Carbon tax an ever-increasing tariff

This is an edited extract of my speech given to the Liberal Party’s Modest Members group on Wednesday 12th October.

Last Monday, Trade Minister Craig Emerson argued that the introduction of a carbon tax ''points to Gillard Labor governing in the Hawke-Keating tradition''.

The Hawke-Keating ''vibe'' that Emerson argues the Gillard government is channelling is that policy changes presently being introduced, including the carbon tax, will provide foundations for a more flexible, dynamic and competitive economy.  But the economic benefit of trade liberalisation and floating the dollar cannot be compared with the introduction of a carbon tax.

At its heart, the past three decades of positive economic reform led by the Hawke-Keating and Howard governments removed barriers and distortions in the economy that misallocated economic resources and stopped Australia pursuing its comparative advantage.

Or, in layman’s terms, producing things that we can most competitively to reduce costs to households and be internationally competitive.

Importantly, those reforms scrapped the false foundations that tariff and non-tariff trade barriers created for protected industries.

This stands in stark contrast to the carbon tax and its successor emissions trading scheme, which brings back these false foundations back.

A carbon tax is designed to tax out of competitiveness otherwise viable businesses within Australia’s comparative advantage, and tax into competitiveness those that are not.

It’s precisely why government Treasury modelling assumes so many foreign permits will be traded into Australia’s scheme.

Our lack of capacity to cut emissions is not a result of absent enthusiasm.  It’s not something we are competitive at because our emissions profile is dominated by burning coal for electricity, and the tax price needed to successfully tax it out of competitiveness is absurdly high if we want to keep the lights on.

If the rest of the world had emissions trading Australia would be one of the last developed countries on earth you would try to cost effectively cut emissions because it would always be cheaper to do it elsewhere.

A carbon tax operates as an ever-increasing internal tariff.

A carbon tax acts as false foundations to give lower-carbon industries an artificial boost, which will escalate over time as the tax rate goes up and permits are removed from an ETS, increasing the price of emissions permits.

Trade barriers, such as tariffs, act in the same fashion as a carbon tax, by taxing out of viability imports that compete with otherwise uncompetitive domestic production.

Non-tariff barriers ranging from abused quarantine standards, rules of origin certification requirements and compulsory labelling standards to prompt consumer boycotts have the same effect as tariffs, through a less transparent economic profile.

And the havoc trade barriers caused in distorting the unsustainable allocation of economic resources in the Australian economy from World War II until the start of reforms in the 1970s will be repeated.

The only scenario where an internal carbon tariff won’t cause economic harm is if every other major competitor country takes on equivalent self-flagellation.

But that clearly isn’t happening.  Such proposals aren’t even being discussed in the US.

A recent commissioned review panel report recommended that New Zealand engage in liberalisation of its planned phase-in of its scheme.

Only Europe has made equivalent steps in the same direction as Australia, with the massive allocation of free permits — though Europe’s emissions reduction has occurred from reduced economic activity from the global financial crisis, exporting industries and jobs offshore to countries without equivalent carbon prices and the purchase of permits from developing countries through international emissions trading.

But the latter isn’t looking like a viable ongoing option, with the World Bank recently reporting that the international carbon market is in recession as the world waits for the elusive successor agreement to the Kyoto Protocol to be negotiated.

That’s why Japan and South Korea, understandably, are holding off introducing any scheme that acts as an internal carbon tariff.

The only commonality between the Hawke-Keating reforms and Gillard’s carbon tax is that through the lifetimes of the government the rates imposed will change.

But unlike Emerson’s 1980s employers who gradually phased down the rate of false foundations and misdirection of capital in the economy, the Gillard government is set only to increase them into perpetuity.

Freedom of Speech in Australia

In most public libraries you can get to read the most controversial things ... and no one bats an eyelid.  In fact you don't even have to visit a library to access the most evil of tracts, such as Mein Kampf or the Protocols of the Elders of Zion -- just jump on to Google and you'll be able to download the entire texts.

You can wander into many bookshops to get some weirdo ideas from the Moonies, to the Mormons, or the early novels of L. Ron Hubbard.  Or listen to preachers of hate like the Reverend Fred Nile who tells us that homosexuals will burn a billion years in hell.

Or take in the words of Danny Nalliah of the Catch the Fire Ministries and his ravings and ranting about Muslims and Atheists.

So you can say a lot of things in our democracy, and you can watch a lot of things -- violence, pornography, cattle being clumsily slaughtered, and you can read ... Well almost anything.

Increasingly it seem the ''well almost anything'' may involve two names -- ''Andrew'' and ''Bolt''.

Now as you might suspect I actually disagree with many, if not most, things Andrew Bolt says ... and writes.

But I am concerned that people in some of the circles I mix, on my side of politics, increasingly seem to think that they should write, or invoke, or resurrect, laws that will shut Andrew Bolt up.

A democracy is -- at the very least -- a free marketplace of ideas, and a free marketplace of arguments against those ideas.  But it is never, never, a stifling or a suffocation of ideas.

Ideas will out, they cannot be contained.  They are our better, or our worse, angels -- and they will be heard.  Now I do vehemently disagree with what Andrew says, and often says, about certain people being insufficiently black.

There really is a silly idea here, of how black or white applicants should be for certain prizes and scholarships.

Andrew grabs an idea and often follows his logic to wherever it may lead him -- God help those who stand in his way!

Now while I really can't accept some of this stuff I will -- unsurprisingly -- defend to the death his right to run a hot-headed, half-cocked argument ... where he says he is now putting into his cross-hairs all sorts of political, academic and media grandees.

It is the Voltaire in me that says I don't like what you're saying -- or about to say -- but sure as hell I reckon you have the right, in our democracy, to run that argument.

Sometimes I hear about Andrew Bolt's latest outrageous challenge to orthodoxy, and groan, and wonder if he truly believes the words he has written.  Or whether he merely loves the controversy and the headlines it creates.

But despite all the bombs he regularly throws over the parapet at some of my mates in Canberra I have to own up to liking Andrew Bolt.  I have done media battle with him plenty of times and I know that there is a real decency there, which I would be proud to attest to in any court.

So I am sorry to see him now dragged through the courts for possibly breaching -- if he did -- a law that, probably, should not be there;  stretching out its fingers into the realm of what Orwell might have called a Thought Crime;  because he impertinently asked the wrong questions, when all the right answers have been handed down from above -- in tablets of stone -- long ago.

This is not a cast of mine that I applaud.

It smacks of the 16th century when Tyndale was strangled to death while tied at a stake and then his body burned, all for translating the Bible into English.

Or the 17th century when Galileo was put in danger of the same fate for saying the Earth moved around The Sun.

And the 20th century when books were burned in the public square for being not quite the way a dictator preferred a book to be.

In each case a Thought Crime is said to have been Committed, it comes from an elite, keen to assert its casting vote on what was reality, and who should decide what ideas were allowed, and in what circumstances they can be promoted.

So we need to be very, very careful when we define vilification and what, by contrast, dissent is or what can or cannot be accepted as a contrarian view.

I sometimes feel we are getting a bit too vigilant over words and ideas when many really vile deeds go unpunished.

I suspect I will always disagree with Andrew.  On most things.

I will always fear his persuasive powers as an advocate of ideas that I will never agree with;  But I will always be ready to meet him in vigorous debate over things that shape our country's future.

And I will always defend his democratic right, as a member of a free society, to say what he will, to exercise that privilege of dissent which has defined, since Federation, the Australia we all belong to, and all, with varying shades of caveat, believe in, and remain proud of, a free Australia.

Our freedom of speech should remain unmitigated by this new quavering cowardice that some would impose.

I thank you.

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Distinguished guests, one and all.  President Ronald Reagan once said of the American Conservative William F Buckley Jr., that ''Bill Buckley is perhaps the most influential journalist and intellectual in our era.  He changed our country, indeed, our century.''  Buckley of course founded the National Review in 1955 and then served as its editor in chief for 35 years.

In Andrew's case, he is just a few years into a critically influential role in the Australian media.  Andrew Bolt recovered from an early career set-back when he worked for the Hawke Labor Government.  Imagine how bad it would have been Andrew if your CV had read, ''previously worked for the Rudd Labor Government'', to establish himself as someone with an unparalleled position of influence within the Australian media.

I must say that I am as I am sure we all are deeply inspired by Andrew Bolt's courage and his passion, his purpose and his honour.  A man with an authentic intellect, a fine uncluttered mind, a man of relentless energy, a proud Australian with much to be proud about.  It was Hemmingway who described guts as being ''grace under pressure.''  Andrew Bolt has guts.  It was Andrew Bolt who exposed Lowitja O'Donoghue's fraudulent claims to be a member of the Stolen Generation and it was Andrew Bolt who exposed kooky Tim Flannery's mad claims about the Australian environment, particularly our dams and our rivers.  It was Andrew Bolt who challenged Robert Manne to name just 10 members of the Stolen Generation, something Manne has still been unable to achieve.

The Greens, Lowitja, Tim Flannery, Robert Manne and others appear rather paranoid about Andrew Bolt, but as Henry Kissinger once said, ''even paranoid's do have enemies.''  We should remember that Andrew is a man with an outstanding understanding of how the modern media works, which is critical to his influence in Australia today.

From 1926, Robert Menzies made his first political speech at the Prahran Town Hall as a member of the group fighting Stanley Bruce's attempts to centralise more arbitration powers in Canberra at the expense of the states.  After his speech Menzies asked his uncle who had attended the rally what he thought of the address.  Sidney Sampson, who was Menzies uncle, said ''My dear boy, as an argument to the High Court of Australia it was admirable, but as an address to the electors, it was hopeless.  The art of political advocacy is the art of judicious and varied repetition, until you learn to repeat yourself with skill, you will never make a politician.''  Andrew Bolt has an understanding of the power of repetition that few other possess.  He understands the power of reminding us all, on a regular basis of the failing of the policy positions of Manne, Flannery, O'Donoghue, Gillard, Rudd, the Greens and dozens of others.  It is a simple, but devastating tactic which has been used by the left for generations, but by the right with scarcity.

In Andrew's writing you also see elements of a belief in Maslow's theory of Human Motivation.  In 1943, Maslow said, ''It is quite true that man lives by bread alone, where there is no bread, but what happens to a man's desires when there is plenty of bread and his belly is chronically filled?''  As we move up Maslow's pyramid and satisfy our psychological needs, our need for safety and security, of love, of belonging, of self-respect and then social status we reach the top of his pyramid.  What happens then according to Maslow is that man expects to find a new discontent and restlessness.  This explains the drug-like addiction, therefore, of the upper-middle classes to issues like global warming, calls for Western nations to wipe out third-world debt, demanding that orderly refugee programs be subverted and ultimately demanding that we live in a society where people are not entitled to be offended, insulted or humiliated, that is to say, a place where freedom is strangled and corrupted by the parliament.

The Sydney Writers' Festival is a perfect example of why forums of thought and ideas, free speech must roam in a democracy.  Where else could there be a place where John Howard, four times elected by the Australian people as its Prime Minister, was booed and jeered by the same crowd that gave a standing ovation to convicted terrorism supporter, David Hicks.  I've often wondered who attends Sydney Writers' Festivals, but thanks to Paul Keating we now know -- sandal wearing, muesli chewing, bike riding pedestrians.

In a free society Larissa Brent should be allowed to tweet that watching bestiality on television was less offensive than watching Bess Price, a prominent Aboriginal leader who has done so much to campaign against violence against Aboriginal women and children.  People like Guy Rundle should be allowed, as he did in 2007, to demand that The Australian newspaper dismiss some of its conservative commentators on the basis that they are out of step with the thinking of the newly elected Rudd government.  To his shame the ABC's John Faine also joined this chorus.

In 2007, Robert Manne said, ''Twenty years ago Australia didn't have journalists like this in the mainstream press.''  He was referring to writers such as Ackerman, Albrechtsen, Bohme, Blair, Bolt, Devine, Duffy, Henderson, McCran, McGuinnes, Pearson, Roskam, Sheehan, Tom Switzer and others.  Robert Manne in 2007 was lamenting the end of the left's long running summer party of marijuana and cask wine, where they didn't have to put up and tolerate alternative opinions, god forbid.

In a speech to the Republican National Convention in New Orleans in 1989, whilst accepting the Republican nomination for the US presidency, George Bush Senior said that he was often criticised for being a quiet person.  In reply, Bush said it allowed him to hear the quiet people that others didn't.  In so many ways Andrew Bolt speaks for those that have no voice.  He speaks for the quiet people who think, but that also work.

Let us hope that Andrew Bolt continues his campaigns on so many issues of interest to ordinary Australians, so that in the decades ahead we can look back and say of his glorious career, that he changed Australia and changed the way Australians viewed their country.  Thank you.

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Thank you John, it's a great honour to be speaking here this evening.  I regard Andrew Bolt as one of the very greatest journalists that Australia has produced for many, many years and I have no doubt that he is going to go down in Australian history as one of our greatest journalists.  I want to particularly draw attention tonight to one of the strongest advocates of the ideas which everyone on this platform is going to dissent from tonight.

On the 9th of April, only a few weeks ago, an article appeared in The Australian newspaper in defence of the legislation, which has brought Andrew Bolt before the Federal Court.  The article was written by none other than the Honourable Michael Lavarch, the person who was attorney general in 1995, had had the racial vilification clauses inserted into the Racial Vilification Act.  Mr Lavarch tells us that after sixteen years of the Act, and I quote his words, ''it is entirely clear that the law does not stifle free speech,'' these are his words, and it's important that we try to understand his frame of mind.

The political correctness on the Labor side of politics tries to stifle free speech and is intolerant of different views.  But here we have a Labor Party attorney general defending the law as being entirely compatible with free speech.  My own conclusion is the opposite, in my view it is entirely clear that the law does stifle free speech and it does so because it prohibits people from saying thing they ought to be able to say in perfect freedom without the authority of the state being triggered or aroused in this was.  Freedom of speech has clearly been breached when a person may be hauled before a tribunal of public servants or a court because of things that have been said or written in the media and when orders may be issued which prevent them from repeating these things or continuing with their publication and even requiring them to apologise for what they've said.

In the short time I have tonight I propose to look at Mr Lavarch's defence or his legislation and to argue that he has advanced no sound argument to justify it, but in fact that his case is foolish and even dangerous.  Now Mr Lavarch starts out by reminding us that freedom of speech isn't absolute and in that of course he is correct.  The law, as it stands, apart from his Act does not permit perfect freedom to say anything, to say something which causes a riot, or which libels or defames a person, or which is misleading or deceptive in a commercial sense is not permitted and I don't think anyone on this platform would disagree with that.

The Lavarch Act however, is clearly an attempt to extend the prohibitions of the law, to new kinds of speech and the real policy question is whether this is done with good reason.  The Act prescribes unlawful acts which are, quoting the law ''unreasonably unlikely in all the circumstances to offend, insult, humiliate, or intimidate another person or group of people.''  The Act also initiates a new process for dealing with prohibited statements involving tribunals, staffed by public servants as well as courts and the question arises whether this process is an acceptable substitute for freedom of speech.  What can possibly be the justification for such a law?  Mr Lavarch says the following and his words bear close attention he says, ''The value of the law is to require those engaged in contentious debates to reflect on the accuracy of their arguments and the supporting facts before they are used.''  Apparently in Mr Lavarch's view of the world, the well-established processes of public discussion and debate and the sanctions of public opinion what we have hitherto known as freedom of speech is no longer good enough to test contentious views in contentious debates.

Such debates really need to be tested before tribunals of public servants so that parties can be persuaded to reflect on their arguments and their facts.  To enable a person who claims to be insulted by what someone else has said to enlist the full panoply of state power against one who has offended them is truly grotesque and it is this grotesqueness that places me on this platform tonight.  It is a principle which could not be generally applied without bringing the while system of justice to a halt.  To suggest that we need public servants or courts to invite us to reflect on what we say and even to recant and apologise is a reversion to the techniques of the medieval church with all the threat that that implies.  To a person used to freedom it's hard to imagine a process more insulting and demeaning, and to claim that it is in the public interest can be mounted in defence as Michael Lavarch does is to ignore the obvious fact that the intimidatory process to which a person can still be subject before such a determination is made cannot be but chilling to the whole process of free speech.

In his famous essay on liberty, John Stewart Mill, the strongest opponent of political correctness in his day considered the argument put by some at the time that, and I quote Mill, ''the free expression of all opinions should be permitted on condition that the manner be temperate and do not pass the bounds of fair discussion.''  Now that's the view Mill's criticising.  Mill pointed out the impossibility of fixing where the supposed bounds are to be placed and then he said in words that apply exactly to the present legislation, ''If the test be offence to those whose opinions are attacked, I think experience testifies that this offence is given whenever an attack is telling and powerful and that every opponent who pushes them hard and whom they find difficult to answer appears to them if he shows any strong feeling on the subject to be intemperate.''  To make the test is to undermine, to offence the test is to undermine the very freedom which exposes error.

Despite all this, however, Mr Lavarch is confident that free speech has not been damaged by his law because he says, and I quote his words, ''No shock jock has been taken off the air or newspaper columnist closed down.''  Think of those words, does that mean, does Mr Lavarch mean that free speech remains untouched and untrammelled so long as no radio host or newspaper columnist has been prevented from speaking or writing at all?  Closed down, to use his phrase.  If this is his standard for the survival of free speech, many more obnoxious laws I'm sure could be legislated that would still leave the former attorney general fully satisfied.

Mr Lavarch also informs us that allegations under his act have been dealt with in secret, he says confidentially, by the Human Rights Commission with, quote, ''Scores of determinations made initially by the Commission and now by Federal magistrates.''  Since it all happens behind closed doors, how can Mr Lavarch, or we, know what the effect of the thousands of instances and scores of determinations have been?  The law of secrecy replaces the law of free speech.

If the actions of state are justified in such cases, however, why does it not then apply to offensive, insulting or humiliating remarks that are religious in nature?  Or relate to a person's class, or gender, or political views or even to their opinions on industrial relations.  The federal law depends on the nation that there is something special about a racial insult, but is there?  Why is a special law needed for racial insults?  Mr Lavarch in his April article gives us his answer and this is all he has to say about it, ''history tells us'', he says, ''that overblown rhetoric on race fosters damaging racial stereotyping and this in turn can contribute to societal harm well beyond any deeply felt personal offence.''  Let us substitute the word class for race in the statement, or the word religious, or the word gender, or the word national or even the word politics or political, or, as I said before, even the words industrial relations.  Mr Lavarch's statement is true for each;  overblown rhetoric on any of these topics can create stereotypes, can cause offence and if made the basis for action, may lead on to damaging consequences.

It wasn't racial hatred, but class hatred that set the guillotine going in the French Revolution.  Scores of millions were starved and slaughtered in Stalin's attack on the wealthy peasants, or in Mao's collectivisation and in his vicious cultural revolution or the genocide perpetrated by the Khmer Rouge in Cambodia, but in democracies we have long known that it is not words that produce such horrors, it is the failure to expose prejudice, control violence and ultimately, the absence of democracy that leads to these catastrophes.  Violence and incitement of violence are proper domains of the law, but this is not what this law is about.  Because history tells us that overblown rhetoric in countries which are not democracies can precede damage to individuals, do we need a tribunal to control our overblown rhetoric?

Australia is a nation, I would have said, with a well established reputation amongst the democracies for both its overblown rhetoric and its peaceful society.  Perhaps the two even go together, but not if Mr Lavarch's law is allowed to prevail.  I am conscious of a distant echo, a historical echo in this debate.  It is the voice of Robert Menzies opposing Chifley's nationalisation of the private banks.  Chifley claimed his measure was needed, in an argument worthy of Michael Lavarch on the basis that, quote, ''Since the influence of money is so great, the entire monetary and banking system should be controlled by public authorities responsible through the government and parliament.''  Menzies ridiculed this argument as absurd by asking the leader to substitute primary production, transport and even opinion instead of money.  Menzies said, ''There we have the entire totalitarian concept, totalitarians in Europe preceded by exactly the same logic they said, 'Here is something which has great influence on the community life, therefore the government must control it' and they went step by step so that in the long run, the government controlled everything.''

Mr Lavarch and his ilk tell us that what people say is potentially too dangerous to be left to the uncertain processes of freedom of speech and the sanctions of public opinion.  ''What is needed,'' he says, ''is a government tribunal to counsel and warn and secure retractions,'' like the medieval church.  If his view is accepted then liberal democracy becomes a historical interlude between the ruling classes that preceded it and the bureaucracies and tribunals that Mr Lavarch would apparently, like to see replace it.

The numbers here tonight are a clear message, but there are many Australians will not accept that Australia is on the road to such serfdom.  The processes of this law I find obscene in the full meaning of the word:  offensive, loathsome, ill-omened, disgusting.  That is why we are here tonight, the law which has made this event possible, must be abolished without delay.

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The gist of my remarks were that the fight for free speech and the liberty to speak up on public issues -- issues not excluding who we want to receive affirmative action or group rights-type benefits that attach only to a special few in society -- is a fight that will never go away.  As former US president Andrew Jackson put it, ''eternal vigilance is the price of liberty''.

And those who attended were not just supporting Bolt but freedom of speech and of liberty more generally.  Because let me blunt.  In my view this Racial Discrimination Act, the part amended by the Racial Vilification Act that gives us section 18C and in some circumstances makes hurting someone else's feelings, is awful.

Think about it.  Someone's subjective sense of being offended or humiliated has been made determinative of whether an unlawful act has been committed, subject to a few exemptions in section 18D.

That's a terrible statutory provision.  It ought to be repealed.  Now.  Yes, a judge may, perhaps, find the exemptions apply.  Yes, there is some wiggle room.  But even forcing someone to have to litigate constitutes a massive chilling effect on free speech.  Let's face it.  Not everyone has Bolt's cojones (and I know that may not have been the most felicitous way of putting the point).  And not everyone has the resources of a big employer to back this sort of egregious litigation.  These provisions create a sort of half-baked right not to be offended, a big mistake in my view.

So the fault lies with the legislature for passing these statutory provisions, not with the judges who have to interpret them.  This is politically correct, pandering, group rights-inspired legislation.

The only sort of free speech that matters is the sort that offends some people somewhere.  In a situation where all is agreement and harmony and people sitting in circles, holding hands, and singing Kumbaya, the concept of liberty and free speech does nothing.  You will never have to fight for it meaning a freedom only to act or speak within the bounds of agreed opinion, good taste and proper decorum just isn't valuable.  It doesn't carry with it any obvious good consequences.

The threat to our freedom of speech in the West today does not come from some Soviet-style secret police.  No, it comes from turf-protecting bureaucrats who find themselves all of a sudden in the human rights game;  it comes from people who want to create a right not to be offended.

Or at least not to be offended about the things that matter to them, because almost all the sorts of people who like the legislation being deployed against Bolt would be horrified to think that those in the US who are offended by the burning of the American flag ought to be able to prosecute the burners for their offended sensibilities.  So what they really want is a right not to be offended, as long as it's the sort of things a good chardonnay-sipping member of the progressive elite ought to be offended about, nothing else.

But plain and simple that's a mistake.  The only kind of free speech worth anything is the kind that leads to speech that offends people.  And I say that knowing full well that none of us can be absolutists and there will always have to be some limits on speech, against counselling murder, say, or detailing how to make biological weapons.

But we ought to want as much scope as possible for people in a democracy to speak their minds.  And precluding people from having and expressing an opinion on the problems with self-identifying as an indigenous person, or on who ought to be able to benefit from positive discrimination laws, well that's ridiculously inhibiting of free speech in my view.

I think that in any well-functioning democracy it is incumbent on all citizens to grow a thick skin.  If you're offended, tell us why the speaker is wrong.  Tell us why he or she is misguided or has defective moral antennae.  Don't go to court and seek a court-ordered apology, or orders prohibiting publication of views you find offensive, or some two-bit judicial declaration.

And as a legislator under no circumstances pass statutes that allow for the creation of this mutant, half-baked right not to be offended.  The very fact that people can be dragged through the courts -- whatever the ultimate outcome -- has a massive chilling effect on free speech.  I know it.  You know it.  And our legislators ought to know it too, and do something about repealing this terrible piece of legislation.

At the end of the day those of us who want a considerable amount of scope for people to speak their minds are the optimists.  We're the ones who are in the tradition of John Stuart Mill.

Recall the main ground that Mill gave for preferring very few limits indeed on what people can say.  It was a consequentialist ground or justification.  Leave people almost always free to speak as they like and in the ensuing battle of ideas truth will out, or in less hopeful terms, it is more likely to emerge than if people are silenced and issues are resolved by self-styled human rights experts or government appointees.

So for the benefit of getting at truth and true assertions we override hurt feelings, we ignore offended sensibilities, we discount the possibility of outright lies being spread, and we choose not to have our legislation accord with the world view of grievance industry mongers.  Short of obvious, concrete, unavoidable harm to others, we let speech alone.

And underlying that rationale for lots of scope to speak our minds is a clear optimism about truth emerging in the tussle of ideas and ultimately an optimism about the views of the ordinary voter in a democracy.

In my opinion too many of the people who push these speech-limiting laws have simply lost faith in the views and beliefs of their fellow citizens.  They have even lost a bit of faith in democracy itself.

Theirs is not the optimistic position.  Ours is.

We are the citizens of one of the world's oldest and greatest democracies;  we are not a collection of victims too offended to muster up the resources to reply on our own behalf when we disagree with others.

It is a badge of honour to live in a society that protects differences of opinion, including ones with which we vehemently disagree.

Address to the Revolt Against the Carbon Tax

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

I therefore leave you with this message.

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

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

Has Australian Democracy Become Too Conservative?

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

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

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

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

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

That's where I stand.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

But conservatism is a discrete and coherent philosophy.

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

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

Let's call it a disposition.

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

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

Here's why.

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

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

Conservatives have no use for grand principles.

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

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

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

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

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

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

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

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

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

Government planners focus on this sort of knowledge.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The moral value of free markets

Speech from the launch of Richard Morgan's
Lessons From The Global Financial Crisis:
The Relevance of Adam Smith on Morality and Free Markets
at "Morgans at 401", 401 Collins Street Melbourne

We are here today to launch Richard Morgan's book, a book that applies 18th century wisdom to current circumstances.

One of the great virtues of knowledge of past ideas, is that it forces present thinkers to work harder.  Not always an agreeable prospect.  Hence the push to define the past as a realm of Stygian moral and intellectual darkness that our present knowing moral splendour has utterly superseded.  Thus is current fashionable opinion both elevated and protected.

Yet much that has been paraded in recent decades as allegedly cutting edge thought is little more than ideas from as long ago as the 5th century BC re-packaged.  Indeterminacy of meaning, for example -- which the post-modernists make so much of -- was a hot topic for Socrates and the boys.  While the politics of Plato's Republic -- with its Platonic Guardians, and their necessary supporting Platonic myths -- seems to get endlessly recycled.  Judges and international bureaucrats -- some of them scientific -- are notable current offerings as Platonic Guardians:  with supporting Platonic myths from which dissent is, apparently, not to be permitted in polite society.

Against this recycling of the 5th century BC, it would be quite an advance if we could get rather more academics and other intellectuals to advance to the standard of some good 18th century thinking.

Consider the famous passage by Voltaire in his Letters on the English, first published in 1734.

Take a view of the Royal Exchange in London, a place more venerable than many courts of justice, where the representatives of all nations meet for the benefit of mankind.  There the Jew, the Mahometan, and the Christian transact together, as though they all professed the same religion, and give the name of infidel to none but bankrupts.  There thee Presbyterian confides in the Anabaptist, and the Churchman depends on the Quaker's word.  At the breaking up of this pacific and free assembly, some withdraw to the synagogue, and others to take a glass.  This man goes and is baptized in a great tub, in the name of the Father, Son, and Holy Ghost:  that man has his son's foreskin cut off, whilst a set of Hebrew words (quite unintelligible to him) are mumbled over his child.  Others retire to their churches, and there wait for the inspiration of heaven with their hats on, and all are satisfied.

Let us consider for a moment how much turgid academic ranting on the allegedly intimate connection between capitalism and bigotry is rendered otiose by this simple observation of what commerce actually means.  Commerce does not care for the colour of your skin, your religion, your sex, your sexuality, your ethnicity:  what it cares about is the colour of your money.  And the worth of your word.

It is politics, with its conjunction of coercion and category -- often coercion-by-category -- that makes the colour of your skin, your religion, your sex, your sexuality, your ethnicity important, even fatally important.  Commerce wants your money and so must, perforce, attend to what you want.  Commerce-as-commerce is not interested in any of the vile wars waged by believers -- both secular and religious -- against human nature as it is in the name of human nature as it is supposed to be.  Commerce just wants your money.  Preferably again and again.  "It is better for me if you are happy with what I do" is practical commerce.

For requiring their consent is a great encourager of good behaviour towards others.  As Adam Smith observed:

The real and effectual discipline which is exercised over a workman is that of his customers.  It is the fear of losing their employment which restrains his frauds and corrects his negligence.

Down the ages, there has been much railing against commerce as undermining the moral order, how amoral the "vulgar merchants" are.  Yet -- when one bothers to look at the historical record -- it is the commercial societies that have, again and again, pioneered social advances.  The Serene Republic of Venice with equality before the law and sophisticated capital markets;  the Dutch Republic being the first society to abolish the spectre of famine;  England pioneering state action to assist the poor.  No nations have been so morally tender about just about everything as are modern liberal capitalist societies.

The marginal in society are frequently rather better treated by commerce than by politics.  A Fortune 500 company is much more likely to acknowledge same-sex relationships than a US State is.  The former cares about getting and keeping good staff, and reaching customers.  While political and religious entrepreneurs often seek to sell effortless virtue:  to sell a sense of unearned self-satisfaction from simply being different to some other group -- whites feeling terribly virtuous for not being black, gentiles feeling terribly virtuous for not being Jewish, straights for not being gay, those born and raised Protestant for not being Catholic, or vice versa.  And so on.

If one is selling effortless virtue based on denigration of others, then one is selling bigotry.  Something politics, and religion, are sadly rife with.  Commerce, not so much.  One attends in a different way to those you want to do business with, as Voltaire famously observed.

Long before people talked of the "pink dollar", there was the Jewish ducat.  While women could scale the heights of commerce when they were still formally barred from even the foothills of politics.  The first African-American woman to become a millionaire was not Oprah Winfrey, but Madame C.J. Walker, who became a millionaire by 1910:  and if you were a millionaire in 1910, you were really a millionaire.  She achieved this by selling hair-care products, employing many African-American women in the process, quite deliberately so:  no doubt a grave offence against the Equal Opportunity Act -- don't tell Rob Hulls.

When one looks at the denunciations of vulgar merchants and "immoral" commerce, again and again one sees the real complaint is that they attend to what people want, not what the critic thinks people ought to want.  That they attend to what people are like, not what people allegedly ought to be like.

To any supporter of a static social order, the restless energy of commerce is a threat.  And what social order is more static than one that seeks equality of outcome?  The societies that have most raged against commerce have also created some of the most appalling horrors in history, struggling mightily and brutally against what people want.

Indeed, if one wants to establish any bigoted social order, one of the first things one has to do is to restrain commerce.  As Thomas Sowell points out, part of the impetus for the Jim Crow laws in the American South was to ensure that a white person buying a first class train ticket did not find themselves sitting next to a black person.  For, left to themselves, the railroad companies only cared if you could pay.

The apartheid regime in South Africa restricted commerce in all sorts of ways, as it had to in order to make race matter so much.  Hence, when Helen Suzman was the only Opposition member of the South African Parliament, she represented the Cape Town equivalent of Kooyong.  The commanding heights of South African commerce was where white opposition to apartheid was electorally strongest.

One of the great disasters of indigenous policy in our country was the law restricting consensual commercial relations between Aboriginal stockmen and pastoralists, by imposing full-time employment as the only acceptable form of contract.  This, as was predicted at the time, devastated outback Aboriginal employment.  Arrangements that had evolved to suit the people involved in them were abolished by coercive action by central authority because people, not involved in those interactions, had a theory.  A theory that did not have pay any attention to what people on the ground actually wanted, and so what would actually work.  A theory that classed itself as profoundly moral while it proceeded to stop people attending to what each other wanted.

Adam Smith had something to say about such "Men of System", who attended to their own theories of government and not to people and circumstances.  Such a person

... does not consider that in the great chess-board of human society, every single piece has a principle of its own, altogether different from that which the legislature might choose to impress upon it.

In Richard Trudgen's Why Warriors Lie Down and Die -- a necessary book to understand the serial disasters of indigenous policy in this country -- there is a particularly appalling passage about "benevolent" government bureaucrats being frustrated when the locals continued to use their canoes to fish rather than the shiny new trawler the taxpayers had bought for them.  But the locals knew about canoes and operated them within family and clan groups.  The trawler involved new skills and its operation would upset agreed alliances and arrangements among those families and clans.  But the bureaucrats knew nought of such matters, so they deliberately burnt the canoes to force the locals to use the trawler.

Needless to say, this wanton vandalism had no such effect.  Indigenous Australians have suffered mightily from the coercive benevolence of the state.

For attending to what other people want is not a simple matter of selfishness versus benevolence.  As C.S. Lewis noted:

"... those who torment us for our own good will torment us without end, for they do so with the approval of their consciences."

As will those who torment others in the name of the general good.  The truly terrible thing about a Nazi gauleiter or Soviet commissar was not that they lacked a conscience, but precisely that they had them:  consciences that burned to "purify" society.  Attending to others is a great restraint on oppression of all kinds:  both those motivated by moral claims, and those not.

For great harms are often created when capitalist acts between consenting adults are banned.  The high minimum wages, and grave difficulties in sacking people, of French law do much to explain the social disasters of the banlieu, the French housing estates.  The harder it is to sever a working relationship, the riskier it becomes to begin it.  The more productive someone has to be to make starting a working relationship worthwhile, the less such relationships will be engaged in.  Instead, people retreat to ways of reducing the risk:  they insist on more certification;  they use networks so people they know can, in effect, vouch for any new person;  they minimise risks in communication by hiring people most like themself, and so on.  Consequently, if you are a young Muslim male from those French housing estates, your chances of getting a job are greatly reduced.  Living lives of idle resentment, burning a few cars provides cathartic excitement.

Thus does state-imposed "morality" divide society by stopping commerce from bringing people together.  Social disaster created by a whole set of "moral" theories that stop people attending, one-on-one, to what other people want.

Yet Voltaire, over two and a half centuries ago, could see what encourages people to live together amiably and productively and what divides them.  We really could do with a great deal more such eighteenth century wisdom:  a sentiment that can turn up in all sorts of places.  When he was General Secretary of the Communist Party of the People's Republic, Hu Yaobang was reported to have observed that it was the ideas of Montesquieu, rather than "outdated" ones of Marx, that China needed.

There is much to be said for the brute realism of commerce.  The ivory towers of academe generate more than their fair share of nonsense.  Adam Smith famously described certain universities as having:

... chosen to remain, for a long time, the sanctuaries in which exploded systems and obsolete prejudices found shelter and protection after they had been hunted out of every other corner of the world.

But academics can peddle ideas whose consequences they do not have to deal with.  Consider the fairly appalling state of modern pedagogical theory.  Academics come up with pedagogical theories to be imbued in educators of teachers, who then teach student teachers, who then go and teach students, the ones who actually bear the consequences of those ideas.  Few milieus in our society are more isolated from the consequences of their ideas than the peddlers of pedagogical theory and few groups produce so much arrant nonsense -- and often grandly big-noting nonsense at that.

Not, I suggest, a coincidence.  There are all sorts of good features to commerce's attention to what other people want:  to having to deal, often on a daily basis, with the consequences of what you do.

It is a grave mistake to think that politics has any inherent tendency to better behaviour than commercial life.  In his recent book on the Irish housing boom and bust, Irish journalist Fintan O'Toole refers to:

... certain landowners [who] had accumulated large landbanks at the outskirts of urban areas which they then released in dribs and drabs in order to manipulate the market and artificially to maintain high land prices.

In Australia we have a name for such people.  We call them "State Governments".  If Australians were as free to buy and sell land as Texans -- a State that has a bigger population than Australia, faster population growth, higher average income and a bigger proportion of its population in its five largest cities -- our houses would cost half to a third (or even less) their current prices.  Instead, a country with one of the world's lowest population densities has the most expensive metropolitan housing in the Anglosphere.  A true regulatory achievement.

As Adam Smith observed:

The statesman, who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would no-where be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.

In the light of recent tragic events, we might consider the way regulations controlling removal of trees and bushes retarded people's ability to manage the fire risk of their properties.  We might further consider the failures in management of public lands -- notably the failure to reduce fire loads along roads, and in government lands generally.

We might consider the failure to invest in dams to match the increase in Victoria's population.  The last being a particularly egregious failure to live up to Adam Smith's third duty of government:

... the duty of erecting and maintaining certain public works and certain public institutions which it can never be for the interest of any individual, or small number of individuals, to erect and maintain, because the profit could never repay the expense to any individual or small number of individuals, though it may frequently do much more than repay it to a great society.

But "global warming" provides useful cover for the failure to match new water infrastructure to the increase in Victoria's population.  A 30% increase in Victoria's population without a significant new dam is so obviously the fault of the climate -- one of those useful Platonic myths I referred to earlier.

The failures of regulation, and of government management, are so numerous, that to presume that they have some strong demand on our support -- rather than requiring very careful justification -- is a triumph of faith over experience.

By contrast, the economic benefits of free commerce are well attested, something Richard Morgan provides an excellent short survey of in his book.  But it is a great mistake to think that those economic benefits are somehow separate, or even opposed, to the moral benefits of free commerce.

Not a mistake that Adam Smith himself was at all inclined to make.  As Richard Morgan reminds us, Smith was a moral philosopher who produced The Theory of the Moral Sentiments years before he published The Wealth of Nations.  To start with a short discussion of elements of The Theory of the Moral Sentiments, as Richard Morgan does, is entirely appropriate.  The right way to frame the practical and moral advantages of free commerce, illuminated by the observations and wisdom of Adam Smith.  Wisdom that, as Richard Morgan sets out, is entirely relevant to our own time.

The case for freedom of commerce is very much a moral case.  I commend Richard Morgan's short, and highly readable, book to you as an excellent primer to the continuing relevance of Adam Smith's 18th century wisdom.  Perhaps more of our academics -- and even a few of our politicians -- might catch up to the 18th century, so we can better cope with the challenges of the 21st century.  Especially as Richard Morgan has kindly made it so easy for them to do so.

Thank you

Gambling in a Free Society

Presentation to the RSL & Services Clubs National Conference
27 July, 2009

Gambling is a pastime that has brought pleasure to free citizens through most of recorded history.

I say to free citizens because it is a striking fact, and certainly no coincidence, that authoritarian governments of both Left and Right are quick to ban gambling.  The latest example of this phenomenon is Putin's Russia where, in an example of ever increasing authoritarianism, sweeping new restrictions on the gaming industry came into effect on 1 July forcing casinos and poker machines halls across Russia to close.

Fortunately, in a democracy like Australia such comprehensive restrictions are unlikely, but punters and industry alike need to remain vigilant to protect their rights; rights which are constantly being assailed by a range of critics proposing ever greater restrictions on gamblers.

Now, increasing restrictions on the right to gamble are not new in Australia.  The late 19th century and early 20th century was an era which saw increasing regulation of a range of activities including shop trading hours, the serving of alcohol and gambling.

In relation to alcohol, the temperance movement's influence climaxed in the First World War, with the imposition of 6 o'clock closing, the introduction of local preference provisions and bans on the employment of barmaids.  Amusingly, many barmaids were re-employed during the Second World War, prompting some wags to suggest that stopping them working was essential to defeating the Kaiser, and encouraging them to work was essential to defeating Hitler.

With gambling, the same era saw ever more strenuous efforts by governments to close down any off-track betting on horseracing, whether by SP bookmakers or, most famously, with John Wren's tote.  Wren's most recent biographer, James Griffen, highlights just how much hypocrisy was involved in the pursuit of Wren's gambling operations.  Politicians, and other guardians of community welfare, claimed it as their duty to save working class gamblers from themselves, yet there was never any similar push to stop similarly "illegal" gambling in city clubs.  It should also be noted that Wren's tote was operated in an honest manner, and gave a better return to punters than its rivals.

Fortunately, the period from the 1950s to the 1990s saw a progressive liberalisation of many areas of Australia's economy and society.  In regards to gambling, there were reforms such as the introduction of legal off-course wagering through TABs and legalising poker machines, beginning in NSW in 1956.

It is no coincidence that the most prominent individual opponents of poker machines nationally today come from the states such as Victoria and South Australia, which did not introduce pokies until the 1990s and also have strong non-conformist traditions.

These days even the non-conformist religious ministers tend not to use religion directly in their argument against pokies, instead relying on more humanist grounds.  However, it is an intriguing question as to why anti-gambling activists tend to single out the pokies.  It cannot be because of rates of return to punters, because punters get more back from pokies than they do from wagering and vastly more than they do from buying lottery tickets.  Perhaps, like the woman who in the 1980s wrote to The Age opposing a proposal to sell Tattslotto tickets in TABs on the grounds that she did not believe Tatslotto should be associated with gambling, some types of gambling are more socially acceptable than others.

One is inclined to suggest that there is a strong class element here.  The chattering classes look down on pokies players and patronisingly feel that pokies players must be dupes for even wanting to gamble in this way.  Combine this with a media always keen to run bad news stories and one has a difficult scenario for anyone trying to defend either the gaming industry or its customers.

Just last week, the latest figures for gaming turnover in Victoria were reported with screaming headlines about gaming "losses".  It is important to consider this use of language.  If I spend money on a lousy meal, a disappointing film, or in going to watch my football team lose, nobody says I have "lost" the money, yet if I choose gambling as my form of entertainment it is said that I have "lost", rather than "spent" the money.

Opponents of increased diversity of gambling options tend to argue, as one critic did, that "those of us who have the good of the nation at heart feel there are sufficient facilities for gambling already."  It sounds like a quote from an anti-gambling activist today, but is in fact from Rev Gordon Powell in 1948.  He was opposing an increase in the number of trots meetings in Melbourne.

The argument that there are already enough venues for gambling is a bit akin to those who do not drink coffee thinking that there are already enough coffee shops in many trendy inner urban shopping streets.  The difference is that non-coffee drinkers rarely have the same patronising and superior mindset as elements of the non-gamblers.

Of course, much of the anti-pokies rhetoric places a large proportion of the blame on state governments, which are allegedly so beholden to taxation on gambling.  This line of argument formed part of the Howard Government attack on the states and Prime Minister, Kevin Rudd has also criticised state Labor governments for relying too heavily on the revenue.

Considering that gambling taxes make up a bit over 3 per cent of state revenue for gambling as a whole, or 2 per cent for gaming machines, it is hardly undue reliance, when compared to property and payroll taxes.  Of course, an easy way to reduce their "reliance" would be by the states cutting the rates of gambling taxes, but I am not sure if this obvious way of reducing "reliance" is what the gambling critics have in mind.  Ensuring punters get back a higher percentage of their turnover would seem a laudable aim, especially as gambling taxes tend to be regressive, but not apparently to the anti-gambling zealots.

This view that state governments have some sort of vested interest in promoting gambling has contributed to the trend of all levels of government feeling the urge to play a role in gambling policy.

At the federal level, the most obvious manifestation of this is the Productivity Commission's Gambling Inquiry.  The Commission's 1999 report has provided the basis for many of the subsequent debates and arguments about gambling in this country.  At last count, the Commission's current Inquiry had received 252 submissions and it is pleasing to see so many sensible ones.  Anyone wanting to see some of the key arguments should look at the submissions from RSL & Services Clubs, Clubs Australia and myself.  It is also good to see so many submissions from individual clubs, highlighting what they contribute to their local communities, both in economic and social terms.

Key elements of the debate will no doubt continue to relate to the prevalence of problem gamblers and the percentage of gambling "losses" which come from problem gamblers.  All reputable studies are showing a downward trend in the prevalence of problem gambling and hopefully the Productivity Commission will recognise this and put an end to some of the more exaggerated claims of the anti-gambling lobby.

Even if we accept, for the time being, the 1999 figure on the prevalence of problem gambling, it still means that 98 per cent of those who gamble in Australia are not problem gamblers.  It seems unfair to impose unnecessarily onerous restrictions on such an overwhelming majority to protect the minority, especially if there is minimal evidence that the restrictions will actually help the problem gamblers.

One current such proposal, banning ATMs in gambling facilities, would cause significant inconvenience to users, not just of gaming facilities, but of all other food and entertainment within venues.  As so many in the industry have pointed out, is it really a good idea to send patrons out of the secure location of a club or hotel, down to an ATM at a bank in a deserted main street?

It is also important to continually rebut some of the more exaggerated claims of the opponents of gambling.  One of their most commonly cited claims relates to the impact on families.  Interestingly, a 2006 Relationships Australia survey placed gambling 22nd of 24 possible factors "negatively influencing relationship with partner", with a score of just 3 per cent.  Six times as many people had relationship problems due to disputes over housework and three times as many complained about the "influence of in laws".  So while pokie critics stress about poker machine spin rates, perhaps they could do more good if they worried about in-law visitation rates.

As well as the Commonwealth involvement, local government has also begun interfering with gambling.  In some jurisdictions state governments have given local government the power to object to new developments which include poker machines, but rather than using this power with discretion, some councillors in municipalities such as Logan in SE Queensland are trying to ban new pokies all together.

Not to be outdone, the mayor of Moreland Council, in the northern suburbs of Melbourne, recently proposed doubling the rates paid by gaming venues in his municipality.  Singling out pokies leaves many other businesses paying rates at the standard level in Moreland, businesses such as brothels, tattoo parlours, tobacconists and pawn shops, all of whom at least some citizens might consider to be as socially damaging as the local pokies venue.

As the President of the Waverley RSL in Victoria so eloquently commented in his club's newsletter last year:

It is unfortunate that many in the community (particularly in local government) do not have an understanding of the crucial role that RSL sub-branches play in the service of volunteer hours and support to the aged and needy within their communities.

Another unfortunate aspect of the debate about gaming being focused solely on issues of problem gambling is that it has crowded out debate about very important topics, such as the new industry structure in Victoria from 2012, the impact that internet-based gambling will have on all traditional forms of gambling, and the preferential treatment of casinos.

Nobody denies that there is a risk attached to gambling, and that gambling addiction has caused significant problems for individuals and families.  The gaming industry, with clubs at the forefront, has implemented significant measures over the past decade to reduce the risk of harm.

As with almost any other human activity, gambling will always carry a risk but, in a healthy democratic society, the assessment of risk is something that is best left to adult individuals, rather than the state.  Ultimately, the right of individuals to spend their own money as they choose, including on gambling, is fundamental to a free, open society.

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Managing Personal Behaviour, Risk and Responsibility

RESPONSIBILITY AND PUBLIC POLICY

With the emergence of behavioural economics, popularly known as "nudge" theory, fundamental questions about how consumers behave, and what, if anything, governments should do about it, have come to the fore of public policy debate.

Nudge theory -- pioneered by the likes of Economics Nobel Prize winner Daniel Kahneman, Richard Thaler and Barack Obama's new regulatory commission appointee Cass Sunstein -- draw on the tools of behavioural psychology and neuroscience to explain human economic behaviour.

Using experimental and other investigative methods, they have found that people tend to use simple rules of thumb when making decisions, sometimes leading to systemic errors of judgment.  For example:

• People tend to follow the herd, emulating consumptive decisions of those around them.
• Our choices are often made in the context in which they are presented to us.
• Some people are averse to changing their economic behaviour, and thus prefer the status quo.
• People tend to value a loss much more than an equivalent gain.
• We tend to underestimate the significance of future events.

These findings are in contrast to the neoclassical view of a rational economic man, an autonomous individual who routinely makes optimal self-interested economic decisions.

Nudge theorists are showing that consumers sometimes behave in ways that do not conform to conventional standards of economic behaviour.  Ironically, because of this nonconformity, it is typically recommended that the state be called in to nudge individual behaviour in directions more befitting of the neoclassical standard.

That said, nudgers claim to be nuanced about what kind of nudging is permissible.  A number of scholars in this field consider that "it is both possible and legitimate for ... public institutions to affect behaviour while also respecting freedom of choice."

In this context, nudge theorists would like to steer the paternalised person in a given direction, but always leaving open the option for the individual to choose another course.

The policies derived from such principles have been given the rather peculiar label of "libertarian paternalism".  For example, nudge proponents have favourably cited moves by the American states of Michigan and Missouri to introduce legislation for individuals to voluntarily place themselves on casino gambling blacklists.  Governments can then enforce these bans by prosecuting violators and confiscating their winnings.

In the food industry, some nudge theorists suggest a revamp of the taxation system to tax energy-dense, unhealthy foods at a higher rate and label them with a red circle, akin to a stop signal traffic light.  Healthy foods would either be not taxed, or taxed at lower rates, with a green circle affixed to their packaging.

Julian Le Grand, a former senior policy advisor to Tony Blair, in 2007 suggested that various restrictions on alcohol trading would be consistent with libertarian paternalism.  For example, supermarkets should be required by government to have a separate checkout for alcohol, forcing beer and spirits shoppers to endure the inconvenience of having to queue twice.

Of course, in Australia, bottle shops are typically either located away from a supermarket, or in a separate corner of a supermarket with its own check-out queues.  While these arrangements had been put in place ostensibly to shield alcohol away from minors, nudgers now see the need to put obstacles in the way to protect adults from their own selves.

Whereas these ideas have been cited in the nudge literature overseas, there are obvious signs that similar ideas are infiltrating the Australian policy discourse:

• The national preventative health taskforce discussion and technical papers are replete with nudge language.
• Various states have included in new gambling legislation a provision that gambling operators must have self-exclusion programs.
• The federal government has been engaging in a "war on alcopops" at home.

However, to use nudge theory as a platform for new regulation is problematic.  Government agents are humans, too, and they are likely to display the same behavioural biases not only in their private lives, but in terms of their policy dispositions.

Repeatedly, Australian governments show a willingness to follow the international policy herd.  Their "action biases" toward taking action now, and not later, reveal a lack of wisdom and farsightedness in considering the long-term costs of policy.  The display of behavioural biases by the public sector greatly weakens the notion that they can instigate policies to correct the biases of private sector agents.

More conventional problems commonly associated with public policy development, such as the distortionary effects of rent-seeking, also remain relevant.

Nanny state paternalists also face what economist Friedrich Hayek labeled the "knowledge problem".  It is difficult for governments far removed from the circumstances faced by consumers to correct for their idiosyncratic biases.  Actions by those close to the problems at hand are far more suitable.  This is why consumer initiative and industry self-regulation can be so much more effective than poorly targeted, one-size-fits-all government policies.

As British economist Robert Sugden explains, incoherent preferences are not sufficient to justify government paternalism.  This is because market capitalism is a "discovery procedure" that allows consumers and businesses, through repeated processes of trial and error, to learn about their preferences over time.

The process of government intervention in consumer preferences usually entails increasing prescription that erodes individual freedoms.  Take gambling self-exclusion legislation as an example.  The latest statistics suggest that about 80 per cent of people participate in gambling activities at least once in any twelve-month period.  This implies that almost 20 per cent of people already routinely self-exclude themselves from any form of gambling, without any need for intervention by third parties.

In addition, gambling businesses and their industry associations have long maintained their own self-exclusion policies that problem gamblers can use.  It therefore seems unnecessary for governments to pass a law to require industry to have a self-exclusion program, when they already have one.

My reading of some of the state legislation over time suggests that governments are steadily imposing new reporting and other requirements on gambling businesses, as a way to enforce self-exclusion edicts.

The Productivity Commission Chair Gary Banks wrote in 2006, "regulation has come to be seen as a panacaea for many of society's ills and as a means of protecting people from inherent risks of daily life. ... In this climate, a 'regulate first, ask questions later' culture appears to have developed."

This lax policy environment often gives rise to a situation where assessments of the costs and benefits of regulation are either not robust, or not developed at all.  Yet, it must be emphasised that the burden of proof that new regulations will achieve their objectives, and will not place onerous cost burdens upon business and the community, always rests upon the proponents.

Academic findings of non-rational consumer behaviour are insufficient to justify an expanding public sector.  In practice, however, governments seem happy to oblige different ways of advocating further restrictions on the freedoms of food, beverage, hospitality and gambling industries to trade, and the freedom of consumers to buy from producers in these industries.

Libertarian paternalism or nudging is no different to old-style paternalism, with the same consequences of an erosion of economic and social freedoms.

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THE NANNY STATE, OLD AND NEW -- OR --
THE WOWSER IN AUSTRALIAN HISTORY

In any society there will always be attempts to define where the boundaries should be drawn on a whole range of activities.

I will attempt to provide some historical context to the discussion we are going to have and also look at the issues from a more narrowly Australian perspective.

While the term "nanny state" is an internationally recognised critical term for the situation when that boundary is narrowed too much, one of Australia's great home grown inventions is the word which so aptly describes those who seek greater restrictions on personal behaviour.  The word is, of course, "wowser".

There are various theories as to the derivation of the word.  One claim, largely promoted by the wowsers themselves, was that the word evolved from the initials of the phrase, We Only Want Social Evils Remedied.  Another theory was that the word was first coined by Ezra Norton, editor of the Sydney Truth, and it does seem the word's first appearance in print was in that august journal on 8 October, 1899.  Other theories point to derivations from Cornish words.

Whatever its origins, the word, wowser, became one of Australia's more celebrated exports.  HL Mencken, the celebrated American journalist, writer and linguist and strong Prohibition opponent loved the word.  He though it captured the image of:

A drab souled Philistine haunted by the mockery of others' happiness ... he must devote himself zealously to reforming the morals of his neighbours, and, in particular, to throwing obstacles in the way of their enjoyment of what they choose to regard as pleasures.

As recently as 2007 UCLA Professor Stephen Bainbridge was excited to learn about the word and saw that it could be applied to politicians of the Christian Right there.

Looked at historically in the Australian context, one can certainly identify periods where there has been a general movement towards defining the boundary on allowable personal behaviour more narrowly, while there have been other periods when there has clearly be a move towards greater liberalisation.

Then, there are other periods, arguably more ideologically confused, where the lines may have been simultaneously narrowed in relation to one activity, and loosened in relation to another.

In his 1962 book Obscenity, Blasphemy, Sedition: The rise and fall of literary censorship in Australia, Peter Coleman pointed out that the "the 1880s were one of the great turning points in Australian history".  Coleman explains how, in order to combat the rise of new more sensational journalism and more realistic literature, every colony/state passed obscenity laws between 1876 and 1902.

This period of the late 19th century and early twentieth century was also an era when significant new restrictions were imposed on the service of alcohol and the rights of citizens to gamble.

In relation to alcohol, the temperance movement's influence climaxed in the First World War, with the introduction of 6 o'clock closing, bans on the employment of barmaids, the introduction of local preference provisions (allowing municipalities to exclude licensed premises) etc.  Amusingly, on the issue of barmaids, their employment status was generally revived in the Second World War, prompting some wags to suggest that stopping them working was essential to defeating the Kaiser, and encouraging them to work was essential to defeating Hitler.

When it comes to gambling the similar pattern is reflected in the chapter titles of John O'Hara's book Mug's Game: A History of Gaming and Betting in Australia.  It has chapters:

4. The Challenge to Gaming and Betting 1880-1900
5. Wowser Reforms 1900-16

These two chapters are thankfully followed by chapter 6 -- The Liberalisation of Gaming and Betting.

As historian Stuart Macintyre notes in the Oxford History of Australia "the achievements of the wowsers were impressive";  they passed laws that restricted obscenity and juvenile smoking, raised the age of consent, limited gambling, closed down many pubs, and in 1915-16 established a 6pm closing hour for pubs, which lasted for decades.

The decade that probably did the most to liberalise those late 19th century laws was the 1960s when citizens were allowed to read Lady Chatterley's Lover, have a legal off-course bet on the horses and have a drink after 6pm.

What is interesting is that attitudes towards wowsers cut across the normal political divide.  Wowsers were generally seen as conservative, but it was the Communist writer, Frank Hardy, who went after that great wowser-target, John Wren, in Power without Glory.  As Wren's most recent biographer, James Griffen, demonstrated most of Hardy's charges against Wren were erroneous and scurrilous.  The Hardy case against Wren was enthusiastically repeated by Manning Clark in his works.  Griffen has written that wowsers were "oppressive and class conscious and responsible for such squalid features of social life as ubiquitous back-lane betting and the six-o'clock swill".

In recent years, the major target of the anti-gambling lobby, a position for many previous decades taken by SP bookmaking, has been taken by poker machines.  As I noted at the start of my article, "Class and Casinos", opposition to poker machines is one thing that unites a diverse range of conservatives and Leftists in knee-jerk opposition.  What is intriguing is how poker machines only became controversial when introduced in traditionally wowser states, such as Victoria and South Australia in the 1990s, despite having operated without any strong opposition in New South Wales for forty years.

In 1968, Melbourne journalist, Keith Dunstan, wrote a book called Wowsers that looked at all the areas which the wowsers had tried to restrict, but which, by then, were being liberalised.  Dunstan had ten "evils" that had been under wowser attack:

• The Desecration of the Sabbath
• The Demon Drink
• Smoking
• Theatre
• Dancing
• Bathing
• Cremation
• The Social Evil
• The Printed Word
• Gambling

Looking back, forty years later, we can see that of those ten, smoking has become much more restricted, the other nine have been liberalised.  However, two of the liberalised nine, alcohol and gambling, remain under constant "wowser" attack, attacks often prefaced with the words "I'm not a wowser, but ..."

What I would argue was that each of the items on the Dunstan list was presented as a risk on Christian moral grounds.  Now, even when some of the key participants in the debate may be religious leaders, their arguments against specific activities tend to use humanist rather than religious arguments.

What is also interesting about that list of evils is that it does not include anything to do with food.  I think it is an intriguing question as to why the nanny state, or to use the Australian vernacular, wowsers, have turned their attention, for example, to the food industry.

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FROM RISK TO "NANNY STATE"

THE BIG PICTURE

• Policy reform in last 30 years
  = governments shift from ownership to regulation

Chart 2:  Pages of Commonwealth Acts of Parliament passed per year, 1901-2006

THE "REGULATORY STATE"

• Regulation and regulatory spending increases define government over the last 3 decades
  • Freer Markets, More Rules (Steven K. Vogel)
  • Regulatory Capitalism (John Braithwaite)

Chart 9:  Pages of new Commonwealth subordinate legislation, 1962-2006

Chart 10:  Pages of new state subordinate legislation, 1962-2006

DIRECTIONS OF THE REGULATORY STATE

• Ideology determines policy
  • More than just left vs. right

• Shift in what we regulate
  • privatised entities, environment, etc

• Shift in how we regulate
  • black letter ‐> "responsive regulation"

• Shift in why we regulate
  • from "market failure" to risk

RISK

• Governing as risk management
  • Epidemics
  • Environmental toxins
  • Climate Change
  • Mental & physical health

• Competing knowledge claims
  • Alcohol
    • Prevent heart attacks, strokes, dementia, Type 2 diabetes, stiffening of the arteries, prostate cancer, skin cancer, common cold.
    • "The science supporting the protective role of alcohol is indisputable; no one questions it anymore ... There have been hundreds of studies, all consistent" ... "Abstinence is a risk factor for coronary heart disease" Dr. Curtis Ellison, professor of medicine and public health at the Boston University School of Medicine.

"RISK SOCIETY"

• Ulrich Beck, Risk Society: Towards a New Modernity, 1986
• Anthony Giddens "Risk and Responsibility" Modern Law Review, 1999
• Experts vs. Non‐experts
  • Talking past each other

... in the eyes of the technological elite, the majority of the public still behaves like engineering students in their first semester.  They are ignorant, or course, but well‐intentioned; hard‐working, but without a clue.  In this view, the population is composed of nothing but would‐be engineers, who do not possess sufficient knowledge.  They only need to be stuffed full of technical details, and then they will share the expert's viewpoint ‐ (Beck, Risk Society)

EXPERTS AND OTHERS

• Inputs to risk assessment
  • Scientific evidence (contested)
  • Individual values

Even in their highly mathematical or technical garb, statements on risks contain statements of the type that is how we want to live -- statements, that is, to which the natural and engineering sciences alone can provide answers only by overstepping the bounds of their disciplines. ... scientists withdraw their borrowed notions of cultural acceptance from empirical criticism, elevate their views of other people's notions to a dogma and mount this shaky throne to serve as judges of the irrationality of the population, whose ideas they ought to ascertain and make the foundation of their work. ‐ (Beck, Risk Society)

THE "NANNY STATE"

• Ad‐hominem?
• Reflects a condition of the Risk Society
  • Nexus of
    • expertise,
    • state power &
    • paternalism

WHERE NEXT?

• Broad, bipartisan ideological trend in government
• Policymakers not interested in delineations between industries
  • National Preventative Health Taskforce (alcohol, tobacco, obesity)
  • Debate limited:
    • Utilitarian (what policies "work")
    • Reactionary ("hands off my hamburger")