Unfair Privileges: The Fair Employment Trade Union Rescue and Revival Bill and how it will damage Victoria

EXECUTIVE SUMMARY

The Bracks Government, under the guise of supposedly defending low-paid workers, is proposing new industrial relations laws which will put onerous burdens on small business, damage business generally, drive investment from the State and discourage employment.

The so-called Fair Employment Bill, to cover working employees not under Federal awards, is actually a program to shore up unions, deserted by a third of their members since 1990, by giving them legislative privileges.

The Bill sets up a whole new industrial relations apparatus, costly to employers, which would seriously subvert the law of contract and almost certainly cost jobs.

This coercive Bill would give unions wide powers to enter workplaces.  It sets up a tribunal whose orders could override contracts, even rewrite contracts.

Any contract not under federal jurisdiction would be covered.

The following facts reveal the true purpose of the Bill:

• About 560,000 employees not under Federal awards are covered by Schedule IA of the Workplace Relations Act.  And that Schedule delivers higher average wages than Federal awards.
• Labor tried to rush the Bill through with no parliamentary committee examination.
• Unions have tried to resist employers taking higher wages in return for conditions that the employees would rather "cash out".  In this, the unions have failed.
• Union membership in Victoria has collapsed from almost 720,000 in 1990 to fewer than 460,000 now.
• With no State industrial tribunal, the Trades Hall Council has become largely irrelevant.

So the Bill is designed to try and resuscitate the ailing union movement on which Labor relies for funding and personnel.

Industrial Relations Minister, Monica Gould, has said that the Bill (after revision) mirrors the Federal Workplace Relations Act.  So business is entitled to ask:  why bother with this State Bill?

Anyone running a business in Victoria, or thinking of doing or so, should oppose this Bill, whether it affects them directly or not.  It would affect businesses they are likely to deal with, raising costs and risks, and discouraging investment,

It certainly will not help those working people likely to lose jobs.

The Government should drop the Bill or, failing that, the Parliament should reject it in its entirety.

UNFAIR PRIVILEGES

THE STORY SO FAR ...

In 1992, the newly-elected Kennett Government passed industrial relations reform legislation which created major new opportunities for workers to escape from the cost burdens imposed on them by State workplace regulation -- burdens which had helped Victorian unemployment rates rise from below to above the national average even before the recession of the early 1990s.  The Kennett legislation was predicated on the election of a Coalition Federal Government in 1993.  When the Keating Government was re-elected, the Victorian Act became a dead letter.

Subsequently, in 1996, the Kennett Government referred most of its industrial relations powers to the Commonwealth Government.  The State industrial relations tribunals were abolished -- saving Victorian taxpayers millions of dollars a year -- and those Victorian employees not covered by federal awards were placed under Schedule IA of the Workplace Relations Act.

The Bracks Government came to power in October 1999 with an industrial relations policy which included a commitment to if necessary, re-establish a State industrial tribunal and independent umpire with State common rule awards.  In April 2000, Victorian Industrial Relations Minister Monica Gould announced the establishment of the Industrial Relations Taskforce to review regulation of the Victorian industrial relations system.

The Taskforce was chaired by Professor Ron McCallum from the University of Sydney Law School.  Its report, released in August 2000, contained 106 recommendations plus supporting statistical and analytical work from the Australian Centre for Industrial Relations Research and Training (ACIRRT), also at Sydney University Professor McCallum had previously argued, in his 1997 Whitlam Lecture (available on the ACTU Website) that the fall in union membership had been a result of labour market liberalisation and that the labour market needed to be re-regulated if the union movement was to revive.  The Taskforce recommended creation of a Fair Employment Act which would include establishment of a Fair Employment Tribunal;  set a range of working conditions in legislation;  and widen the definition of "employee" and "employer" so as to ensure wide coverage for the new regulatory system.

The Fair Employment Bill was introduced into the Legislative Assembly on 25 October 2000.  In its original form, the Bill set up a Fair Employment Tribunal, gave union officials wide powers of entry to workplaces (including private homes) and defined "employee", "employment" and "employer" so widely that any contract for services not directly about transfer of land or under the aegis of Federal jurisdiction would be covered by the proposed law.  It was accompanied by a strong campaign from government, union, church leaders and other public figures, that the Bill should be passed as quickly as possible, preferably without debate.  (Generating a wave of moral indignation is a well-established technique for paying off special interests).  It was passed by the Legislative Assembly and introduced into the Legislative Council on 16 November.  The Opposition majority in the Legislative Council has deferred consideration until mid-March 2001.

The lack of a Government majority in the Legislative Council, and strong opposition from business, rural and other interests, has led the Government to offer a range of amendments.  A Bill which was so urgent it needed to be passed immediately has since become an ambit claim open to negotiation.

The failure of the Bracks Government to follow elementary procedures of accountability in the introduction of this legislation is noteworthy, particularly given how strongly the Labor Party campaigned on the issue of accountability while in Opposition.  There has been no attempt, for example, to use the Committee structure of Parliament to consider, for instance, the implications of the Bill for the Victorian economy.

THE PUBLIC JUSTIFICATIONS FOR THE BILL

The public justification for the Fair Employment Bill was set out by Professor McCallum in an interview on 3LO on 7 July 2000 with Terry Lane:

you've got 30% of the Victorian workforce, the bottom 30%, who aren't receiving community standards.  They're receiving less minimum terms and conditions of employment than other employees throughout Australia.

As the Professor went on to complain, beyond the minimums set out in the Workplace Relations Act for Schedule IA employees (all those Victorian employees not covered by federal awards),

it's up to the employer and employee to determine.  Moreover, there is no agency which can go into bat on their behalf and prosecute employers who breach the law.

The particular benefit which has been picked on as the rallying cry for Victorian re-regulation has been bereavement leave.  Thus the Professor stated,

These Schedule IA employees ... don't even get bereavement leave or personal carers' leave.

He goes on to admit that no employer would actually deny a person the right to go to their mother's funeral but, the problem is,

there's no right that an employee has.  The aim was to ensure those on Schedule IA aren't the sort of lumpen proletariat second-class citizens in Victoria.

Statements by others in defence of the Bill have all been variations on the themes set out by Professor McCallum in this interview.

The Bill sets up a wide range of prosecutable offences.  As can be seen from the summary of provisions, this is a Bill which goes way beyond the circumstances of low-paid workers.

Summary of Provisions:  Fair Employment Bill

§§	Provision in Original Bill	Change (if any)
4	Defines an employee for Chapter 3 of the Bill (workplace grievances and related matters) as including a person engaged to perform work under a contract for services
	Defines an employer for Chapter 3 of the Bill (workplace grievances and related matters) as including those for whom services are contracted
5	Defines as an employee any person who is in a partnership larger than three	Dropped
	Defines outworkers as employees
6	Gives Tribunal power to declare persons to be employees	Restricted to natural persons who apply in writing
	Restricts right to make applications to Minister, to recognised organisation or peak body
7	Declares those in receipt of labour hire services to be an employer of individual providing services
8	Defines as outworker to include clerical workers working from home
15-44	Defines a series of minimum conditions (including paid bereavement leave)
45	Establishes a legislative right to long service leave
49	Provides very extensive definiton of "one employer" for long service leave
51	Provides very extensive definiton of "continuous service"
53	Provides additional consideration for long service leave for casuals
71-73	Regulates termination of employment
74-76	Gives Tribunals wide power to vary regulated conditions
74	Restricts applications to Minister, to recognised organisation or peak body or (by leave) employer or employee
77-88	Gives Tribunal wide powers to make industry sector orders
77	Voids any contract provisions which are less man those of an industry sector order
78	Restricts applications to Minister, to recognised organisation or peak body or (by leave) employer or employee
89-95	Regulates employee remuneration
93	Makes the principal contractor liable for remuneration payable to employees of a subcontractor	Has been announced will be restricted to outworkers
101	Establishes a broad definition of a workplace greivance
107	Gives Tribunal broad powers to resolve such grievances
108	Gives Tribunal power to rewrite contracts deemed unfair	Has been announced will be restricted to owner- drivers, security guards, childcare workers and cleaners
109	Gives Tribunal partial power to override Fair Trading Act for contracts deemed unfair
110	Provides six year limit for former employees to bring a workplace grievance action
114	Gives Tribunal wide ambit for conciliation and mediation services
155	Gives Tribunal wide investigative powers
225-9	Grants extensive powers of entry, etc to registered organisations (such as unions] including into private homes	Reduced to those under Workplace Relations Act

INCONVENIENT FACTS

The second volume of the McCallum Report is entitled Statistical Research on the Victorian Labour Market.  Its primary author is Ian Watson from ACIRRT.

According to that study:

• about two-thirds (1.1 million) of Victorian employees are covered by Federal awards and about one-third (561,000) are under Schedule IA.

Schedule IA:

• covers 54% of Victorian workplaces;
• 94% of workplaces covered have 9 or fewer employees.

Compared to federal awards, Schedule IA

• provides higher average wages;  and
• provides higher average earnings for every skill category except labourers.

Moreover, according to the ACIRRT study, Schedule IA employees are, compared to those under Federal awards:

• more likely to be employed full-time and less likely to be casual;  and
• more likely to be metropolitan and less likely to be from a non-English speaking background.

Much has been made of the number of low-paid workers under Schedule IA, but, depending on how one draws the line, there are either as many or almost as many low-paid workers under federal awards as there are under Schedule IA, while Schedule IA employees are proportionately more likely to be in the higher wage brackets than federal award employees.

The report also sets out the degree to which particular benefits are available to Schedule IA employees -- higher pay for overtime to 41% of Schedule IA employees, penalty rates for working weekends to 24%, shift allowances to 6%, and annual leave loadings to 35%.  It makes no comparison with the actual availability of such benefits to employees under federal awards, simply saying such benefits are "standard".  But as a crucial question is whether standards set by regulation are actually adhered to, this is hardly adequate.

The complaint is made even weaker since the report shows there is no difference in coverage of benefits between New South Wales and Victorian employees.  The Report makes much of the fact that Victorian benefits used to be comparatively higher:  but so was Victorian unemployment.  (Victoria's unemployment rate has recently returned to the national average from having been considerably greater).

• Employers were equally likely to rate Federal awards and Schedule IA as fair to their employees (81% for both) and almost equally likely to rate it as fair to their organization (70% for federal coverage, 66% for Schedule I A).

This is not a picture of a system doing dramatically worse than Federal award coverage.  In fact, on average, it was doing better.  The McCallum Report is a case of people so apparently ideologically blinkered they cannot even see what is obvious from their own data.

Moreover, the higher wage rates but apparently lower levels of benefits for Schedule IA employees suggests that such benefits have been "cashed out".  Where employees and employers deal directly, it is in the interests of both parties to have the remuneration as simple as practicable, to minimise administrative costs.  Where one or both deal through agents, it is in the agents' interests to separate out remuneration into as many different "bits" as possible.  That increases the needs for the administrative services of such agents and enables agents, such as union officials, to "laud" their achievement in getting (or frustrating) the latest "bit".

The reality is that all the costs of labour -- whether they be leave entitlements, payroll tax, PAYE tax, long service leave, superannuation payments or workers compensation -- are borne by the worker regardless of who signs the cheque.  Employers, be they in small or large businesses, make decisions on hiring new employees or contractors on the basis of the difference between the total cost of hiring, and the estimated contribution the new worker will make to the business.  This is so regardless of how the costs of the new employee or contractor are distributed.

Bereavement leave is just another parcelling out of the income available to workers -- in this case, by an arrangement which "pools" the benefit (that is, some workers will receive it, others won't, but employers will have to incorporate the cost in what they offer any worker).  Adding extra costs raises the threshold below which a job will not be offered.

That Schedule IA provides lower average rates for labourers is also a point in its favour, given that unemployment tends to be concentrated among the least skilled.  A higher premium for skill also encourages skill-acquisition.

The Report's own data also shows there is little difference between the proportion of low-wage employees in New South Wales and Victoria:

• 10.5% of Victorian employees are on less than $10 per hour, compared to 7.8% of New South Wales employees and 8.7% nationally;
• For labourers, the proportions are even closer:  15.0% for Victoria, 14.6% for New South Wales and 14.7% nationally.

The Report strains mightily to identify "problem" areas, but its own data show that back in 1989 Victoria also had a higher proportion of low-wage employees.  It also makes no attempt to identify possible reasons for the patterns it notes (for example, many of its results are consistent with a particularly competitive Victorian restaurant market).

Victoria was economically successful during its experience of a less regulated labour market.  From 1993-94 to 1998-99, it had the highest growth of any State in final demand, in housing investment, in housing prices and the largest drop in the unemployment rate.  From August 1993 to August 1999, Victoria had the second-highest increase in its employment/population ratio of any State, both for the State as a whole and for non-metropolitan areas.  Only Queensland did better (and, for State capitals, only Sydney did better than Melbourne).  Yet the Bracks Government is proceeding with this Bill.

WHY THIS PATH?

There is nothing in either the foregoing data, the Report, or the claimed justifications for action which compels the setting up of a State Tribunal and associated regulatory system.  It is entirely open for applications to be made to the Australian Industrial Relations Commission to change rates or benefits under the Schedule.  The Small Claims Tribunal can deal with claims of breaches of contract.  It is open to Victoria to arrange with the Commonwealth to fund, directly or indirectly, greater resources to enforce the law.  Besides, this is an area where unions should be able to offer their services to employees.  It is even open to the Victorian Government to subsidise specific low-income earners if it wishes.

Clearly, however, the public justifications, and the use of the "Fair Employment" terminology, make it a great deal easier to "sell" the Bill by appealing to the moral vanity of commentators and to the concern for fairness in the general community.  (Use of the words "fair" and "fairness" by politicians and legislators should be treated with great scepticism, as vested interests seeking to preserve or enhance their privileges are likely to be lurking behind them.)

Critics of the Bill can, and have been, castigated for being against "fair employment" and in favour of "exploitation".  Such propagandist claims should not, however, be mistaken for the real purpose of the Bill.

That the public justifications for the Fair Employment Bill are not its real purpose can be seen in the provisions of the original Bill, most obviously in its provision (since deleted) that any member of a partnership greater in number than three will be deemed to be an employee.  Clearly, this has absolutely nothing to do with low-paid rural labourers or outworkers, that is, the groups frequently nominated as requiring legislative assistance, particularly as Victorian labourers are as likely to be earning under $10 per hour as New South Wales labourers or those across the nation.

It does make more sense, however, if the purpose was to set up an industrial relations regulatory net so broad that no mode of participation in the workforce would allow people to escape from it.  But why would one want to do that?

THE REAL GAME

To have membership of Victorian unions fall from almost 720,000 in 1990 to less than 460,000 now must be a deeply shocking experience for union officials (and a major concern for a Labor Party still dependant on union support, particularly in fundraising and for election campaign workers).  The lack of a Victorian industrial relations system has undermined, almost completely, the reason for existence of the Victorian Trades Hall Council and its officials.

That the ratio of union officials to members trebled between 1968 and 1996, that amalgamation of unions into "super unions" did not result in a single cut in the number of officials and that union membership fees rose faster than wages from 1971 to 1989, points to some of the problems now besetting unions, and why so many workers no longer value union membership.  Unions simply do not provide services of sufficient value for workers at prices that workers are willing to pay.  The combination of declining service value, and rising membership fees, makes it easy to understand why workers are abandoning trade unions, particularly when doctrines of class struggle and class exploitation now appear as museum rhetoric.

But to suggest that workers are leaving unions because they are no longer providing services that workers want at prices they are willing to pay is not a welcome argument for union officials.  That workers may, in economic terms, be considerably better off without them is an argument that is even less welcome.

How much more congenial to be told that it is the evils of deregulation which have done this and that the solution is to re-regulate the labour market.  Re-introduce a Victorian industrial relations regulatory system and Trades Hall will again have an arena of its own.  Set up a State Tribunal and union officials can attempt to use their role within the new system as a basis to recruit members.  They can even "forum shop" between the State and Federal systems (and seek to complete their careers as Tribunal members in either State or Federal jurisdictions).

But there is a potential problem here.  Conventional full-time, permanent employment is in decline.  Other modes of workforce engagement -- part-time, casual, contract, labour hire and other forms of self-employment -- are on the increase.  All these modes of workforce engagement are more difficult for union recruitment.  That union officials have often been highly critical of workers thus employed, has hardly helped recruitment of such workers.

As the regulatory complexity surrounding conventional employment expands, other modes of workforce engagement become more attractive as ways of avoiding the escalating costs such regulatory complexity imposes on both workers and businesses.  Even within conventional employment arrangements, many companies, most notably within the mining industry, can offer their workers significantly higher remuneration for contract employment because such arrangements avoid the extra costs and onerous complexities of award employment.  They can, and do, cash out the complexity and thereby achieve a win-win situation for workers and businesses.  And there are considerable benefits available -- even in the US, whose labour market is generally more lightly-regulated than ours, the overall cost of regulation has been estimated to be as high as 19% of GDP.

Union officials will resist this simplification to the utmost because their expertise lies in creating and then dealing with complexity as intermediaries between employers and employees.  Attempts by union officials to resist such simplifications in the mining industry and elsewhere have seen dramatic drops in union coverage, as employees have walked away from unions which have strenuously resisted increases in their income.  Employees opt out of regulatory complexity because they can earn more, and opt out of unions because they operate in the interests of their officials, not their members -- which is why there are so many former union members and a falling number of new union members.

The attempt to protect unions by creating new legislative privileges for them by re-regulating the labour market is not restricted to Victoria.  New laws re-regulating the labour market have been introduced in Queensland and New Zealand.  There have also been attempts to introduce them in New South Wales and Tasmania.  It is Labor Party policy to do so in WA.  Federal Labor Policy now says:

• The protection of the industrial relations system should be extended beyond a narrow definition of employees to include those in employment type relationships.

The justificatory claims about the Victorian situation are only the local excuses to push a re-regulation agenda which extends around the country and across the Tasman to address a common problem -- the rapid decline in the reputation of trade unions within the community at large, and the workforce in particular, the most visible manifestation of which is falling union membership.

The unions, and Professor McCallum, have realized that it would clearly not solve the unions' problem if a Victorian IR system were to be set up which, by increasing the cost and legal complexity of permanent employment, further encourages people to shift to other modes of workforce engagement -- more casualisation, more contract work, more use of labour hire from agencies.

The solution to this problem in the Bill has been a breathtakingly simple one:  define "employee", "employment" and "employer" so widely that all imaginable modes of workforce engagement were covered.

The Bill not only sets up a new and unnecessary bureaucracy, it attempts to redefine contract and company law -- for only one reason, and that is to provide a statutory crutch to a poorly performing and increasingly irrelevant and unpopular union movement.

But doing that means placing arrangements which have grown up under conventional contract law under an entirely new mode of regulation.  To attempt effectively to rewrite contract law at a stroke was bound to cause major problems.  Which is why the Government has since had to engage in amending the Bill "on the run".

UNINTENDED CONSEQUENCES

Already, the brief history of the Bill demonstrates that the intentions of legislators are no protection against unintended consequences.  The ambit of the Bill can be seen in its definition of an employee.  The Bill excludes those earning $71,200 per annum (indexed) or more from its industry sector orders (the new awards) and workplace grievance claims, thus using the same cut-off as that for unfair dismissal claims under Federal legislation.  Chapter 3 of the Bill covers workplace grievances and other employment-related matters.  For the purposes of this Chapter, an employee includes a person engaged to perform work under a contract for services.  This gives the Tribunal the power to inquire into, amongst other things, the fairness of the contract for services.  In other words, almost any commercial contract other than one concerned specifically with the transfer or use of land or provisions which turn out to be excluded by coverage by Federal law (no doubt a matter for future litigation) will come under the ambit of the Tribunal, a Tribunal that can make its own mind up about "fairness".  (The dispute between Melbourne airport and taxis would be covered, for example.)  This provision gives union officials a statutory lever of great power.  The massive second-guessing of contract arrangements involved will make entering into ordinary business contractual arrangements in Victoria much more uncertain and risk-laden than entering into matrimony.  Such uncertainty will have a seriously deleterious impact on business and investment activity in the State.

For all purposes, the original Bill included in the definition of employee each person, being 1 of 4 or more persons who are, or claim to be, partners working in association in an industry.  That raised the spectre of partnership disputes (such as those for family farms organised as partnerships) ending up in the Tribunal, with a disgruntled family member suddenly claiming "back pay" entitlements.  This provision has since been dropped.  A classic case of, in the words of Professor McCallum himself, "when governments hurriedly pass laws often they don't mesh together".

Under the original Bill, the Tribunal was given the power to declare a class of persons who perform work in an industry under a contract for services [the term used to described traditional contractual relationships] to be employees.  More uncertainty is thus introduced into business arrangements via the overriding of the choices of free individuals.  This provision has since been restricted so that it can apply only to a class of persons each of whom has consented in writing to being included in the class for the purposes of being declared an employee which restricts the application of the power, but still allows the changing of fundamental aspects of an arrangement after it has been entered into and without the consent of one of the parties (in this case, those hiring the said services).

This new restriction is more apparent than real, since all contracts for service are still covered by the workplace grievance provisions.  And even with the restriction, a business could still enter into contractual arrangements, then find that the other party or parties had signed such a consent order and suddenly have its relationship governed by the Tribunal without its consent.  Again, the increased uncertainty must discourage business activity by raising the risks that businesses face.

Under the Bill an outworker is defined as a person engaged, for someone else's industry, in or about a private residence or other premises that are not necessarily business or commercial premises, to (a) pack, process, or work on articles or materials;  or (b) carry out clerical work.  What counts as "clerical work"?  If, as appears to be the drafters' intention, it is defined according to award definitions, then it includes everyone from routine clerical workers to people operating with minimal supervision with significant computing, administrative, specialist or financial skills (provided they earn less than $71,200 a year).  On the other hand, if it follows the Macquarie Dictionary definition it covers those employed in office, shop etc. to keep records and accounts, to keep correspondence &c. one who keeps the records and performs the routine business of a court, legislature, tribunal &c.  Either way, the capacity of the Tribunal to interfere arbitrarily in arrangements after they have been freely entered into is very large.

The breast-beating about outworkers is particularly ironic in the light of history.  Over 100 years ago, in the 1890s, Henry Bournes Higgins, later the second President of the Arbitration Court, was claiming in the Victorian Parliament that an industrial inspectorate, with powers of entry into private homes, would stop the exploitation of outworkers.  A century later and they are again being used as the overt justification for a new regulatory empire.  That the original Bill can confer such extensive powers of entry to its inspectors and union officials -- since wound back to those under the Workplace Relations Act -- show such ambitions are still alive.

Section 93 of the Bill makes principal contractors liable for the remuneration of employees of subcontractors, greatly increasing the risks of such contractual arrangements, thereby reducing their attractiveness.  Under pressure, the Bracks Government has since announced that this provision will apply only to outworkers.  Again, the risks involved in such arrangements will be increased, discouraging their use.

Similarly, the Government has announced that unfair contract review provisions will be limited to owner-drivers, security guards, childcare workers and cleaners.  These industries will be "blessed" by having their contractual arrangements made more uncertain due to the potential for unilateral re-writing of contracts by Tribunal officials who are in no way responsible for the consequences of their decisions.  Again, the risks involved in contractual arrangements in this industry will be increased, discouraging their use.

This trend of narrowing the ambit of the Bill speaks volumes for the inherent problems of the exercise (and shows how spurious were the claims that the Bill should be passed urgently).  The Government is now claiming as a virtue the much decreased coverage of the Bill which, according to the Minister for Industrial Relations, is "merely trying to bring 13 per cent of the our workforce up to minimum standards".

Minister Gould's media release of 29 January 2001 goes on to say:  "the minimum conditions ... mirror the minimum conditions currently found in the Workplace Relations Act.  'Right of entry conditions for authorised union officials are exactly the same as those in the federal Act ... and the power of the Information Service Officers in the legislation also mirror the powers of inspectors under the Workplace Relations Act'."

Which, of course, raises the question:  why bother if the Workplace Relations Act is merely being "mirrored"?  Particularly when Victorian taxpayers will have to fork out at least $10m a year for this new regulatory empire.  The answer is because it provides a new Industrial Relations jurisdiction in which union and Trades Hall officials can seek to operate for their own benefit.  In particular, the operation of "industry sector orders" provides a means for ramping up of specific benefits to display how valuable the services of unions are, regardless of the implications for Victorian employment and business activity.

Once the basic structure has been implemented, the Government can hope to extend its ambit back towards the Bill as originally introduced if favourable circumstances develop.

RESTRICTION OF WORKERS' CHOICE OF REPRESENTATIVE

The Bill carefully restricts applications before the Tribunal to a recognised organisation, [that is, a trade union or employer's association], a peak body or the Minister in some provisions (such as a declaration as to who is an employee) and allows employers or employees, only if given leave by the Tribunal, to apply in some others (such as minimum conditions and industry sector orders).  Such restrictions increase the role of the approved agents and limit the capacity of private advocacy service providers, such as lawyers, to compete with unions to provide services to employees.  It is a clear case of granting legislative privilege to protect unions:  a union movement which is very important in providing funding and workers for the ALP -- both directly and through supporting campaigns such as that run by the teachers -- and which has 60% of the votes at the ALP's State Council.

CLEARLY UNNECESSARY

Returning to Professor McCallum's justifications for legislative action, it is clear that none of them stand up.  Professor McCallum alleges that:

you've got 30% of the Victorian workforce, the bottom 30%, who aren't receiving community standards.  They're receiving less minimum terms and conditions of employment than other employees throughout Australia.

• Actually, on average, their pay is higher than federal award recipients, and the Government is now making much of the fact that the Act will only set conditions for 13% of the workforce.

it's up to the employer and employee to determine.

• And, on the evidence, they generally seem to do so at least as satisfactorily as happens under Federal awards.

there is no agency which can go into bat on their behalf and prosecute employers who breach the law.

• This does not require a vast new regulatory structure to fix.  Furthermore, if there is a demand for such services, this provides a recruitment opportunity for unions.

These Schedule IA employees ... don't even get bereavement leave or personal carers' leave.

• It is perfectly open to employers to provide such leave under Schedule IA, just as it is open to make an application to the AIRC for the right under Schedule IA.  (Nor did the ACIRRT study for the McCallum Task Force bother to report whether, and to what extent, such leave is provided to Schedule IA workers.)

The aim was to ensure those on Schedule IA aren't the sort of lumpen proletariat second-class citizens in Victoria.

• But, on the McCallum's Task Force's own evidence, they are not.

WRONG WAY, GO BACK

This is a costly and unnecessary Bill which seeks to squeeze what freedom still exists out of an already over-regulated labour market.  Moreover, it will not even provide the assistance to the union movement that it is intended to do.  While the Bill will give union officials and Trades Hall a new jurisdiction in which to play their costly IR Club games, it will do nothing to improve the services that unions offer members.  Union membership was declining before the limited labour-market liberalisations established since 1992 and will continue to decline unless membership of unions is enforced by statute.

What the Bill does is put a series of loaded guns in the hands of entrepreneurial lawyers.  Given that individuals will be given the right to make application to the Tribunal for workplace grievances -- the area of jurisdiction of the Tribunal with the widest ambit -- lawyers and other private advocacy services will be able to provide direct services to employees and others, thereby competing with unions in this arena.

The consequences of the Bill are clear:

• a growing and increasingly popular range of forms of workforce engagement will become riskier;
• the complexity of employment arrangement and the costs to business in compliance will increase for all those covered by the Bill;
• to the extent its regulatory complexity and restriction raises the costs and reduces the benefits of labour, it will discourage employment;
• it will not and cannot increase the returns from hiring labour;  and
• it is an illusion that it can raise the returns to labour itself.

All the costs of labour -- wages, taxes, workers compensation, etc., etc. -- incurred by a business in hiring a worker, are earned by the worker, including benefits such as bereavement leave:  they are just different ways of distributing the income available to workers.  The returns to labour (as distinct from the returns to capital), as always, come from skill, effort and the effectiveness of institutions (what economists call "productivity").  By feeding the illusion that the returns to labour are not dependent on these things, and by reducing the effectiveness of market institutions, the Bill and the Tribunal will simply repeat once again the century-old experience with wage arbitration (see Appendix).  That experiment has shown that wage arbitration serves narrow, vested interests;  that it does not benefit those people it is supposed to benefit -- ordinary workers and the wider Australian society.

Anyone running a business in Victoria should oppose this Bill regardless of whether it will cover their workforce or not.  Even if it does not cover their workforce directly, it will affect businesses they are likely to have to deal with, raising costs and risks and adversely affecting the general business climate in Victoria.

Any business which is likely to be directly affected by this Bill -- remembering that its coverage could easily be broadened by unions, or even entrepreneurial lawyers, seeking to "forum shop" -- should oppose this attempt to make their employment arrangements costlier, more complex and riskier.  There are enough risks in modern business without having such a basic relationship subject to the arbitrary intrusion of unaccountable officials.  There is nothing in this Bill for Victorian workers or Victorian business but increased costs and regulatory burdens and an underlying contempt for the right of Victorians to make their own arrangements.  Victorians did not vote for this in September 1999.  It should not be imposed on them in 2001.

APPENDIX
WAGE ARBITRATION -- THE FAILED EXPERIMENT

In the 1890s, Australia and New Zealand began an experiment, led by Victoria, with trade protection and wage arbitration.  A century later, we can see clearly the experiment was a mistake.  Australia and New Zealand moved from being countries with good economic growth records in the nineteenth century to being the developed countries with the second-lowest and lowest economic growth rates in the developed world in the twentieth century.

Per head economic growth rate compared
with developed world average (%)

Source:  Maddison, OECD.

* 1870 to 1913 for NZ

It is hardly likely to be an coincidence that the two countries which adopted protection and wage arbitration became the two developed countries with the lowest economic growth rates over the twentieth century.

The fall in Australia's and New Zealand's relative standing has been stark, from the per capita richest and third-richest countries in the world to steadily falling below the developed world average.

Per capita GDP
(Developed country average = 100)

Source:  Maddison, OECD.

The policy framework of having officials arbitrarily interfere in workplace relationships entered into by free and responsible people and restricting the use of people's most important economic asset -- their labour -- has not proved to be a happy one.  Re-regulating the labour market, moving back in the direction of a failed experiment, is not the way to go.

No cure until ABC admits there's a problem

If you want a perfect display of what is wrong with the internal culture of the ABC, one cannot go past Quentin Dempster's latest book Death Struggle.

The book, by a former staff-elected ABC Board Member, manifests, with an amazing self-righteousness, a complete refusal to acknowledge, let alone engage with, critics and their criticisms.

The principle of the book is simple:  the ABC never has a case to answer.  Apart from bad management action such as the Whitlam Lecture broadcast of 1997 or creeping commercialisation, the ABC is never the problem, only its critics.  It utilises a standard progressivist tactic:  simply refuse to acknowledge as legitimate the concerns or questions which those who differ might have.  With Dempster, as with other defenders of the ABC (such as Errol Simper and David Bowman) the question, "is there something systematically wrong with the ABC's product?" is a non-question.  There is no question of ABC bias, only the malice of those offended by the noble righteousness with which the ABC goes about its business.

An obvious example of this "white-out" approach is provided in Dempster's discussion of the controversy over the ABC's 1998 federal election coverage.  The widely-covered release of my weekly studies of the prime time news election coverage of the ABC and the commercial free-to-air networks is simply not mentioned.  Yet the ABC put great efforts into trying to either stop media coverage of the releases or discredit them.  Journalists were rung up and pressured into querying sponsorship and critiquing the methodology.  Media Watch weighed with ludicrous claims of statements being "buried" in one-page press releases and made absolutely spurious inferences about (trivial) funding from a Liberal-associated trust (many of our sponsors also donate to the ALP, so what?) utterly unconnected to the media monitoring activities.

None of the commercial channels in any way attempted to suppress or discredit what the IPA was doing.  Only the ABC attempted to close down debate by ad hominen attacks.  (For the record, we found Channel Ten had the most pro-ALP coverage, though there was a remarkable shift in ABC behaviour from being the most pro-ALP to being balanced following various public embarrassments juxtaposed with the first release of our findings).  Similarly, the Bell report commissioned by the ABC into its coverage of the 1998 Waterfront dispute is mentioned:  the IPA analysis of the same dispute which found, among other things, that Bell had not even counted soundbites accurately, is not.

Early on in Death Struggle, Dempster is outraged that then ABC Managing Director Hill agreed to provide tapes of ABC News during the 1993 election for analysis by a University media department in a study sponsored by a wide range of business organisations.  The question of why business organisations might have been driven to taking this extraordinary step never seems to enter his head.

And the ABC is fully accountable, but any outside body attempting to examine its record is an attack on its independence.

On Monday 22 January, the UN Intergovernmental Panel on Climate Change released its latest report on global warming.  The coverage of this in the 7.30 Report of Tuesday 23 January reported this as if it was beyond reproach and all critics of global warming should now cease and desist.  At the BBC website, the coverage was utterly different, with equal billing given to a series of senior scientists who strongly criticise the findings on scientific grounds (no Virginia, serious, human-induced global warming with major negative effects is not a done scientific deal).  The BBC engaged in journalism, the ABC in propaganda.

Yes, the rest of the Australian media is prone to similar sins, but it is not a useful expenditure of taxpayers' funds to have the ABC intensify wider journalistic sins.  Unfortunately, the ABC has the cues of credibility without the substance of it.  When Professor Heningham of Queensland University surveyed journalists, he found they rated 7.30 Report, ABC News and Four Corners as the most pro-Labor media outlets.

It is very revealing that the ABC of the Triangle (Sydney-Melbourne-Canberra:  rural ABC and the ABC in, for example, Perth are somewhat different beasts) has consistently refused to do the obvious -- appoint a couple of presenters to prominent slots that the non-progressivist critics of the ALP would be comfortable with.  This would disarm critics at a stroke.  There is no commercial media empire in Australia that does not have more diversity of opinion expressed from within its ranks than the triangle ABC which, in the words of Andrew Bolt of the Herald-Sun talking of 3LO in Melbourne, has in its on-air staff the full range of opinion -- from red to pink.

After all, broadening the ABC's support base is common sense.  Why do they not do it?  Because to admit the credibility of alternative viewpoints is to undermine the use by the baby-boomer collective which is the functional owner of the ABC of progressivist positions as moral assets.

A prime reason why they are so attached to the ABC is precisely because it is not a broad church in that sense, because it flatters their self-conceit that all morally and intellectually serious people agree with them.  The ABC would have far less value to them if admitted the genuineness of other positions, if critics of the progressivist ascendancy were allowed on as more than occasional "guest enemies" to show the progressivists' own magnanimity.  Which is why they would apparently prefer that the ABC go under through the death of a thousand cuts and creeping commercialisation that Dempster so rails against than it become a genuine national broadcaster, representing the breadth of national opinion, or even of intellectual opinion.

Who are the intellectuals who get showcased by the ABC?  David Suzuki, John Ralston Saul, Noam Chomsky and, for old times' sake, John Kenneth Galbraith.  You don't have to be an ideologue to notice a bit of a pattern (apart from an appalling cultural cringe towards North Americans, some of whom get more exposure in Australia thanks to the ABC than they do at home).  You have to go back over two decades and The Blainey View for a serious example of our "national" (sic) broadcaster showcasing a non-progressivist intellectual.  Given the resurgence in conservative and classical liberal thought over the last 25 years, this is a ludicrous dereliction of duty.

People from the "right-wing" such as myself and the unavoidables, like Geoffey Blainey, are allowed on periodically as, in Blainey's felicitous phrase, "the guest enemy".  Otherwise, they are definitely not part of the ABC's normal service.

Many of the defenders of the ABC -- the David Bowman's, Errol Simper's and Peter Mannings' -- are perfectly happy with this pattern.  Progressivists do see their views as fully represented on the ABC, and, to the extent they notice the exclusion of classical liberal and conservative views, don't think it is a problem.  They like the ABC being a hostile environment for conservative and classical-liberal views, which is why the elementary strategy of broadening the support base by becoming a genuinely national broadcaster is not suggested, even though it is a blindlingly obvious move.

But only obvious, of course, if you think that liberal-conservative views are a legitimate part of the national debate.

The 1988 series The True Believers, the ABC's last major Australian political drama, provides an excellent example of what is wrong with the ABC.  Here was a golden opportunity to produce a great series, a mirror to ourselves, which would garner support across the political spectrum.

Instead we got one riddled with historical errors and which was, in Robert Manne's words, "almost comically biased", publicly denounced by a range of participants in the events portrayed or by their families.  Once again, taxpayer's money was effectively thieved, and the proper role of the ABC betrayed, so that ABC staff could indulge in undergraduate political preening.  And this propaganda passing as history has been foisted on school children since.

It is interesting how contradictory are the arguments, depending on circumstances, which are mounted to defend the ABC.  We are either told that left views are not represented in the commercial media (which is patently false, and an extremely arrogant attitude to public broadcasting) or that there is no problem with bias on the ABC (also patently false, and a sign, if believed, of an extremely insular attitude, of really believing that all people of intelligence and moral sensitivity believe in the same thing one does).

For the ABC, it is a matter of now or never.  If the ABC cannot be reformed, if its internal culture cannot be broadened, if the attitude displayed in Quentin Dempster self-serving and self-indulgent Death Struggle remains indicative of the core of the ABC, then clearly reforming it from within will have proved to be a dead-end.  The only alternative left will be abolishing it, for the good of broadcasting and the health of public debate generally.

Cult of a Leader

Two of the most striking female personalities of the second half of the twentieth century were Jackie Onassis and Diana, Princess of Wales.  Jackie O and Di:  we all feel we have a strong sense of who they were.

Can you remember a single thing either of them ever said?

As American commentator Camille Paglia has pointed out, the two of them were, in effect, silent screen stars.  They conveyed a sense of themselves by how they dressed, how they acted, how they looked, how they registered emotion.  But not by what they said.

In many ways, they are perfect examples of the power of the visual image in the TV age.  They anointed themselves as Queens for the TV age.

People talk about celebrity leadership, but that is not quite right.  Celebrities are not leaders.  They are a focus for public fantasies but, beyond that, stand for nothing but themselves, which is why so many of them lead such vain and trivial lives.

What modern leaders do, however, is use the techniques of being a celebrity as tools of leadership.  They still need words, but they use them less than in the past and visual techniques more.

The most complete example of that is Ronald Reagan, former actor, former President of the United States.  He was a great user of all the techniques of communication:  the look, the gesture, the occasion, the word, the tone of voice, the striking phrase.  And he was surrounded by people who worked with his understanding of those techniques.

A much-repeated story tells of American Public Broadcasting System reporter Lesley Stahl who put together what she thought was a devastating critique of Reagan's Presidency.  After it aired, a senior Reagan staffer rang her up and thanked her for the documentary.

But, the baffled reporter said, the documentary was very hostile.  Oh, was the reply, that was just the narration, no-one remembers that and the pictures were great.

Clinton, newly retired US President and a much less substantial figure (in all senses:  what phrases of his will linger apart from "I did not inhale" and "I did not have sex with that woman"?) was equally skilled in the celebrity techniques of visual leadership.

No more so than when, having been elected as a centrist new Democrat, he promptly tried to nationalise a sixth of the US economy (with his wife Hilary Rodham Clinton's abortive health care "reform"), was punished by a Republican take-over of Congress in the 1994 mid-term elections and, with startlingly fancy footwork, remade himself as a centrist, "triangulating" against both the Republicans and the Democrats in Congress.

What is particularly striking in his case is that the American public were able to distinguish between Clinton as President (who they felt had done a good job) and Clinton as person (who they came to have little time for -- and even less now:  by contrast, Reagan's reputation continues to rise).

Leadership through celebrity techniques pertains to the leadership, rather than the person.

Reagan's last great political act -- releasing the letter announcing his degenerative Alzheimers' two days before the 1994 congressional elections -- was a final statement of brilliantly timed use of celebrity techniques.

What can one say about a man who uses the official diagnosis of his own senility as a political weapon?  Except express one's awe at such use of personal tragedy to activate powerful political sentiment.

Sporting leadership remains something done within shouting distance of one's players.  So leadership there has not changed in its essentials because of the advent of the visual age, though the packaging of sporting figures as celebrity figures certainly has.

The quasi-leadership role commentators sought to impose on Australian sprinter Cathy Freeman was quite unreasonable.  The grace with which she dealt with it says much about her, the unreasonableness of the demand says much about the modern media.

Advocacy groups seek to reach people through TV, but focus on issues and organisation brand-name rather than personal leadership.

Union leadership also seeks to reach people through TV -- most obviously in the sophisticated use of media by the Maritime Union of Australia leadership during the waterfront dispute.  But their current focus on public campaigning is a reaction to decline and weakness, not an expression of strength.

The advent of such campaigning in Australia will, however, as it has done in the US, impose new demands on business leaders.

But political leadership remains the form of leadership most transformed by the demands of a visual age.  Queenslanders have just seem two great case-studies in such leadership in a visual age.

First was Premier Peter Beattie.  He did just about everything right.  He understands the first rule of scandal -- the real killer is the cover-up.  So the rorts affair was dealt with by public inquiry, public punishment and public acknowledgment of wrongdoing.

His whole visual persona is of comfortable ordinariness.  He looks perfectly comfortable being slightly ridiculous holding a piglet, floating with sharks or whatever.  Any amusement is shared with him, not against him.

In an age of spin and evasion, he is excellent at the public mea culpa.

He is very effective at dealing with questions, he looks comfortable with them.  His ability to give sparkling answers helps ensure he may be comfortable, but he is far from dull.  In fact, decent, approachable comfort is the unifying theme of his public persona.

Which, in the circumstances, was just what the electorate wanted.

The contrast with a divided alternative who couldn't even organise a photo opportunity properly could not have been greater.

The other great example of visual leadership is Pauline Hanson.  Pauline would not have got to first base if, under constant pressure from journalists and commentators who use cultural issues to parade their own virtue, mainstream liberal-conservative politicians had not caved in and vacated from seriously contesting issues such as immigration and indigenous affairs.

Hence various forms of "separate development" are treated in mainstream public debate as the only acceptable policies for indigenous affairs.  The only way one can vote for colour-blind public policy in this country is to vote for One Nation -- note the name.  This is what gives Pauline Hanson the key basis of her support (a fact for which the Liberal and National Parties have no one to blame but their own incompetence at cultural politics).

Those stifled, indeed vilified, sentiments give her an audience.  Leadership has to have substance to sustain it.  But the ludicrously over-the-top vilification of Pauline Hanson has provided her with a starring role in a grand public drama.

In a pre-packaged age Hanson speaks her mind.  She can be clumsy, awkward, inarticulate, visibly nervous.  But that just makes her seem more authentically a voice of stifled, ordinary people.

The sheer courage she has displayed has been one of the more remarkable features of their whole saga.  Indeed, she has displayed far more courage than the ravening herd of elite commentators who have screamed at her so as to shore up their own public displays of conspicuous virtue.

She has also displayed a capacity to learn on the job, something people can also identify with and admire.  The recent use of dresses as fashion statements is perfectly in synch with the use of celebrity techniques in a visual age.  It is something that those two aristocrats, Jackie and Di, understood completely.

The leadership celebrity techniques in a visual age are demotic:  as open to a fish-and-chip shop owner as an American Queen of Camelot or an English People's Princess.

Does the shift from overwhelming reliance on words to far more reliance on visual image somehow debase political leadership and political processes?  I see no particular evidence for it.

Polling does show that people identify less closely with particular political parties than in the past:  but it also shows that they are more likely to be able to pick differences between parties and more likely to follow political events.

The best book on campaigning, Samuel Popkin's The Reasoning Voter, brings out the underlying rationality in the use by voters of the information cues modern campaigning gives them.

They remember past behaviour, they judge words against actions, they infer from character to behaviour.  And there is nothing irrational in the recent election results.

In many ways, governments are far more accountable now than they have ever been in Australian history -- which is why there are no incumbent Governments, State or Federal, who were in power 10 years ago.  (The Northern Territory remains a place where they do things differently).

There is a problem with the moral vanity of journalists and commentators narrowing the range of public debate, but the One Nation phenomena is providing a (somewhat hair-raising) corrective to that.  More to the point, the power of the visual is a reality cannot be changed in a democratic polity.  Politicians must adapt to it or fail.

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Who's Sorry Now?

The truth really matters.  There is a whole world of difference between government or church officials who forcibly remove an Aboriginal child from a caring family, and officials who accept responsibility to look after a child who has been abandoned or otherwise given up by its parents.

Unfortunately, in the four years since the release of the Bringing Them Home report on the "stolen generations", many prominent people have done everything possible to obscure this crucial distinction.  Australians have been told time and again that up to 100,000 Aboriginal children were "stolen" from their families so they could be assimilated and lose their cultural identity, and these figures have been blithely repeated by news media around the world.

The reputation of many people who were dedicated to assisting Aborigines has been maligned.  Instead of being given their due as decent and humane individuals who often made considerable sacrifices to do what they thought was right, they have been portrayed as being complicit in a form of "genocide".

Much of the blame for this disgraceful situation must be placed squarely on the Human Rights and Equal Opportunity Commission, whose then president, Sir Ronald Wilson, was the main author of Bringing Them Home.

Rather than making the careful distinctions that were essential for investigating a controversial and painful issue, the report lumped everything together -- from cases where children really were stolen, to those where Aboriginal children in remote locations were sent off to boarding schools by parents who saw the benefits of a Western education.

Suggesting, oh so patronisingly, that in the latter cases parents would almost invariably have been subjected to "duress" from white officials, Bringing Them Home used the term "forcible removal" to cover all the cases it considered, supposedly for "ease of reference".  This is a bit like discussing an enormous range of offences from littering to murder, and referring to all of them as "violent crime".

But from the start it should have been obvious that, whatever their motives, those who have been misrepresenting the "stolen generations" issue were playing a particularly dangerous game.  If they really want Australians to reflect on the many wrongs that have been inflicted on Aborigines since European settlement, it is essential to offer only accounts of the past that are scrupulously honest, accounts that cannot be challenged or dismissed.

But the temptation for moral posturing and political brow-beating on Aboriginal issues overcame good sense long ago.  As bits and pieces of the truth about the "stolen generations" have emerged, first in court cases, and now in yesterday's Courier-Mail story about Dr Lowitja O'Donoghue, many Australians are probably thinking that it is all a con, just like the "secret women's business" of Hindmarsh Island.

This would be unfortunate.  Although the numbers are far less than those claimed, there can be no doubt that at various times and places over the past century, some Aboriginal children were wrongly taken from families who were both willing and able to care for them.  And even where neglect or mistreatment gave authorities no alternative but to place an Aboriginal child in foster care or an institution, some removed children suffered serious abuses, including acts that were criminal even by the standards of the day.

Nevertheless, perhaps it is time to bring closure to this whole sorry issue.  The Human Rights Commission and the "stolen generations" industry should apologise to all Australians, Aboriginal and non-Aboriginal, for the enormous damage their misrepresentations have caused.

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There is still time to get it right

The lure of Pauline need not spell the ruin of the Howard Government or of economic reform.  There is still time and scope for the Coalition to craft an agenda, which is consistent with its basic philosophy, differentiates it from the Labor Party and the parties of the Left and yet addresses the many valid concerns of voters attracted by One Nation and rural Independents.

The task is not to adopt One Nation or it leaders, but to claim its ground and drive a wedge between it and the other parties.

The first step is to stop the demonising of One Nation and Pauline Hanson.  She may be a spiteful, ignorant populist but so are a large number of other politicians, commentators and so-called experts.  She is less spiteful than either Philip Adams or Bob Ellis, is no more ignorant of economic issue than Robert Manne and is no more populist than Bob Brown or Bob Katter.

More importantly, by demonising One Nation, one is alienating between 10 and 40 per cent of many rural electorates.  These people are not racists, fools or second-rate citizens.

The Howard Government must, in addition, realise that One Nation voters cannot be simply bought.  Richard Court tried and failed.  Over the last six years, the Court Government, under the skilful guidance of Hendy Cowan, undertook a huge rural spending spree aimed at buying the One Nation vote.  The result was a landslide loss to an extremely urban-centric ALP on the back of One Nation preferences.  The Howard Government has already pumped money into the bush without many thanks.

The fact is, One Nation's appeal is primarily cultural, not economic.  Its economic policies, with one major exception, are identical to those of the Greens and the Democrats.  As such, One Nation provides nothing unique on the economic front.  Surely, if people are primarily interested in stopping globalisation and economic reform, they would vote for one of those culturally kosher parties.

The one exception is tax and spending.  One Nation is a small-tax, low-spending party (for budget sector spending), whereas the other parties of the periphery are high-tax and big spenders.  This is not surprising as One Nation harks back to an era -- before Whitlam -- when Australia had the second-lowest level of taxation and budget sector spending in the OECD.  Surely, a Coalition government should feel comfortable in coveting this ground.

Clearly, Hanson's appeal comes mainly from her gutsy defence of conservative social values.  She may be inarticulate, simplistic and just plain wrong, but at least she is willing to stand up to the urban elite and express the values of rural people.

What would such a agenda include?

The Howard Government should jettison its tax-and-spend policies and champion small government.  It has put in place a GST which is sucking up more money than ever expected.  Its much heralded income tax cuts did no more than give back a little bracket creep.  And it has jacked up taxes on petrol, booze and smokes under the guise of tax reform.

As a result, the tax take measured as a share of GDP is the highest in history and, despite large increases in spending, the government has built-up a large surplus.  Rather than squander these surpluses on pork barrelling, it should give it back to taxpayers in the form of income tax cuts and lower petrol excises.

The Coalition should renew its commitment to reducing red tape.  It has allowed the ATO to design the BAS statement as a fishing exercise and to chase the shadow economy into every niche and cranny of the economy.

It should eliminate the BAS statement, recognise that the shadow economy will always be with us as long as the top marginal tax rate exceeds 50 per cent and put the ATO on a tight leash.

It should become the champion of national sovereignty.  Australians are rightly concerned over the continual erosion of national sovereignty by the secretive signing of international treaties.  This process has unnecessarily transferred many vital decision-making process to unaccountable and undemocratic foreign groups.

This tendency can be tamed with a constitutional amendment at the next federal election requiring Senate ratification by a majority of two-thirds of all treaties before they have any standing in Australian law.

It should become the champion of colour-blind government.  There has been an excessive tendency to provide government assistance on the basis of race, ethnicity, sex and age rather than need.  The Government should begin the task of winding this back and a good place to start would be ATSIC.

This organisation is neither representative of indigenous people, nor is it effective in addressing their needs or reconciling differences between Australians.  If this is too hot for the Liberals, the Nationals should grab it with both hands.

The Howard Government should address the structural problems of Telstra.  Years ago, when Telstra was being corporatised and readied for sale, it should have been split up, with its monopoly element -- the local loop -- separated from the rest which would then be opened to competition.  This split was, however, blocked by the then Telecommunication Minister Kim Beazley to placate the unions.

As a result, we have the ACCC micro-managing Telstra and the telecommunications industry and the only potential competitor in the local loop -- Optus -- is about to exit the game.  The solution is clear.  Do it now;  separate the local loop and sell the rest.

Many other initiatives are ripe for consideration, including the Business Council proposals aimed at slowing the flight of businesses offshore;  introducing laws that require compensation for loss of property rights, particularly for environmental purposes;  and easing restriction on immigration while limiting their access to welfare further.

In short, the Coalition should treat the setbacks in WA and Queensland as a wake-up call to go back to its basic philosophy and craft a new conservative-liberal coalition committed to open markets and a tolerant national culture.

If George W. Bush can do it in the United States, surely John Howard can do it here.

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A Chance to Revisit the Dream, Not the Nightmare

Bill Clinton's last days in office were an unintended gift to George W. Bush.  The outgoing President made it so much easier for the new President to establish his moral authority, despite the controversy surrounding his election.  In a final spasm of the reckless self-indulgence that blighted his presidency, Clinton made off with White House furniture and china, and granted outrageous pardons to lawbreakers under the most questionable of circumstances.

Even Mr Clinton's mates were appalled.  Last Sunday the New York Times, a bastion of left-liberal thinking, editorialised about the "national need to come to grips with the wreckage, both civic and legal, left by former President Clinton".  These were exactly the sentiments that Clinton's opponents had been expressing for years, to the scorn of the liberal elites.

Clinton is a child of the 1960s, and he embodies the excesses of that turbulent decade.  His neglect of propriety and restraint, and his indifference to the consequences of his actions brought him undone;  as they did to many other baby-boomers who also thought they could extend their adolescence into middle age.

Of course, George W. Bush is a baby-boomer too.  And in the past, he also led a dissolute life, although he reformed himself before taking public office.

But the new President's take on the cultural revolution of the sixties is quite different to that of his predecessor.  One of the most important influences on his philosophy of "compassionate conservatism" is a book by social critic Myron Magnet, called The Dream and the Nightmare:  The Sixties Legacy to the Underclass, which Bush read soon after it was published in 1993.

Magnet pointed out that the cultural revolution of the 1960s was essentially a creation of the privileged and educated -- the "haves" as he called them -- who hoped to achieve two related kinds of liberation.

The first was the honourable goal of political liberation for the "have nots", the poor and the black.  It was guided by worthy democratic ideals, the realisation that poverty and racial discrimination still disfigured American society, which would have to become more open and inclusive.

The second was a personal liberation.  The "haves" wanted to free themselves from what they saw as the shackles of middle-class values relating to the family, work, and the gratification of desire.  To them, mainstream American culture was repressive, hypocritical and destructive, underpinning an unjust society which oppressed its own citizens and those of the Third World.

These notions did not remain confined to the counterculture, but spread into the mainstream, particularly as the young radicals grew up and took positions in the universities, the media, and other opinion forming institutions.

Magnet argued that the union of political and personal liberations had a terrible effect, especially on those it was most supposed to help.  Instead of empowering the "have nots", it played a major part in creating a large urban underclass.

By constantly emphasising that the poor were victims, the "haves" made it ever less likely that the disadvantaged would take responsibility for improving their own lives.  The remade culture of the "haves" denigrated the very values that would assist the "have nots" economically and socially -- the "bourgeois virtues" of deferred gratification, hard work, sobriety, and the like.

Furthermore, the new culture permitted -- and even encouraged -- behaviour that "when poor people practice it, will imprison them inextricably in poverty".  Scions of the upper middle class could experiment with alternative life styles or dabble in delinquency, confident that when it all ended in tears, a network of family and friends would pull them back up.  Yet when ghetto girls in their early teens got pregnant, or got hooked on crack cocaine, there would be no such help.

Magnet gave a delicious twist to the bleating refrain "it is all our fault".  "Yes it is", he was saying, "but not in the way you pretend".  The devastation was largely caused by "elite, mainstream culture, which underwent a series of convulsions that left it communicating to the poor exactly the wrong message and the most self-destructive values".

But because their commitment to social justice gives them their sense of self-worth and moral superiority, the left-liberal "haves" refuse to acknowledge the wreckage that has resulted from their failed programs for liberation.  To them, Magnet's account is anathema.

So while Bush's endorsement of the role of The Dream and the Nightmare in crystallising his own thinking has brought the book to a much wider audience, it has also brought opprobrium from the "progressives".  As one commentator put it, Magnet is a "cultural hawk" and an "atavistic adviser" who harked back to a "bygone Victorian age", when "the poor knew their place".

Neither Magnet's analysis nor Bush's interpretation of it can be portrayed as a plan by economic rationalists to strip the state down to bare essentials, absolving it from all obligations to the poor and the marginalised.  They are not Thatcherites, claiming that "there is no such thing as society".

Bush acknowledges that government "has great responsibilities for public safety and public health, for civil rights and common schools".  But these responsibilities mean directing assistance so as to encourage people to take charge of their own lives, and facilitating a sense of civic participation in the nation as a whole.

As he made clear in his inauguration speech, Mr Bush will use the prestige of a revitalised presidency to stress four virtues -- "civility, courage, compassion and character".  A bracing antidote to the greed and sleaze of the Clinton years.

Submission to the ACCC Inquiry into Telecommunications Price Controls

Submission

We understand that the Commission is soon to report to the Government on telecommunications price controls and that the deadline for submissions has passed.  However, given the smallness of the window for submissions, the intervention of the holiday period and the importance of the subject, we request that the Commission take the following short submission into account in its final deliberations.

GENERAL

Price controls ought always to be a measure of last resort and maintained for as short a time period as possible.  Their distorting and inequitable effects are well known and their long-term existence is an admission of policy failure.  It was intended that these controls be removed expeditiously and that they should be structured and administered to achieve that end.

What we now have is not just 'belt and braces' but two price belts (retail price caps and sub caps) and two sets of competition braces (Parts 111A/1V of the Trade Practices Act and Parts X1B and X1C of the Act, including wholesale price control).  We have suggested elsewhere that we could dispense with one set of braces (Parts X1B and X1C) without any loss of trouser support.  We think that we could also get rid of the two belts (the retail price caps and sub caps) without serious adverse effects and with some significant benefits.

A regime where all the major wholesale prices are controlled as well as 75 per cent of the retail prices seems to denote a certain timidity and an associated unwillingness to allow market forces to operate at any level.

Having said this, we commend the draft recommendations of the Commission to remove at least part of one belt.

MONOPOLY

Much of the Commission's reasoning in support of retaining the bulk of the price controls is that a Telstra monopoly continues to exist;  or, more precisely 'monopoly characteristics' continue to exist.  In turn this rests on the presumed persistence of some natural monopoly characteristics.

Natural monopolies are hard to find and there is a respectable argument that none exist.  In this case, the liberalisation of the market, technological advances and normal entrepreneurial activity by large and small competitors has, in a few years, substantially narrowed what was once thought to be unassailable market dominance by the incumbent.  Competitors have entered the higher return areas first.  This process continues.

The only real and enduring monopolies are those conferred by governments.  These have a long and dishonourable tradition from the salt monopolies granted by medieval monarchs to the industrial monopolies enjoyed by government-owned enterprises in coal and transport in the 20th century.  Even these tended to collapse eventually under the weight of their inefficiency.

There is a degree to which the current persistence of monopoly in telecommunications in Australia can be attributed to government interference.  The imposition of low returns for certain services discourages entry.  If it is correct that the setting of unrealistic access and retail prices prevents entry then we may have a government-perpetuated monopoly in, for example, the local loop (albeit imposed on an unwilling monopolist).

Certainly, the unwillingness of Cable and Wireless/Optus to offer local connections on a scale commensurate with their network seems to support the thesis.  Indeed, much of the attention the Commission devoted to protecting the CWO pay television interests several years ago was ultimately focussed on the need to give CWO the opportunity to roll out its cable network to the bulk of homes so as to compete directly with Telstra in the much more important telecommunications market.  CWO has been given a lot of protection by the ACCC and could have been expected to enter the local connection market much more vigorously.

The Commission's paper, in discussing the monopoly characteristics appears to mix causes, symptoms and results.  Brand name and incumbency are not natural monopoly characteristics as they are not permanent.  Nor are dominance and pricing independence, which simply constitute a state of affairs, which may or may not persist and, in this case, is seen to be eroding.  Concentration measures are less relevant when a market is opening up as rapidly as this.  Even declaration of services by the Commission is only a judgement at a certain point in time.

Equally, a large market share does not preclude highly developed competition and contestability.  This would be 'effective competition'.  We need to bear in mind that the size of many of the competitors relative to the incumbent and the speed and diversity of technological change implies a capacity to exploit commercial opportunity in a way not historically characteristic of this sector.  Nevertheless, we will not ultimately arrive at perfect competition;  we need to consider the tolerable degree of imperfection.

We believe that the monopoly elements of this market are breaking down rapidly.  Competition both over the wires and through other modes is both actual and potential for all of the services covered by the retail price controls.

The existence of the Part IIIA access provisions would be sufficient to encourage or require good behaviour on the part of the incumbent.  In persisting with numerous controls the Government runs the risk of itself perpetuating bottlenecks and the elements of monopoly they bring about.

INSTRUMENTS AND OBJECTIVES

The assertion that removal of most of the current price controls would not lead to the unbridled play of monopoly power by Telstra does not dispose of the matter.  The price and other controls are part of a hopelessly confused matrix of policy objectives and instruments and monopoly is only one of the concerns.

The Commission states that low-income groups and rural areas are a principal focus of this review.  These are equity concerns (broadly speaking) rather than concerns with monopoly/efficiency.  Moreover, the price controls of various kinds on local calls, line rentals and for low spend consumers have little to do with the exercise of monopoly power although they do incorporate efficiency requirements over time.

The result of the application of this mixture of disparate instruments (caps) is what would be expected.  They conflict.  The individual and overall result is something of a lottery.  Some of the adverse consequences are:

• There are efficiency losses from lower than cost prices for access and for some services.
• This gives rise to distorted investment (the whole community suffers the loss) and massive cross subsidies (paid by users of other services, many of whom may not be well off).
• Poor people in the metropolitan areas subsidise the services of well-off people in the non-metropolitan areas.
• Struggling business users of services subsidise wealthy residential users.
• Poor, intensive users of services subsidise wealthy, light users (who have access to business lines).

The equity results of the use of the controls are as uncertain as the efficiency results.

All in all, this is not good policy.

And when we take into account that many of the reductions in prices in recent years would have occurred anyway under the pressure of competition, these controls begin to look redundant and perverse.  The efficiency of these controls in achieving their stated aims is very much open to question.

We believe it is time to progress to a simpler regime.  In particular we agree with the thrust of the Commission's thinking that the equity concerns are poorly addressed by the differential pricing of services.  These concerns are better and more transparently met through the tax and transfer system.

Incidentally we do not agree that industry funding is the right way to go.  The less wealthy would still be contributing to cross subsidies through charges for the services they use.  The only purpose served would be the rather contemptible one of hiding this implicit form of taxation from public and parliamentary scrutiny.

THE COMMISSION'S RECOMMENDATIONS

The Commission's recommendation to remove most of the sub caps is therefore welcome in that it removes a series of distortions without much affecting overall equity.  We agree that it should benefit regional and intensive users.

But we believe that the Commission is being too timid in freeing the market as this sector matures.

We would argue that all of the sub caps could go, including the 22 cent local call.  Under the access provisions, competitors to the incumbent are already offering lower local call prices.  Removal of the controls might also encourage investment in new facilities in the regions.

We would also argue that the broad price controls be removed, not just the controls on charges for leased lines and mobile other than fixed to mobile calls, as recommended by the Commission.  We believe that there will be sufficient competition to continue to generate price reductions in line with costs, although we do think it is a leap of faith to assume that productivity in this sector will continue to proceed at current rates.  The need for such a bold ex ante assumption illustrates one of the major weaknesses of the control regime.

Furthermore, the difficulty with partial change to a set of controls is that the prices and cross-subsidies are created and adapted as a set.  STD and IDD markets appear to be very competitive with returns in both declining dramatically in the last 3 years.  Even fixed to mobile services do not appear to justify price control.  But removal of these services from the bundle leaves nothing left with which to subsidise local calls and line rentals.  This need for cross subsidy almost necessitates the conclusion on the (non) competitiveness of mobile, STD and IDD services.

At the very least, removal of the two elements proposed by the Commission suggests a need to look closely at the CPI minus figure again as they presumably reduce the cross subsidy pool.

We also need to consider the dynamic of a very fast changing sector.  Further competition is developing and will develop well within the time frame allowed for the next phase of control envisaged by the Commission.  The controls would retard this.

CONCLUSION

If we were to stand back and consider what sort of new regime we would put in place now if no regulation currently existed, we do not believe that we would install the complex and restrictive apparatus that would remain if the Commission's draft recommendations were accepted.  They are likely to perpetuate the bottlenecks they are supposed to remove.

We continue to believe that this sector, including its consumers, would be best served with much lighter-handed regulation through the general competition provisions of the Trade Practices Act.  As the Commission states, there is 'at best overlap and at worst conflict' between the control regimes.

Much of the price control is directed at equity concerns which are more fairly dealt with through the tax and transfer system.

Accordingly, we would favour the complete abandonment of the price caps including the 22 cent local call and the local call parity.  Extensive controls at the wholesale level would persist.

Rebalancing could not take place instantaneously and some transition period would be required.  We suggest that effort of this kind, directed to planning and implementing the end of controls, would be more fruitful than administering their continuance for an indefinite period.

Lessons from the California Energy Crisis

The energy crisis in California should ring alarm bells in Australia, though not for the reason commonly suggested.

California -- a state of 34 million people and the centre of the new high-tech world -- has been racked by black-outs, rising electricity prices, and bankruptcy amongst energy generators and wholesalers over the last year.  This has resulted in the State Government putting into place emergency rationing, bailing-out bankrupt distributors and contemplating entering the electricity business.

The critics, both in the US and Australia, have been quick to blame the crisis on privatisation and deregulation.  Privatisation, however, has played no part in the crisis as the Californian electricity industry has always been in private hands.  Deregulation is also not the cause.  The crisis would have arisen under the old regulatory system.  Moreover, the political micro-management of California's utility companies can hardly be called deregulation without twisting the meaning of the word beyond recognition.

The underlying problem in Californian is faulty regulation.

First and foremost, there has, effectively, been a ban on the construction of new generation capacity.  Over the past two decades California regulators have blocked new construction, arguing that renewable energy would pick up the slack, that "negawatts" -- activist jargon for subsidised energy conservation -- was preferable to "megawatts," that minimising new emissions was more important than generating new electricity and that the BANANA army ("Build-Absolutely-Nothing-Anywhere-Near-Anybody") must be heard.

During the 1990s, electricity demand in California grew by 12 percent, while supply grew by 1 percent.  It is a simple fact;  you cannot go on obstructing the building of new capacity for years on end in a growing economy without eventually experiencing black-outs.

The same ideology is beginning to prevail in Victoria, as witnessed by the impediments put in the way of the proposed electricity transmission line from Tasmania to Victoria.

Second, the wholesale cost of electricity in California has skyrocketed thanks to the regulatory bias in favour of so-called "clean" energy.  Virtually all additional capacity over the last two decades in California has been in renewable and gas-fired power stations.  As a result, the State is inordinately dependent on these two high-cost sources of fuel.  This dependence was made much worse by the explosion in the natural gas price -- up by 600 per cent -- since November last year.

Again, one can see the signs of a growing policy bias -- no mater the cost -- in favour of so-called "clean" energy.

Third, the Californian government prevents wholesalers from passing costs on to consumers.  The Californian regulators have mandated a maximum retail price of 6.5 cents per kilowatt hour, irrespective of the underlying cost.  As a result, generators have had no incentive to build new plant and, with the rise in natural gas prices, electricity wholesalers and generators have been haemorrhaging red ink.  Additionally, consumers have had no incentive, or even recognition of the need, to conserve electricity or build new plant.

Thankfully, Australian governments, as part of the national electricity market, are moving away from fixed retail prices to market-determined rates.

The California energy crisis has lessons for Australia, but it is important we learn the right ones, otherwise we may hasten down them same path as they.

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Illusions of Tribal Culture

At first glance, it seems terribly contradictory.  The good folk who get so worked up about corporal punishment in schools are often the very persons who sing the praises of Aboriginal customary law, under which delinquents were speared in the leg.

It is the same story with many other practices.  People who are contemptuous of the prerogative of governments and corporations to withhold secrets from the public are usually very keen to ensure that tribal "secret business" is kept hidden from outsiders.  And those who exhort Christian churches to ordain women priests seem quite unfazed about the strong gender restrictions on religious advancement common in indigenous societies.

But these responses appear inconsistent only if we assume that the individuals expressing them are primarily concerned with equity and human rights.  In fact, their motivation frequently lies elsewhere, in the resentment that many educated members of the middle class feel towards their own society, and their corresponding idealisation of cultures that seem to offer an antithesis to all their frustrations about the modern world.

These kinds of attitudes have a very long history.  In the first century AD, authors such as Tacitus and Seneca held up the simple virtues of the Germanic tribes as a reproach to the degeneracy of contemporary Roman life.  And as the Australian anthropologist Roger Sandall waggishly suggests, the invention of the wheel in ancient Mesopotamia was probably soon followed by loud calls "for reinstating the holy pedestrianism of the past".

Westview Press in the United States has just published Sandall's book, "The Culture Cult", an incisive collection of essays on "romantic primitivism" and "the unending revolt of the civilised against civilisation".  Though witty and learned, the book is unlikely to find much favour in university anthropology departments, which it characterises, with some justification, as refuges for people who prefer shamanism to science.

Unlike the majority of contemporary anthropologists, Sandall is strongly opposed to cultural relativism, the doctrine that although cultures may differ widely, they are all equally valid frameworks for human living.  (In practice, many of his colleagues, as well as other members of the intelligentsia, cleave to a modified form of the doctrine, in which one culture -- that of the West -- is somewhat inferior to all others).

In uncompromising terms, he asserts that there is "a Big Ditch" between the tribal and modern worlds.  The current fashion of pretending that we can "mix 'n match", indiscriminately blending appealing aspects of tribalism and modernity, is a dangerous illusion.

Indeed, many of the most appealing elements of indigenous cultures have little to do with the reality of tribal life, either now or in the past.  Rather, the "wise ecologists", "mystical sages" and "pacifist saints" from which we supposedly have so much to learn are essentially projections of our own fantasies, the outcome of what Sandall -- with the cartoon epic Pocahontas in mind -- calls "Disneyfication".

The Disneyfied portrait of tribal life can only be sustained by selectively editing the anthropological record, leaving out all the excesses, or always blaming them on contact with Europeans.  Unfortunately, many contemporary anthropologists go along with this deception, pretending that brutal oppression or endemic violence or cannibalism rarely existed in the tribal world.

Anthropologists who seriously challenge this rosy picture often suffer the wrath of their colleagues.  When the Australian anthropologist Derek Freeman showed that Margaret Mead's account of free love and communal bliss in Samoa was a fiction, the American Anthropological Association organised an extraordinary program of denunciation against him.  A similar campaign is currently being waged against one of America's most famous anthropologists, Napoleon Chagnon, whose portrayals of Amazonian Indians as ferocious warriors has deeply upset those who believe in the harmony of tribal societies.

Of course, it could be argued that the practitioners of tribal customs were long regarded with contempt by Westerners, and that the current enthusiasm for their ways goes some way towards redressing the balance.  If it were simply a matter of restoring lost self-esteem to peoples whose dignity was unjustly derided, there would be little cause for complaint.  Certainly, the formerly widespread belief that indigenous peoples were intellectually inferior and incapable of mastering Western knowledge is completely false.

But as Sandall argues, illusions about tribal cultures can cause real damage to indigenous people themselves.  They are being conned into thinking that they can retreat from a thorough-going embrace of the modern world, and still attain a long and healthy life, prosperity, civil rights and all the other benefits of modernity that they desire.

Unfortunately, rule by elders or chiefs, non-market economies and collective property ownership, and beliefs in a world governed by mystical and magical forces seldom lead to the culturally rich and harmonious Gardens of Eden of popular imagination.  As Sandall unsentimentally puts it, "if you want to live a full life and die in your bed, then civilisation -- not romantic ethnicity -- deserves your thoughtful vote".

To the sensibilities of the contemporary intelligentsia, this is outrageous.  But it would have seemed unexceptional to the Aborigines who struggled for equality in the days when it was denied them, to men like William Cooper or John Patten.

And little more than a quarter of a century ago, the late Charles Perkins penned words that could have come from Sandall himself, writing that traditional Aboriginal culture "is in some ways incompatible with western society.  The two just really can't go together".  What Aboriginal leader would dare say this now, unless with the proviso that it is Western society that should be rejected?

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A Fine Year for the Self-indulgent Whine

If you want a perfect display of what is wrong with the internal culture of the ABC, one cannot go past Quentin Dempster's latest book Death Struggle.

The book, by a former staff-elected ABC Board Member, manifests, with an amazing self-righteousness, a complete refusal to acknowledge, let alone engage with, critics and their criticisms.  We are well into the land of opinions as moral assets which only moral cretins and fools disagree with -- so no conversation with them is required.

The principle of the book is simple:  the ABC never has a case to answer.  Apart from bad management action such as the Whitlam Lecture broadcast of 1997 or creeping commercialisation, the ABC is never the problem, only its critics.  It utilises a standard progressivist tactic:  simply refuse to acknowledge as legitimate the concerns or questions which those who differ might have.  With Dempster, as with other defenders of the ABC (such as Errol Simper and David Bowman) the question, "is there something systematically wrong with the ABC's product?" is a non-question.  There is no question of ABC bias, only the malice of those offended by the noble righteousness with which the ABC goes about its business.

An obvious example of this "white-out" approach is provided in Dempster's discussion of the controversy over the ABC's 1998 federal election coverage.  My widely-covered release of weekly studies of the prime time news election coverage of the ABC and the commercial free-to-air networks is simply not mentioned.  Yet the ABC put great efforts into trying to either stop media coverage of the releases or discredit them.  Journalists were rung up and pressured into querying sponsorship and critiquing the methodology.  Media Watch weighed with ludicrous claims of statements being "buried" in one-page press releases and made absolutely spurious inferences about (trivial) funding from a Liberal-associated trust (many of our sponsors also donate to the ALP, so what?) utterly unconnected to the media monitoring activities.

None of the commercial channels in any way attempted to suppress or discredit what I was doing.  Only the ABC attempted to close down debate by ad hominen attacks.  (For the record, we found Channel Ten had the most pro-ALP coverage, though there was a remarkable shift in ABC behaviour from being the most pro-ALP to being balanced following various public embarrassments juxtaposed with the first release of our findings).  Similarly, the Bell report commissioned by the ABC into its coverage of the 1998 Waterfront dispute is mentioned:  my analysis of the same dispute which found, among other things, that Bell had not even counted soundbites accurately, is not.

Early on in Death Struggle, Dempster is outraged that then ABC Managing Director Hill agreed to provide tapes of ABC News during the 1993 election for analysis by a University media department in a study sponsored by a wide range of business organisations.  The question of why business organisations might have been driven to taking this extraordinary step never seems to enter his head.  The problem is never the ABC, only its critics.

And the ABC is fully accountable, but any outside body attempting to examine its record is an attack on its independence.  The self-serving unctuousness is risible.

But this self-serving unctuousness is precisely what is wrong with the ABC.  On Monday 22 January, the UN Intergovernmental Panel on Climate Change released its latest report on global warming.  The coverage of this in the 7.30 Report of Tuesday 23 January reported this as if it was beyond reproach and all critics of global warming should now cease and desist.  At the BBC website, the coverage was utterly different, with equal billing given to a series of senior scientists who strongly criticise the findings on scientific grounds (no Virginia, serious, human-induced global warming with major negative effects is not a done scientific deal).  The BBC engaged in journalism, the ABC in propaganda -- no doubt so that the various ABC journalists could display their environmentalist virtue.  As Allen Consulting recently estimated that full implementation of the Kyoto agreement on greenhouse gas production would cut Australia's GDP by about 1.9% a year (over $140 billion over a decade), the feeding of global warming hysteria through moral vanity substituting propaganda for journalism could be enough on its own to make the ABC's contribution to Australian national welfare a net negative.

Yes, the rest of the Australian media is prone to similar sins, but it is not a useful expenditure of taxpayers' funds to have the ABC intensify wider journalistic sins.  Unfortunately, the ABC has the cues of credibility without the substance of it.  When Professor Heningham of Queensland University surveyed journalists, he found they rated 7.30 Report, ABC News and Four Corners as the most pro-Labor media outlets.

It is very revealing that the ABC of the Triangle (Sydney-Melbourne-Canberra:  rural ABC and the ABC in, for example, Perth are somewhat different beasts) has consistently refused to do the obvious -- appoint a couple of presenters to prominent slots that the non-progressivist critics of the ALP would be comfortable with.  This would disarm critics at a stroke.  There is no commercial media empire in Australia that does not have more diversity of opinion expressed from within its ranks than the Triangle ABC which, in the words of Andrew Bolt of the Herald-Sun talking of 3LO in Melbourne, has in its on-air staff the full range of opinion -- from red to pink.

After all, broadening the ABC's support base is just elementary sense.  Why do they not do that?  Because to admit the credibility of alternative viewpoints is to undermine the use by the baby-boomer collective which is the functional owner of the ABC of progressivist positions as moral assets.  A prime reason why they are so attached to the ABC is precisely because it is not a broad church in that sense, because it flatters their self-conceit that all morally and intellectually serious people agree with them.  The ABC would have far less value to them if admitted the genuineness of other positions, if critics of the progressivist ascendancy were allowed on as more than occasional "guest enemies" to show the progressivists' own magnanimity.  Which is why they would apparently prefer that the ABC go under through the death of a thousand cuts and creeping commercialisation that Dempster so rails against than it become a genuine national broadcaster, representing the breadth of national opinion, or even of intellectual opinion.  (And given that Dempster cheerfully boasts about how audience involvement with the ABC has never been greater, clearly there was a lot of fat to cut).

Who are the intellectuals who get showcased by the ABC?  David Suzuki, John Ralston Saul, Noam Chomsky and, for old times' sake, John Kenneth Galbraith.  You don't have to be an ideologue to notice a bit of a pattern (apart from an appalling cultural cringe towards North Americans, some of whom get more exposure in Australia thanks to the ABC than they do at home).  You have to go back over two decades and The Blainey View for a serious example of our "national" (sic) broadcaster showcasing a non-progressivist intellectual.  Given the resurgence in conservative and classical liberal thought over the last 25 years, this is a ludicrous dereliction of duty by our allegedly national broadcaster.

One reason why those who have conservative, classical liberal or other non-progressivist views have such a beef with the ABC is precisely because it is supposed to be a national broadcaster.  People from the "right-wing" such as myself and the unavoidables, like Geoffey Blainey, are allowed on periodically as, in Blainey's felicitous phrase, "the guest enemy" and are supposed to feel grateful for the privilege.  Otherwise, they are definitely not part of the ABC's normal service.  Such ghettoisation is a statement that they are not a fully legitimate part of the national debate and national culture.  And with their taxes too.  Of course this breeds resentment.

And many of the defenders of the ABC -- the David Bowman's, Errol Simper's and Peter Mannings' -- are perfectly happy with this pattern.  Progressivists do see their views as fully represented on the ABC, and, to the extent they notice the exclusion of classical liberal and conservative views, don't think it is a problem.  They like the ABC being a hostile environment for conservative and classical-liberal views, which is why the elementary strategy of broadening the support base by becoming a genuinely national broadcaster is not suggested, even though it is a blindlingly obvious move.  But only, of course, it is obvious only if you think that liberal-conservative views are a fully legitimate part of the national debate.

The 1988 series The True Believers, the ABC's last major Australian political drama, provides an excellent example of what is wrong with the ABC.  Here was a golden opportunity to produce a great series, a mirror to ourselves, which would garner support across the political spectrum.  Instead we got one riddled with historical errors and which was, in Robert Manne's words, "almost comically biased", publicly denounced by a range of participants in the events portrayed or by their families.  Once again, taxpayer's money was effectively thieved, and the proper role of the ABC betrayed, so that ABC staff could indulge in undergraduate political preening.  And this propaganda passing as history has been foisted on school children since.

It is interesting how contradictory are the arguments, depending on circumstances, which are mounted to defend the ABC.  We are either told that left views are not represented in the commercial media (which is patently false, and an extremely arrogant attitude to public broadcasting) or that there is no problem with bias on the ABC (also patently false, and a sign, if believed, of an extremely insular attitude, of really believing that all people of intelligence and moral sensitivity believe in the same thing one does).

For the ABC, it is a matter of now or never.  If the ABC cannot be reformed, if its internal culture cannot be broadened, if the attitude displayed in Quentin Dempster self-serving and self-indulgent Death Struggle remains indicative of the core of the ABC, then clearly reforming it from within will have proved to be a dead-end.  The only alternative left will be abolishing it, for the good of broadcasting and the health of public debate generally.

Food processing industry looking good

Amongst all the doom and gloom in rural Australia the food processing industry shines brightly.

As detailed in the State of the Country series in the Herald Sun this week, rural Australia, more specifically small, inland communities based on broad-acre agriculture are falling behind the rest of the country in almost every economic and social indicator.  Although this is not a new trend, the pace of the decline has arguable accelerated in recent years and for many rural communities the decline has been going on for so long it almost time to turn out the lights.

Couple this with increasing utterances of the big r-word here and aboard, the men and women on the land have a right to be a bit depressed.  After all, recessions usually hit commodity prices extra-ordinarily hard.  Moreover, commodity prices and farmers generally benefited little for the boom economy of recent years.

Trends in the food processing industry should, however, cheer them up.

Food processing is Australia's largest manufacturing sector with turnover of $47 billion and employing 165,000 people nation-wide and over 45,000 in Victoria.  It has also been one of the country's perennial under performers with low levels of productivity and poor export performance.  The industry has gone through radical changes over the last ten years including reductions in tariffs and other forms of government support, increased foreign ownership, rationalisation of plant and increased focus on exports.  It has also been effected by increased competition from abroad and globalisation of brands and sourcing of product.

The process of change while painful for some has been very promising to date.

Since 1991 turnover in the processed food industry has increased by just over 35 per cent;  exports have grown by over 70 per cent;  and employment has expanded by 15 per cent.  Victoria -- which has the largest concentration of food processing operations -- has been the main beneficiary amongst the states from the industry's reconstruction.

Importantly the rural and regional Australia has benefited more than metro areas.

Between the 1986 and 1996 census the number of people employed in food manufacturing increased by 51 per cent in non-metro, inland regions and by 4 per cent in remote regions.  In some regions such as the Murray River, growth in food processing has maintained the absolute number of people employed despite declining employment in farm and transport services.  Food processing industries have also helped rural areas by creating larger markets and sometimes new markets and higher prices for farm products.

Wine has been the stellar performer with a 28 per cent increase in the number of wineries and a doubling of exports in the three years between 1996 and 1999.  Milk, ice cream, biscuits, soft drinks, poultry and seafood processing have also shown double digit growth.

The food manufacturing industry, however, has plenty of work left to do.  Many areas of the industry still lag behind the international competition in terms of labour productivity and scale of production.  And unless these issues are addressed the industry could go into retreat with the exist of some global producers.

Nonetheless, the record of the industry to date offers a way forward for hard pressed rural folk.

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