They appear as a list of exemptions for conduct that might otherwise be found to breach section 18C.  These include artistic work, statements, reports or fair comment made in the public interest.  These exemptions appear, on their face, to be quite broad.  They're not.

In Bolt v Eatock, the Federal Court case against journalist Andrew Bolt, lawyers for the defendant argued that newspaper articles written in the course of public debate should fall under the fair comment exemption.

That argument was not accepted by Justice Mordecai Bromberg, because in his view Bolt had employed "mockery and inflammatory language", a "derisive tone", and "gratuitous asides".

According to Justice Bromberg, Bolt had "failed to honour the values asserted by the RDA".  It's the vibe, your honour.

Sections 18C and 18D have been on the books for 21 years.  In all that time, precisely how many examples can those who champion section 18D as a great protector of free speech point to?  Three.

The exemptions in section 18D have been applied in just three cases ever.  Over that time a total of 65 section 18C cases have been argued before the Federal Circuit Court and the Federal Court.

You can't pretend to believe in freedom of speech by defending section 18C because of the existence of section 18D, and be satisfied that it has "protected" speech in just three out of 65 cases that have come before the courts.

Section 18D doesn't restore the egregious breach of freedom of speech contained in section 18C when a judge is able to rule that exemptions don't apply because your tone is not acceptable.

The argument that state approved speech is the same as free speech is an authoritarian distortion of a bedrock human freedom.  Section 18D doesn't even protect free speech in practice.  Let's not hear of it again.

Union bully busting:  FU to the UFU

Voters in the ACT have a stark choice this weekend:  Jeremy Hanson and the Canberra Liberals, or four more years of a government notoriously beholden to trade unions (even by Labor standards).

Canberrans only have to look south to see what a union-dominated government looks like.

Victoria's situation is so dire that Metropolitan Fire Brigade chief Peter Rau resigned recently due to stress, attributed to bullying by the United Firefighters Union.  It is no wonder.

The reason for Rau's resignation came to light when Acting Emergency Services Minister Lisa Neville was caught out shamelessly spinning the sudden departure.  Rau, she wrongly said, was "gravely ill".

Rather, it is our fire services bodies that are "gravely ill", under siege from the United Firefighters Union.

Consider the symptoms.  The bullying of Rau and others.  Alleged threats by UFU boss Peter Marshall to put an axe through the head of a state government minister.  And the extraordinary attack on over 55,000 Country Fire Authority volunteers.

As spectacular and shocking as these symptoms are, the underlying disease is more complex and longstanding.

Australia's industrial relations regime — ushered in by the Rudd Government's Fair Work Act — has put unions in an unprecedented position of privilege and influence.  In a recently released report, I argued that one of the most insidious effects of Fair Work has been the creep of union influence beyond just pay and conditions via favourable enterprise bargaining agreements.

Through increasingly audacious negotiation with state governments, unions are building clauses into EBAs requiring that management "consult" with them on a wide range of operational matters, often completely unrelated to workers' pay and conditions.

These provisions not limited to fire services authorities.  The Ambulance Victoria EBA, for example, requires that management must consult with the relevant union in relation to any proposal to "restructure the workplace, introduce new technology or change existing work practices".  Management must also give "due consideration" to "alternative proposals".  Similar provisions exist in EBAs covering other emergency services bodies, like Victoria Police and the State Emergency Service.

Public sector EBAs also typically include time-consuming "dispute resolution" clauses, which can be invoked where management and the relevant union cannot reach "consensus" on proposed changes.

Evidence given to the Fair Work Commission by the MFB show that consultation has been required on matters as trivial as the migration of the MFB's operating system to Windows 7 and proposed changes to the model of pencils to be used by firefighters.

Unsurprisingly, management are throwing up their hands in frustration.  Prior to his resignation, Rau indicated that the UFU's "power of veto over my statutory responsibilities is unworkable and undermines community safety".

Similarly, Joe Buffone, then-CFA chief, indicated that consultation provisions "undermine my statutory authority as Chief Officer to have and maintain control, at all times, of resources."

The Turnbull Government's changes to the Fair Work Act this week are a positive step.  In effect, they would quarantine decisions about the deployment of volunteers from union veto powers.

But while protecting volunteers is important, the government must go further in limiting the matters that can be governed by EBAs.

Enterprise bargaining should be a mechanism to set pay and conditions, but it has become a proxy tool for joint union-management operational decision-making.  Until this changes, our emergency services bodies will continue to be hamstrung, and we the public will be "gravely ill" for it.

Wednesday, October 12, 2016

After Brexit, Anglo-Oz relations can flourish

Australia's cultural, social and political history is entwined with Britain's.  We share a language, the Westminster democratic system, the common law and a respect for diversity, individualism and freedom.

Australia's modern incarnation was defined by British colonisation.  As former Australian prime minister Tony Abbott put it last week, during a discussion of Anglo-Australian trade relations at the UK Conservative Party conference, "Once, you exported people to Australia, of course ... chosen by the finest British judges".  Today, Australia and the UK continue to have particularly strong ties in intelligence and international relations, but the UK's decision to join the European Economic Community in 1973 put a strain on our close friendship.

In the 1950s, the UK government assured the Australian government that it would do nothing to diminish trade relations.  Consequently, Australia was genuinely shocked and affronted by the UK's application to join the EEC in 1961.  French president Charles de Gaulle vetoed Britain's entry in 1963, and again in 1967.  In order to join the EEC, Britain was compelled to sever economic ties with the Commonwealth, imposing extensive trade restrictions on Australian exports.  This has had a profound cultural and economic effect on Australia.  As former Australian prime minister Paul Keating put it during the 1990s, the UK had "walked out on us and joined the common market".  This secondary status is writ large at British airports, where, despite sharing a queen with Brits, Australians are shuffled into the slow lane while Europeans are given priority.  (Just a few weeks ago, I waited for 50 minutes in one such line.)

This is why Australia is excited about Brexit.  It is an extraordinary opportunity to right a historic wrong, and rebuild our relations, both economic and cultural.

Many pessimists have pointed out that Australia's trade with the UK is very small — minimising the importance of any trade deals.  Indeed, Britain is only Australia's 8th largest export market.  However, this focus ignores the reason why Australia-UK trade has declined — Australia's lack of access to the common market.  Australian businesses cannot compete on an equal footing with European businesses.

Take one industry:  butter.  Older Britons might remember that until the mid-1970s Australian butter was a significant presence on UK supermarket shelves.  But after Britain joined the EEC, Australian butter exports dropped by more than 90 per cent.  Or take the case of apples:  exports declined from 86,000 tonnes in 1975 to 27,000 tonnes in 1990.  Similarly, before the UK's membership of the EEC, about a third of Australia's sugar exports went to the UK.  This market virtually disappeared overnight.

Australia began negotiating a free-trade agreement with the European Union in 2015.  Sadly, however, talks have stalled due to Italy's protest about Australia's anti-dumping duties on Italian canned tomatoes.  As a consequence of a completely irrelevant delay, Australia and Britain are missing out on the mutual benefits of freer trade.

Our passion to rebuild historic relations with the UK, playing off our complimentary economies, is the reason why we are the first country in line to sign a deal with the UK.  We're pretty good at trade agreements, too, having completed negotiations with China, Japan and Korea in the past few years.

There has also been substantial decline in the number of Australians issued visas by the Home Office in recent years.  This is not because young Aussies are uninterested in coming to the UK, but rather due to new visa regulations and migration caps.  UK foreign secretary Boris Johnson has previously supported a "free-mobility labour zone" between Australia, Canada, New Zealand and Britain.  UK home secretary Amber Rudd has since poured cold water on the idea of increasing the number of Australian migrants.  But, with negotiations yet to begin, there's no reason to dismiss the possibility of it happening.

The consequences of these trade and migration restrictions are bad for both Britain and Australia.  Nevertheless, Australia has flourished since the 1970s, largely thanks to our open economy.  According to the International Monetary Fund, we have the 16th highest per capita income in the world (the UK sits at 25), and, according to the World Health Organisation, the fourth highest life expectancy (the UK sits at 20).  We are proud of our achievements and are ready to re-establish a strong independent relationship with the UK, one that would be beneficial to both our nations.

Saturday, October 08, 2016

Diary

I arrive at Melbourne airport for my midnight flight with an unfortunately timed cold.  My lack of sleep after Canberra's ultimate insider event, the Midwinter Ball, is catching up on me at the worst possible time.  There's nothing quite like a night celebrating with journalists, in Parliament House, to wear down one's stamina.

On the long flight over to London I have the opportunity to read Arthur Brooks' masterful Conservative Heart.  Brooks contrasts Europe's lost mojo to aspirational developing countries.  In India people are agile and innovative — moving to shanty towns desperately looking for opportunities to create a better world for themselves and their children.  In Europe, the energy is lacking.  The best days are behind them.  They have accepted their slow slide to mediocrity.

I have a few weeks before I begin studying.  After less than 24 hours in the United Kingdom (just enough time to get my residency card) I board the next budget airline flight across the channel to Spain.  Spain hasn't had a government for nine months — stuck in caretaker mode after elections last December and June failed to produce a conclusive result.

Yet, miraculously, life goes on unencumbered.  The beautiful beaches, the bars and clubs that stay open all night — nobody tell our Puritan premiers Mike Baird or Anastasia Palaszchuk that people are having fun at 2am in the morning!  The tapas is as free flowing as the sangria (which literally comes from taps in some bars).  What a time to be alive!  The hostels are full of young Aussies, seeing the world before being thrust back into the reality of study and work.  We are an intrepid people.

The darker elements, however, are not far below the surface.  Spain was governed by a fascist dictator until 1975.  The signs of the Spanish Civil War, where dictator Francisco Franco ruthlessly took power, are still visible in gun and shrapnel damage to beautiful historic buildings.  Meanwhile, due to failed economic policies, over half the country's young languish unemployed — freed from material need by a welfare state and yet lacking a sense of purpose and hope for the future.

Following a visit to Bilbao and the beautiful resort town of San Sebastian, I arrive in Barcelona on their Catalonia region national day.  There are tens of thousands of people across the city protesting for Catalonian independence.  Spain's most successful region is sick of subsidising the rest of the country with high taxes — sound familiar? — but the central government won't accede to the people's wishes and allow a referendum.  I wonder if an independent Catalonia would join the European Union.  In Madrid my local tour guide — attempting to be funny — repeatedly points out that Spain was "a great empire ... once upon a time" but now "we're a bankrupt country".  The "joke" doesn't get many laughs.

After a quick visit to Portugal, another economically struggling former empire, the jaunt is up.  I'm back on the plane to London.  I'm doing it the wrong way round — Ausexiting, Brentering.  On my train into London from the airport a loud American tourist asks a local what Brexit means.  "Freedom" the Brit swiftly responds, before admitting he didn't actually vote.  "We've had to follow all their laws, now we can do our own thing," he explains.  The comment reminds me of a poll shared a few days earlier on Twitter by the great Dan Hannan which found the number one reason people voted for Brexit was "The principle that decisions about the UK should be taken in the UK."

The London School of Economics' welcome lecture proves an intriguing affair.  The Equity, Diversity and Inclusion speaker, after discussing various services available to students, begins discussing freedom of speech.  She says it is "not absolute" — limited by public order law, terrorism law and the equality act, however that "simply causing offence is not enough to limit freedom of speech, after all a university is about exploring controversial ideas".  It sounds almost perfunctory, however it is unimaginable that an Australian university would make a similar comment to students during their first week.

The head of the student union was next.  She was careful to comfort European students with the comment that "We didn't vote for Brexit".  As a Commonwealth student I already feel discriminated against.  Brexit is on everyone's lips, and yet nobody knows exactly what it will mean in practice.  The civil service, fearful of a potential leak, apparently did no preparation work before the vote.  And now everyone has their own vision.

I attend an event with Syed Kamall, the Leader of the Conservatives in the European Parliament and a Brexiter himself, who says that the UK will not remain part of the common trading and regulation market, or keep current migration targets.  However that doesn't mean the end of trade, or migration.  Meanwhile, Theresa May is being hounded for not outlining specifics, or triggering Article 50 (the leave clause).  The European Union is also in disarray, infighting about who should lead the negotiations, between the Parliament, the Commission and the Council, and lack any offical position.  Well, with all this drama, there's never been a more exciting time to be an Australian in London.

Red tape hampers resources recovery for miners

The future prosperity of resource-rich states such as Western Australia is threatened by unnecessary regulatory roadblocks.

Capitalising on a possible market recovery, and unleashing the potential benefits of a second mining boom, can only begin by cutting the layers of red tape sitting between miners and the resources they seek to extract.

Australia's has a red tape problem.  My recent research, based on the World Bank's "regulatory quality index" and a methodology developed in the US, found that red tape costs $176 billion in foregone economic output every single year.  That's the equivalent of 11 per cent of GDP.

That new estimate is more than double the Abbott government's 2014 estimate of $65 billion for two reasons.  First, my methodology takes into account not just commonwealth law, but the body of state and local government law too.

And second, rather than asking government departments to estimate the burden of the red tape they impose, my top-down approach incorporates some of the unseen burdens of red tape:  fewer jobs, fewer new businesses, and lower productivity.

It is this second point that is most poignant for the resource industry, and therefore for states such as WA.

The cost of red tape isn't just the inconvenience of government approval and filling out additional forms.  The real cost of overbearing government regulation is how it fundamentally changes the structure of our economy — distorting decisions and resources away from their most productive uses.

The resources industry in particular is subject to a byzantine array of by licenses, permits and approvals, that slow or prevent major projects, cost jobs and ultimately undermine Australia's prosperity.

Earlier this year, for instance, recall that plans for Yeelirrie, one of Australia's largest uranium mines in Western Australia, were halted by the Environmental Protection Authority because of a threat to 11 species of tiny "stygofauna", or "desert prawns".

According to the Productivity Commission, the costs of delaying an average sized project by just one year is in the order of $26 million to $59 million.

The Roy Hill project in the Pilbara required over 4,000 permits, licenses and approvals, including 1,057 environmental regulatory approvals, in the pre-construction phase alone.

With this unsustainable level of regulatory resistance it's no wonder money funnelled into exploration is in precipitous decline.

Over the past four years, according to the Australian Bureau of Statistics, the money spent on minerals exploration in WA (excluding petroleum) has plummeted from $574 million to $220 million.

The trend for petroleum looks even worse:  dropping from $955.4 million in December 2012 to $223.6 million in June this year.  That's a fall of over 70 per cent.

Exploration is critical to the long-term future of Australia.

It is of course the case that some of this trend can be attributed to cyclical economic forces outside our control, from commodity prices and changing global currents.

But it is equally clear that the government has a role in encouraging investment, and in particular competing for investment.

To reinvigorate our resources industry, and thereby the West Australian economy more broadly, governments at all levels must begin to wind back roadblocks on business.

Only by doing this can we propel economic growth, get more people into jobs, and pull ourselves back up the international competitiveness rankings.

We should be optimistic about the future of the mining in this country.  A Newport Consulting report in June showed that 43 per cent of miners surveyed were optimistic about the year ahead.  But 24 per cent of miners in that survey also said red tape was an issue, especially for project approvals.

To be sure, the West Australian government last year reinvigorated efforts to streamline project approvals.  But more needs to be done.  If Western Australia is serious about a second leg of the mining boom then the role of the government is to create a regulatory environment conducive to exploration and investment.

Cutting red tape is a real economic plan with tangible economic dividends — and ones that the public can understand.  Cutting red tape promises to help unleash a second wave of prosperity from the West.

Friday, October 07, 2016

High cost of the warm and fuzzies

The bank boss parliamentary inquisition ordered by Malcolm Turnbull has served one useful purpose.  It has got bankers doing something they don't do enough of talking about banking.

If bank CEOs spent more time talking about their actual job and less time pontificating about things such as climate change, Indigenous recognition and diversity, maybe the banks wouldn't be in the position they're in.  Talking about climate change is easy and popular.  Talking about banking is hard.

In large part, the bank bosses have only themselves to blame for the fact that politicians and the public have precious little understanding of how banks operate.

Both Labor and Liberal treasurers have had trouble comprehending that the Reserve Bank does not and should not determine home mortgage interest rates.

Many parliamentarians complain about the lack of competition between the big four banks.  What they don't appreciate is that the more regulations Parliament imposes on banks, the more the supposed monopoly of the larger banks is entrenched.  Big businesses can afford to pay the costs of regulation — their smaller disruptive competitors can't.  Which is why the banks will be not too bothered by the extra regulation that will inevitably emerge from these parliamentary hearings.

The irony of Labor MPs telling bank executives how to do their job is rich.  It was the Labor Party that gave the country the pink batts disaster, the Building the Education Revolution (BER) scandal and the NBN boondoggle.  An earlier version of the Labor Party understood that the government had no rule in owning or operating a bank Banks might be unpopular, but the chances are that more people would choose for their home loan to be provided by a private bank than by a government department.  And it's almost understandable that Coalition MPs won't defend the banks when the banks won't defend themselves.

There was a time not so long ago when a speech from a bank CEO was more likely to be a critique of capitalism rather than an enunciation of the benefits of free markets.

To be fair, the views of bank CEOs are not very different from those of their peers in other industries.

It's almost impossible to imagine the CEO of an ASX100 company arguing in favour of free speech.  Or Brexit.  Or heaven forbid, that Donald Trump would not be a much worse US president than Hillary Clinton.

On the rare occasion when a CEO does step out of line with the consensus of the political class, the reaction is ferocious.  In 2013, the then Myer chief executive Bernie Brookes made the now "infamous", but entirely true, statement that if taxes went up shoppers would have less money to spend in his stores.  The particular tax he was referring to was an increase in the Medicare surcharge to contribute to the costs of the National Disability Insurance Scheme.  A government bureaucrat, the disability commissioner of the Human Rights Commission, launched a public petition against Myer.  Three years ago, Brookes and Myer got no support from the rest of the business community, in the same way the bank bosses are now being left to fend for themselves.

Beyond the issue of what's happening to the banks is a bigger story about the place and perception of business and enterprise in Australia.  A plausible argument could be made for the claim that the influence in the public debate of the business community, and especially of big business, is as weak now as it has been at any time in recent decades.  This is a phenomenon that is not good for the country's future prosperity.  As the voice of the sector that generates wealth grows weaker, the voice of government, and the voice of the handmaiden of government the public sector unions gets louder and stronger.

Successive bank bosses have used their corporate pulpit to promulgate a soft-left progressive ideology that allowed them to explain away the fact that they lent money at a profit.  The anti-bank sentiment that now exists in the Labor, Liberal, and National parties is a direct consequence of bank CEOs spending years apologising for themselves.

The current crop of bank bosses must now clean up the mess their predecessors left behind.

Wednesday, October 05, 2016

Strip Greens of pointless funding

After years of litigation, environmental activists have been dealt a terrible intellectual and legal blow by the Queensland Supreme Court:  Australian coal mines don't hurt the environment.

Last Wednesday the Queensland Supreme Court rejected a frivolous legal challenge mounted by green group Coast and Country concerning a coal mine near Alpha, in central Queensland.  The green group argued that the burning of coal in export destinations such as India would create carbon emissions, and these emissions needed to be considered by the State Government when granting approvals.

But, in its rejection, the Court noted that stopping the mine would not have made any difference to global carbon emissions:  "Power stations would burn the same amount of thermal coal and produce the same amount of greenhouse gases whether or not the proposed Alpha Mine proceeded."

This is a significant judgment.  It says blocking coal mines in Australia will not benefit the global environment because we are in a globally competitive market place.  If a power station in India does not obtain coal from Australia, it will buy coal from somewhere else.

It also lays bare the motivation behind these legal challenges.  For years green groups have fished for a ruling that says Australian mines are responsible for carbon emission overseas.  This would establish a legal precedent that would destroy the coal industry, which is precisely their aim.

But, just as competition means stopping coal in Australia won't help the environment, it also means business investment is highly sensitive to domestic cost pressures.  Legal challenges that cause delays are a key source of concern for big miners.

As The Sunday Mail (Oct 2) found, more than $34 billion of projects are being targeted by ecoactivists, which could jeopardise employment for 27,000 Queenslanders.

This comes at a time when the same number of people are in full-time work now as they were in 2011 and state debt is forecast to reach $75 billion in 2016-17.

Green groups do not have the solutions.  After the court's decision, Coast and Country's Derec Davies said "it's up to the Queensland Government and the labour force that are traditionally working in mines to look to transition to some sustainable future jobs".  Where are these "sustainable future jobs"?  Davies does not say.  Meanwhile thousands of actual jobs are being squandered.  The Alpha mine is expected to create 5650 jobs.

The State and Federal governments should adopt a pro-Australian energy and jobs policy.  This will involve stripping green legal groups of funding;  abolishing or amending laws that give green groups special legal privileges;  cutting project approval red tape;  and getting the Federal Government out of approvals altogether.  Now that it is clear stopping coal in Australia will not help the environment, why allow green groups to continue with the pretence that it does?