Dawn Of A New Class

Liberty's Dawn: A People's History of the Industrial Revolution
by Emma Griffin
Yale University Press, 2013, 320 pages

We can thank Charles Dickens for the way the term "Industrial Revolution" brings to mind the image of a grimy-faced Oliver Twist or a hungry David Copperfield roaming the mean, dirty streets of London.  In fact, Dickens' portrayal of the miserable life of the poor in Victorian England is now so entrenched that the term "Dickensian" has become a byword to describe that period of history.

It certainly makes for a good story.  The characters of Dickens' novels leap vividly from the pages ― wicked industrialists, petty criminals, cold bourgeois women, virtuous labourers and suffering children all trying to get by in times of great social and economic upheaval.  There can be little doubt the novelist deserves his place among the great literary masters.

Yet how accurate are Dickens' novels when it comes to reflecting the human experience of the Industrial Revolution and its aftermath?  If we take Dickens' word for it (and most people seem to these days), the lives of the working poor during this period were miserable indeed, with few redeeming features.  As it turns out, however, many people who lived through the Industrial Revolution tell quite a different tale about their experiences, a fact we now know thanks to a controversial new book by Emma Griffin.

Liberty's Dawn examines the autobiographies of nearly 350 working class people who lived the majority of their years between the end of the eighteenth century and the middle of the nineteenth century in Great Britain.

What Griffin uncovers in the crumbling, yellowed pages of these varied works is a unheralded fact:  the Industrial Revolution actually helped lift people out of poverty and delivered a better quality of life.  It may seem obvious, but it is a key fact that is too often overlooked in the bleak narrative usually painted about the lives of the poor during this time.

Of course, this is not to say that people, particularly children, didn't experience hardship or exploitation during the Industrial Revolution (Dickens' novel David Copperfield was, after all, partly autobiographical).  But the overarching theme that weaves its way through the tales of these autobiographies is that of self improvement ― that life finished up better than it had started and that the writers were able to take up new opportunities for both economic and social participation that had never presented themselves to the previous generation.  In short, things were getting better.  The mere act of writing their autobiographies demonstrates that these people were not so down-trodden and marginalised as we may believe.

The common experience of the men who left the land for work in the factories and warehouses of the nascent industrial hubs was that the work they performed there was "better than the labour which had consumed their fathers' energies ― and often their own early labours as well," according to Griffin.  There is a certain romanticism associated with pre-industrial rural life that leads us to believe people's lives were simpler, healthier and better than the lifestyles brought on by mechanisation and industrialisation.  The problem with this view is that it is not reflected in the first hand accounts of workers who experienced the change.  For our autobiographers, "rural roots were something to escape, not glorify".  Throughout the book we hear stories of the dissatisfaction of rural life.  Jobs were too few, and what jobs there were paid too little.  Agricultural wages were unreliable, hard to come by and barely enough to eke out the most basic existence for a man and his family.

These works, both published and unpublished, paint a rich and detailed picture of the lives of working people during the Industrial Revolution.  It says something about how little attention has been paid to the voices of these ordinary people that many of the autobiographies, before Griffin turned her attention to them, were "locked away gathering dust in the strongrooms and vaults of local history libraries and country record offices."

The harsh reality of rural life helps explain why so many people abandoned villages and hamlets for the industrial towns and cities springing up across the country at this time.  Factory work was not pleasant or easy, particularly by today's standards, but it paid well and importantly, it paid regularly.  It seems our autobiographers did not find work in the big city to be so objectionable as we might think.  As Griffin writes, "implicit in the accounts of good wages and plentiful work is a relative judgement about the alternatives that were available."

Industrialisation had two very important effects on the economy that are often neglected in the tales of woe about Victorian workers.  The first is that the new urban workforce, armed with better wages, created unprecedented demand for consumer goods.  They needed food, clothes, housing and the other staples of life ― and so new jobs sprung up to create and bring these goods to the cities.  Skilled workers enjoyed an increase in their demand for products.  As one autobiographer who was the son of a shoe-maker wrote, the trouble with the poverty of pre-Industrial Britain was that there were "plenty of feet requiring comfortable shoes, though too little money in circulation to pay for them".  Industrialisation fundamentally transformed this equation.  The barriers to entry into the skilled professions began to break down.  Once the craft of the privileged few, opportunities to enter the ranks of the carpenters, shoe-makers and other artisans were opened up to more poor people than ever before with the advent of industrialisation.

The second effect that is often largely ignored is the shift in employee/employer relations that occurred at this time.  The scarcity of employment opportunities before industrialisation left workers with little choice but to submit to the whims of their employers.  Many of the autobiographers describe an almost master-servant relationship with the landowner for whom they worked as an agricultural labourer.  Industrialisation shifted this power balance significantly.  Many of the autobiographies tell tales of young men leaving a position of employment to seek better wages or better conditions.  In fact, many of the autobiographers paint the leaving of one job to seek a better one as a watershed moment in their lives.

Walking away from a job, however awful and low-paying, was unheard of before the Industrial Revolution got going.  Once it did, deference and submission gave way to autonomy and independence ― things which the working poor rarely achieved while struggling under the yoke of rural poverty.  We should not underestimate the powerful social changes unleashed by this shift in the balance of power.

Of course, not all sections of society benefitted immediately and to the same extent as some of those whose positive experiences are documented in the book.  Women, for example, made up few of the autobiography writers and there is little evidence to suggest that industrialisation changed the rates of female workforce participation or increased wages for women at that time.  It must be pointed out, however, that this was largely the result of enduring cultural norms relating to marriage and motherhood, rather than factors arising due to the Industrial Revolution.  Griffin contends that women were unable to take advantage of the opportunities presented by industrialisation due to "the weight of existing social structures and cultural expectations".

Similarly, the experience of the Industrial Revolution by children certainly offends our modern sensibilities of what a childhood ought to be.  The image of young children working long, tough hours on the factory floor is one that has captured the imagination of many and contributed to the bleak picture that comes to mind when we think of early industrialisation.  As with women, however, child labour is more a function of Victorian era culture than any unique features of the Industrial Revolution.  Certainly the number of children working grew rapidly as a result of industrialisation, but Griffin points out this is a result of the fact that there were now more opportunities for parents to send their kids to work ― a tendency they had already exhibited before the onset of the Industrial Revolution.  Sadly, there was nothing new or particularly remarkable about sending young children to work at that time ― the difference the Industrial Revolution made was that there were more jobs to go around.

The dark and grim palate usually used to paint the Industrial Revolution leads us to mostly overlook the enormous social change it unleashed.  All too often we ignore the fact that while women and children certainly suffered before and during the Industrial Revolution, it was industrialisation that fundamentally transformed our societies and made them what they are today.  The concepts of feminism and child welfare simply did not exist as we know them until industrialisation paved the way for radical social change.

Liberty's Dawn highlights how this radical social change, wrought by the Industrial Revolution, increased the social participation of working class people.  This was partly due to a "flowering of new educational opportunities".  Night schools, Sunday schools, mutual improvement societies and mechanics' institutes sprung up during this period and provided new opportunities for working class people to gain literary and numeracy skills.  More than that, though, they provided opportunities for self-advancement.  These organisations, rudimentary though some were, required some organisational capacity.  Someone had to manage the day-to-day running, and that meant new chances to learn new skills.  Keeping books, managing enrolments, teaching your peers ― these are just some of the skills and knowledge picked up by the working class people who became involved in these organisations.  In short, these organisations didn't just provide education ― they provided leadership opportunities.  It's hard to overstate just how important this was to improving the social participation of working people.

It's no coincidence, then, that this period also coincided with the birth of political engagement by working class people.  It's often assumed that working people mobilised into a political force at around this time in response to poor working conditions.  Griffin provides a counter-narrative to this idea, arguing that such mobilisation would never have been possible before industrialisation unleashed new opportunities for social and political participation for working people.  She writes that "the flowering of clubs and societies at this time was not a symptom of the workforce's growing discontent but of new levels of freedom, confidence and autonomy."

Griffin points to the story of Thomas Dunning to illustrate this point.  Dunning was born to a poor single mother with few prospects of social mobility.  A kindly stepfather took pity on the young boy and taught him the craft of shoe-making ― allowing him to take advantage of increased demand for shoes and get by.  What's remarkable about Dunning though, is his modest rise through various political activist organisations in his area ― making secretary of his local branch of the Chartist Association, and becoming involved in many other causes to represent the interests of local working people.  Griffin points out that Dunning's story "captures nothing less than a social revolution".  A man like Dunning would never have been able to avail himself of such opportunities had he been born in the same conditions a century earlier.

The difference between their own lives and those of their parents and previous generations was a key reflection of many of the autobiographers.  It is striking how similar these reflections are ― they celebrate what they see to be significant and material progress in their lives.  They are upbeat and proud of their achievements.  Liberty's Dawn is controversial only because we can draw only one conclusion by studying these primary sources ― that the Industrial Revolution brought "immediate and tangible benefits for large sections of the labouring poor".  These benefits do not just include significant increases in the quality of life they experienced, although this was certainly significant.  These benefits also included autonomy, independence and a level of social and political participation unknown to these classes before industrialisation.

The Industrial Revolution marks a key turning point in history.  From the revolution to today, people have come to expect to see a level of material progress within their lifetimes.  Before industrialisation, progress within and between generations was painfully slow.  As one of the autobiographers concludes, "I only wish [my parents] had each lived to enjoy and to see the improvements I see".  Another writes he wishes his ancestors could "revisit the earth and see the domestic alterations, commercial improvements, and the wonderful and astonishing activities of life."

These are not the words of men who have lived miserable, down-trodden lives.  These are the words of confident and proud people who appreciate that the world they live in has improved immeasurably over the course of their lifetime.  That is the true legacy of the Industrial Revolution.

What is Tony Jones really worth?

There is currently much ballyhoo — in the Murdoch Press at least — about the release of secret files on the salaries paid to the top talent at our ABC.  Tony Jones, for instance, pulls down A$355,789, making him a one-percenter, as we used to say.  (Occupy Ultimo, anyone?)

But what are Tony Jones and the rest of the ABC mob really worth?  Economics can help with this question.

Karl Marx once said "From each according to their ability, to each according to their need."  It's a fine and noble sentiment that works well in small-scale societies, such as a hunter-gatherer tribe, or within the family.  Yet in the real world the problem with this mechanism is it is not what economists call incentive compatible.  People have an incentive to understate their abilities, and to overstate their needs.

When I taught economics of social issues I had a strict rule in my classroom about the four-letter F-word.

If you thought that something was as it was because it was "fair", or that something was wrong because it was "not fair" you were sent out of the class.  That's how children speak, not economists.  Yet many of what I presume are adults (in the various letters to editors, blogs, twittering) have argued that these wages paid to the ABC talent are not fair.  Or that criticism of the ABC is not fair.  That's not going to get us anywhere.

In modern economic theory, people are paid what they are worth.  In a competitive market, you are worth your marginal revenue product.  That's the additional value to the company's revenue that your additional labour adds.  Theoretically, a well-run company will keep hiring up to the point where the wages of the last person hired (the marginal cost) equals the added value to revenue that they produce (their marginal revenue product).

Now this is a theory and in practice all sorts of other considerations come into it.  But it provides a framework for thinking about what a particular unit of labour is worth.  So what about this ABC talent?  What is its marginal revenue product (MRP)?

Here's the thing:  we don't know that because there is no revenue from which to figure this out.  Public broadcasters don't sell into a market.  When the commercial broadcasters pay their talent the big dollars they do so because they do know their MRP.  They know that adding Johnny Bigsmiles to the breakfast line-up will bring in 100,000 extra viewers, which they can sell to advertisers for A$10 each, making Johnny's MRP A$1,000,000.  In a competitive market for media talent, that is also Johnny's wage.

But in public broadcasting, there is no way to figure out the MRP, and so no basis for figuring out the proper wage, other than by comparison with the market generated price.  So Jimmy Seriousface at the ABC gets a wage that is based on some comparison with Johnny's wage.

Note this is not just a problem for the ABC, but affects the whole of the public sector's pay scales, none of which have access to true prices from which to figure out MRP and thus wages based on economic worth.  Back when people thought market socialism might work, the same problem arose.  The theory was that every country could be socialist except one (Switzerland, say), which would need to remain capitalist so that it could figure out the correct prices to be copied by all the other countries.

The real question is about the legitimacy of the comparison with the market-determined wages.  Here the economics gets trickier.  The theory of efficiency wages suggests that motivating efforts requires some degree of comparability.  The theory of compensating differentials means that because of the perks of public sector work (greater job security, for instance), public sector work will be less well remunerated compared to the private sector.  In the economics of information, high salaries can serve as a screening mechanism to encourage people to invest in revealing their true talents and capabilities, which may mean investing many years working for very low wages in order to have a shot at the top jobs.

Another theory is that public sector wages need to be "competitive" in order to attract top talent.  But that's a sly argument, because it's zero-sum:  the talent attracted is now no longer available in the private sector, where it may have added greater value.  A Tony Jones at the ABC is no longer available to produce the great work in the market media environment, which is presumably the poorer for that.  Competitive wage claims based on attracting talent may make us all worse off (except for Tony, of course).

The point is that while we may know in theory how to figure out what someone is worth, in practice this is extremely difficult, and doubly so where we cannot rely on the marginal contribution to firm revenue.

So how should we figure out what Tony Jones is really worth?  The reality is that in a market economy we can figure that out, but in a non-market economy (such as the ABC operates in) we can't.  Selling the ABC and seeing what extra value we get for Tony is probably the only sure fire way we can resolve this dilemma.

ADVERTISEMENT

Queensland party crackdown out of control

Every government has a reform program of some description.  The reform program of Campbell Newman's Queensland government is to expand, to a ludicrous and dangerous extent, the powers of the police.

Admittedly, the title of the Police Powers and Responsibilities and Other Legislation Amendment Bill doesn't have the same sort of grunting aggression as the Vicious Lawless Association Disestablishment Bill, which was passed earlier this year to target bikies.

But for all the absurdities of the anti-bikies legislation, the bill currently being considered by the Queensland parliament is probably worse.

The bogey-man in this bill is "out-of-control" parties.  No doubt you can conjure up such a threat to public order in your mind.  Hundreds of drunk teenagers spilling out on the street and damaging nearby property.

But according to the draft bill, a party is a gathering of twelve or more people.  And it is considered out-of-control if three people at that party do something like be drunk in a public place, cause excessive noise, unreasonably block the path of a pedestrian, litter in a way that might cause harm to the environment, or use "indecent" language.

The punishment for holding a party that gets out-of-control?  A $12,000 fine or a year's jail.  In other words, a party host is punished for the actions of party guests.  For good measure, the bill allows police to enter property uninvited without a warrant.

Out of control parties are a classic moral panic.  They involve teenagers.  They involve alcohol.  They involve new technologies — house parties are now being organised on social media.  This apparently makes them worse than they used to be.

Of course before Twitter and Facebook there was the text message.  People panicked about text message parties too.  And before text messages?  Well, teenagers clearly found some way to organise wild parties that ended in arrests.

Modern police forces have existed since the nineteenth century.  For two centuries parliaments have been loading the criminal statutes up with new offenses.  According to the government, "the ever increasing size, frequency and societal impact of these out-of-control events in recent times has necessitated the development of specific legislation".  Yet everything that makes an out-of-control party out-of-control is illegal already.

It is already illegal to be drunk and disorderly.  It is already illegal to riot.  It is already illegal to harass pedestrians, use indecent language, breach the peace, be a public nuisance, threaten another person, throw a bottle, damage property, assemble unlawfully, supply minors with alcohol, fight, show your private parts in public, be a hoon, light fireworks, endanger the safety of another individual, litter, trespass, and be excessively noisy.

A recurring feature so many legislative proposals in our modern era is that they mirror existing offenses.  At best, this makes them redundant.  At worst — as in this anti-party bill — they offer prosecutors and law enforcement officers a menu to pick and choose whatever charge will meet with the greatest punishment.

In other words, they vest police officers and prosecutors with enormous discretion to act, arrest, and charge however they like.  It has to.  There's no way the Queensland police could enforce the law, as written, on any of the innumerable parties that occur every weekend across the state.  Three people swearing at a party of more than a dozen guests that annoys the neighbours?  Hard to imagine a party that wouldn't fit this criteria.

A basic tenet of liberal democracy is that politicians — the representatives of the people — write the laws to shape the society they want.  The permanent, administrative arm of government merely enforces those laws, neutrally and consistently.

That's the ideal, anyway.  But not all statutes are enforced equally.  The police, and their prosecutors, have an enormous amount of discretion about what laws they chose to focus on.  (Hence the periodic "crackdowns" on jay-walking or speeding.  If all laws were enforced at all times, there would be no need for crackdowns.)

No matter how many rules we impose on police work, discretion is inevitable.  Inevitable but not desirable.  A liberal democracy is a government of laws, not a government of men, as James Adams said.  As far as possible, we don't want to trust justice and our liberty to the judgment of fickle individuals.

Police officers are no better or worse than the rest of us.  There are bad eggs in law enforcement, as there are in the general public.  And good eggs can sometimes have bad days.  Queensland's anti-party legislation empowers good eggs and bad eggs alike.

As does the anti-bikies legislation, which is so over-blown that it borders on surrealism.  Such laws invite the sort of miscarriages of justice that a liberal democratic legal system should strive to avoid Australians who don't live in Queensland should be paying attention too.

One feature of Australian federalism is that states learn from each other.  A law in one state is apt to be copied by another state.  We saw anti-bikies laws replicated across the country earlier this decade.  No question that all state governments will consider imposing Queensland-style laws themselves.

Defending his out-of-control parties bill, the Queensland Police Minister has argued that "the majority of people who do the right thing have nothing to fear".  Well, that's not the way the bill is written.  Not if the letter of the law is enforced.  No free society should rest their liberties on the discretion of the agents of the state.

ADVERTISEMENT

Why we must save more and the government must spend less

As well as establishing the Commission of Audit to ferret out savings, Joe Hockey has foreshadowed a sweeping inquiry to commence next year into Australia's financial system.

Such reviews in the past have focused on how to get a more level playing field between different financial institutions and how to overcome regulatory distortions.

However, in announcing the future inquiry, the Treasurer stressed that, "one of the main terms of reference will be to focus on how we as a nation can fund ourselves without relying on borrowing from the rest of the world".

Matching our aggregate levels of savings and investment (which is different from avoiding foreign investment) is a reasonable approach for a nation at Australia's stage of wealth and development.  A recent Deloitte report suggested we are not saving enough in superannuation by about 50 per cent, given retirement lifestyle aspirations and projected longevity.

The Commonwealth has commitments to higher levels of spending on education and disability in addition to the inexorable rise of health spending that an ageing population entails.  These factors appear to tilt expenditures further away from saving and towards consumption.

Maybe the Commission of Audit will help reverse this but that would represent a huge turnaround.

On average over the past 30 years, we have supplemented domestic savings by net capital inflows equal to about 4 per cent of national income.

These net capital inflows add to our income levels, though not, of course, as much as if we increase domestic savings by lowering our current levels of consumption.  Moreover, although the Australian economy has performed quite well over recent years, it has not done so over the longer term, nor compared with Korea, Taiwan, Singapore or China.

Since 2006, Australia's national investment has averaged a little under 28 per cent of GDP.

This is relatively high by sybaritic Western world standards, but low compared with many less wealthy countries (in China, savings are more than 50 per cent of GDP, while in Korea, Hong Kong and Taiwan they are more than 30 per cent).  These high savings levels by both rich and poor nations, contradict assertions that Australians cannot afford to save more.  In fact, one implication of the Deloitte's report is that we have to do so.

One reason we are under-saving is that the tax code favours consumption over savings.  "Earned" income is taxed at source and income on the part that is saved (representing consumption tomorrow) is taxed again.

A neutral regime would tax income only when it is spent and would not tax the interest or dividends on that part saved.

This was a central issue of the Henry Tax Review.

Ken Henry pointed out, "If you impose a 30 per cent tax on the returns to both work and saving, the effective tax rate on consumption, if you consume immediately, is 30 per cent.  But .... if you defer consumption for 10 years, the effective tax rate rises to around 40 per cent.  If you defer consumption for 20 years, it rises to around 50 per cent.  When inflation is taken into account, the compounding effect of the tax rates is, of course, even more extreme."

Tax concessions feature prominently in those nations with high savings rates.  Among other savings incentives, India allows the first 10,000 rupees ($171) tax free, (a significant sum when average incomes are only 72,000 rupees);  China has a concessional 20 per cent on interest, dividends etc and Japan, during its high- growth era.  effectively had no tax on household savings.

Australia also has lower taxation on certain savings.  Superannuation contributions incur a 15 per cent flat rate on voluntary contributions of $25,000 to $35,000 per annum depending on age and on the 9.25 per cent compulsory superannuation levy.

That compulsion on savings is in place because many Australians, like people in other wealthy nations, would choose to save less than they need.

This reflects most people's perceptions that an aged pension will be paid to them from future income earners.  Equity issues aside, current income earners' lower savings levels diminish future revenues that would enable this.

To adjust the fiscal regime away from one that taxes savings and future incomes means a considerable but welcome rejigging of the tax system to provide tax shelters for savings.

In addition it would require a marked reduction in government outlays, which are overwhelmingly allocated to current consumption.

ADVERTISEMENT

Australia steps off road to a climate dead end

After six years of negotiating for Europe's best interests, the Abbott government has sensibly aligned Australia's position in international climate change talks to the national interest.

Recently the Abbott government announced it wouldn't be lumbering Australia with more burdensome emissions cuts at this week's climate change negotiations in Warsaw, Poland.

Instead the bipartisan 5 per cent cut of emissions off 2000 levels would remain and no further tax dollars would be on offer for emissions reduction financing programs.

It's difficult to overstate the strategic realignment of the new government's sensible policy change.

To increase their clout and aid the negotiating process countries combine to create negotiating blocs.  The developed world breaks into two main blocs — the European Union and the loose Umbrella group of non-European developed economies.

The negotiating trajectory of the Brussels-led delegation has been to argue for a binding international agreement while progressively putting more ambitious proposals to cut emissions on the table in the hope that both rich and poor countries will follow their leadership.

REALITY CHECK

Since its foundation after the negotiation of the Kyoto Protocol, the Umbrella group has largely served as a counterbalancing reality check on Europe's ambitions.

Broadly, the Umbrella group has argued for a voluntary approach to cut emissions using policies that suit each country's national interests, while also insisting that developing countries that are the source of rising emissions also carry their share of the carbon cutting load.

Yet despite being chair of the Umbrella group, under the Rudd and Gillard governments Australia drifted toward the European position.

The absurdity of Australia's break with Umbrella group countries was highlighted at last December's negotiations surrounding the extension of the lapsed Kyoto Protocol.

On December 31 last year the first phase of the 1997 treaty expired.

In the second phase, European countries signed themselves up to cut emissions by 20 per cent off 2000 levels by 2020.

The current round of climate change talks is to secure a successor to Kyoto by the end of 2015 to then become operational after 2020.

The response from almost all of the Umbrella group countries to the European Union's "leadership" was to book flights and go home.

Having not ratified the first Kyoto phase, the United States did nothing to correct its course.  Countries that had previous ratified the Kyoto protocol, including Canada, Japan, New Zealand and Russia, followed the United States' leadership.

DEEPER CUTS

The Gillard government did the reverse and extended Kyoto and signed up to deeper cuts.

Worse, the then-opposition, keen to avoid the climate change wedge that the Rudd opposition rammed between itself and the Howard government in 2007 about ratifying the original Kyoto Protocol, lined up with the government.

Even after the election, the Climate Change Minister, Greg Hunt, reaffirmed the newly commissioned government's policy of following through Labor's plan to extend Kyoto arguing "in opposition, we gave in-principle support, in government, we still have in-principle support".

Hopefully the renewed wariness of the Abbott government to international climate talks may prompt a reassessment.

Despite the heavy cost that the struggling European continent is imposing on itself, having imposed burdensome emissions cuts the European negotiating position does make a modicum of sense.

Once the heavy cost of policies to cut emissions is imposed, Europe's interest is squarely to get other countries to commit themselves to comparable action.  If they don't, Europe shoulders the cost of cutting emissions while global emissions continue to rise.  Meanwhile, Europe has met its emissions targets through a mix of economic collapse during the global financial crisis and buying cheaper emissions cuts from developing countries.

But it appears that even Europe's position is fracturing.  Major coal producing and consuming countries are increasingly voicing their concern about the path Brussels is leading them down.

Recently the Polish environment minister was reported saying "this concept of leading by example is not delivering" and follows earlier Polish vetoes against Europe increasing its emissions cuts.

Not that Poland is alone.  On Friday last week, the Japanese government formally confirmed its previously hinted decision to reduce its 2020 emissions reduction target from 25 per cent to only 3.8 per cent.  Both economic and environmental factors are at play in Japan's decision;  the most notable being their choice to use coal, oil and gas for stationary energy to replace nuclear power post-Fukushima.  Japan's act is a salient reminder to green groups that opposing nuclear power and demanding higher emissions cuts is an oxymoron.

It's also a clear signal that despite the backdrop of hefty rhetoric from Labor and green groups to the contrary, the Abbott government's disengagement to burdensome targets is closely aligned to like-minded countries.

ADVERTISEMENT

Policy failure led to loss

The election of the Abbott government a little over two months ago heralded the end of arguably the worst government in modern Australian history.

While injurious political leadership changes and subterranean shifts in internal political alliances unquestionably contributed toward instability of public administration, the fact is that innumerable policy failures, unfolding over six years, were the key causes for the change in government in early September.

In no particular order, arguably the five worst economic policy failings overseen by the Rudd and Gillard governments were as follows:

Carbon tax and climate change

After three years of policy uncertainties over the timing of an artificial emissions trading scheme organised by government, Julia Gillard became central to one of the more infamous episodes in Australian political history when she introduced a carbon dioxide tax, in direct contrast to an August 2010 pre-election statement not to do so.

The Labor government also extended the Howard government's scheme of mandating the use of renewable energies in Australia's energy mix by 2020, giving emphasis to the installation of subsidised solar panels and solar water heaters by households.

To administer the Rudd-Gillard green leviathan, the government employed over 1,000 staff in a Climate Change Department, a Climate Commission publicity body headed by climate change alarmists, and a gamut of smaller agencies dedicated to doling out corporate welfare subsidies and loans to wind and solar power companies.

Determinations of allowable price increases by state electricity regulators have shown that about eight per cent of average retail residential electricity bills is accounted for by the carbon tax, with the renewable energy target and other green schemes raising costs by another four per cent.

Fair Work Act (FWA)

The erection of a centralised workplace relations regulatory apparatus, under the Rudd-Gillard FWA, was arguably the greatest concession accorded to the trade union movement for its astonishing $30 million in financial support for Labor's 2007 election campaign.

The capacity for individual employees and their employers are arrive at their own bargains over working conditions has been severely curtailed under the Rudd-Gillard workplace relations regime.

In addition, representatives of trade unions have been legislatively granted unprecedented "right of entry" into private sector workplaces.

Under the sprawling Fair Work bureaucracy, including a Fair Work Commission with significant arbitral powers, decisions such as rising minimum wages, elaborate penalty rates, and recent hikes in economy — wide regulated wages for apprentices threaten the capacity of young people and the unskilled to attain secure employment.

Unemployment had risen in trend terms over the life of the Rudd and Gillard governments, remaining consistently at about one percentage point higher than under the predecessor WorkChoices regulations.

While many factors inform unemployment outcomes, there seems little doubt that implementation of a centralised workplace relations system, which has fuelled rising labour costs in recent years, would be one of these.

Fiscal mismanagement

One of the more enduring policy failings during the Rudd-Gillard government was its deliberate destruction of Australia's sound public financial management settings, and its repeated, but tragi — comically unfulfilled, promises to return the federal budget to surplus.

Deeming discretionary interest rate reductions, exchange rate depreciation and automatic fiscal stabilisers as insufficient to rescue Australia from widely — held pronouncements of economic doom during the 2008-09 global financial crisis, the Rudd government plunged the budget into deficit and became a global frontrunner in the race to rack up public debt.

Rather than saving the economic structure of Australia, the stimulus package distorted our economic structure by prioritising political objectives, such as the desire to tide over unionised construction workers for several months, in some cases years, by refurbishing or constructing primary and secondary school buildings, over private sector priorities.

As is well known, some of the stimulus programs were also implemented at a heavy human cost, such as the tragic home insulation program originally proposed by Bob Brown and the Greens.

Leaving behind a budget deficit of some $30 billion, and gross public sector debts perilously close to the $300 billion mark, the former government has left behind a legacy of fiscal imprudence and waste which is likely to take many years to resolve.

National Broadband Network (NBN)

With much fanfare prior to the 2007 election, Kevin Rudd proposed a NBN providing high-speed broadband internet services, at a cost to the Australian federal taxpayer of about $5 billion by 2013.

Originally intended to be undertaken in partnership with the private sector, in early 2009 the government announced it would itself spend up to $43 billion replacing Telstra copper wire infrastructure with fibre optic cabling.

Whereas the projected costs of installing the NBN have blown out astronomically, the rollout and customer targets had been dramatically curtailed by the former government over time.

In 2010 the government promised that the NBN would be available to 1.3 million premises, and servicing about 500,000 people, by June 2013, however the latest information reveals that the network has passed only 207,500 premises and less than 34,000 households were actively using the service.

Labor's broadband policy clearly represented a throwback to the period prior to telecommunications deregulation, as taxpayers are forced to bear the costs incurred by a governmental monopoly, NBN Co, charged with rolling out the network.

The Rudd-Gillard government has lumbered taxpayers with an infrastructure white elephant of colossal scale which, in the absence of corrective actions, will deliver internet at slower speeds than other countries and at much higher costs.

Live cattle export ban

There is never any delicate manner in which cattle can be slaughtered to provide nutrients for the masses, but the suspension of the month-long live cattle trade to Indonesia in mid-2011 has simply been an unwarranted economic disaster for an efficient and reputable agricultural industry.

Inspired to act by sensationalist reporting by Australian state-owned media about animal welfare practices overseas, the Gillard government's temporary halting of live cattle exports to Indonesia deprived hard — working cattle producers in northern Australia of an ability to generate incomes.

The ban also severely disrupted elements of the beef supply chain in Indonesia, and has needlessly strained economic and diplomatic relationships with our northern neighbour.

The adverse combined effect of these, and other, policy positions adopted during the terms of the Rudd-Gillard government were manifold, and included the declining cost competitiveness of business, reduced job opportunities especially for those on the fringes of the labour market, and, more generally, reduced economic freedom for all Australians.

Unless what is left of the former crop of Labor government ministers and backbenchers concede the gross errors of their policy ways from 2007 to 2013, they are at risk of being left on the political sidelines as the Abbott government gradually takes credit for correcting past policy mistakes.

ADVERTISEMENT

Ultimate sacrifice should not be politicised

Paul Keating said that when you change the government, you change the country.

But if you're Paul Keating you get to keep on changing the country regardless of the fact you lost government 17 years ago.  If you're Paul Keating, the nation's tax­­payer-funded cultural institutions give you a platform for your views on politics, history, and all that's wrong with Australia.

This week the ABC started broadcasting its interview series with Keating.  Why the public broadcaster should provide Keating the privilege of talking about himself for four hours in prime time is a question the new Coalition government will probably be too afraid to ask.

When you change the government it seems you don't get to change the ABC.

It's one thing for the ABC or our public universities to indulge Keating — that's what you'd expect.

But for the Australian War Memorial to give Keating a stage for his partisanship and politicking is a travesty.  The War Memorial is an institution that must be above politics and it must be seen to be so.

On Monday, Keating delivered the Remembrance Day commemorative address in Canberra at the War Memorial.  In it he gave the classic leftist interpretation of Australia's history, which is of our past as the march towards an inevitable social democracy.  This interpretation of our history is what the national curriculum now requires to be taught to every school student.

After the address, a bronze plaque at the entrance to the Hall of Memory was unveiled.  On the plaque is inscribed the text of the Remembrance Day speech Keating delivered at the War Memorial in 1993.  Also unveiled was a new inscription on the Tomb of the Unknown Soldier — "He is one of them, and he is all of us" — words taken from Keating's speech 20 years ago.

The decision of the Council of the War Memorial to venerate Keating in such a way is more than inappropriate.  It besmirches the memory of those the memorial commemorates.

A few weeks ago it was revealed the War Memorial Council had originally planned to not only put Keating's words on the Tomb of the Unknown Soldier but also remove from the tomb the inscription "Known unto God".

Following the intervention of the new Coalition government, a "compromise" was agreed.  Keating's quote would still be added to the tomb but "Known unto God" would stay.

Such is the way the left operates.  It makes an ambit claim that swings the pendulum of what is acceptable two degrees to the left.  Then, in the name of compromise it agrees to swing the pendulum only one degree to the left.

When Tony Abbott next lays a wreath at the Tomb of the Unknown Solider, Keating's words will stare him in the face.

The only compromise the Coalition should have provided to the War Memorial Council after the council's plans were discovered was to offer to accept the resignation of the council members rather than have them sacked.

There's no justification for the reverence given to Keating's 1993 speech.

Parts of it are moving and noble, but other politicians have also made moving and noble Remembrance Day speeches.  John Howard in 1997 talked of those Australians "whose lives were lived in deeds, not years, in sacrifice, not heartbeats in service ...".

Keating's "He is one of them, and he is all of us" is nearly as trite as Julia Gillard at the ALP national conference in 2011 declaring "We are us".

Significantly, not in his speech in 1993 nor on Monday did Keating once refer to the freedoms at stake in our country's conflicts.  In contrast in 1997 Howard spoke of those who fought to ensure our "freedom to think, to move, to speak, to worship, to have a say in the election of governments ... [and] to raise a family and to educate our children".

The words of neither John Howard nor Paul Keating should appear at the War Memorial.

It is not for any politician, living or dead, Liberal or Labor, to take ownership of the sacrifice of those who fought and died in Australia's wars.

It is not within the gift of any member of the Australian War Memorial Council to give a politician such ownership.

ADVERTISEMENT

Terminate the renewable scheme now

The sun is setting on the carbon tax.  At its current rate, $24 per tonne of CO2, the tax increases the wholesale electricity price by 55 per cent and a Treasury endorsed OECD paper estimates Australia needs a tax of $78 per tonne to meet its emission restraint goals.

Other countries are not following Australia's lead in imposing a cripplingly high carbon tax — they are not even taxing emissions at the European Union's $6 per tonne.  The IPCC's recent grudging acknowledgement that its forecasts of soaring global temperatures have failed to materialise over the past 17 years can only reinforce governments' resistance to penalise their economies in this way.

The carbon tax is not the only such burden carried by Australia's producers and consumers.  Other measures including subsidies from general taxation and renewable energy requirements the cost of which have led to reduced industrial and household demand.

With the discontinuation of the carbon tax, alongside the $2 billion a year in subsidies from the "Clean Energy Finance Corporation", these other measures' effects become more prominent.

Labor's budgetary expenditure on emission restraints was about $4 billion a year.  The Coalition's average annual spending, including $800 million on Direct Action, looks to be under $2 billion.  Doubtless this will be further pared.

Renewable Energy requirements for electricity supply have been around since 2001.  Over the years the mandatory share has been expanded and is scheduled to ramp up to constitute a notional 20 per cent of supply by 2020.  Aside from around 15,000 GWh of (commercial) hydro, this has been defined as a 2020 target of 45,000 GWh of subsidy-reliant electricity.  The target comprises 4,000 GWh for small scale, roof-top solar facilities and 41,000 for larger facilities, overwhelmingly comprising wind farms.

Overall, renewable requirements add about 40 per cent to the wholesale electricity cost.

Wind generation costs are at least $100 per GWh, compared with less than $40 for coal, the predominant electricity supply source.  Wind also involves some increased network and back-up costs.

Roof top solar facilities have fallen in price and now receive less favourable regulatory treatment than previously.  Nonetheless, their electricity generating costs and grid connections that are subsidised by commercially supplied electricity makes roof top solar at least five times more expensive than coal.

Progression to the 45,000 GWh annual target would involve a cost and consumer subsidy to renewables rising year-by-year to $5 billion a year by 2020.  By then the renewable program would have imposed a total cost amounting to some $23 billion.  And, because the subsidy extends for the 15 year life of each facility, (solar roof top installations receive this subsidy up-front) the annual cost will continue to increase after 2020 before gradually tapering off and exhausting itself by 2035.

Changes to the program ostensibly follow advice from the Climate Change Authority (CCA).  Appointed by the Rudd Government and chaired by Bernie Fraser, the authority's legislation was intended to lock-in the program, preventing a future Coalition government from dismantling it.  This built-in restraint could be overcome.

Options for modifying the scheme include:

• The "Origin Energy" proposal, which reduces the renewables total to a genuine 20 per cent by 2020 as initially intended.  This would imply a maximum of 33,000 GWh of subsidised renewables, reducing the 2020 annual cost to $3.7 billion.
• A variation of this would allow only the existing and committed projects to proceed as subsidised.  This would mean about 15,000 GWh and an annual cost rising to $1.7 billion by 2020.
• The full costs could be saved if the program were to be totally abandoned, forcing renewables to immediately compete without subsidy, as their adherents always claimed they would eventually be able to do.

Beneficiaries would argue that terminating the renewable subsidies would constitute "sovereign risk" and adversely affect investment generally.  But we are already seeing previously guaranteed income streams from overseas renewable schemes facing early termination.  No investor can reasonably expect a subsidy to prevail for 15 years and there would be few precedents for a government committing its successors to 24 years of worthless expenditure.

The case for an immediate termination is strengthened by the fact that the original rationalisations for the subsidy program have been undermined.  No longer is it seriously maintained that in a few years' time renewables will, with modest initial support, become competitive with conventional supplies.  And it has also become clear that the world will not undertake carbon dioxide abatement measures comparable to those of Australia hence any domestic measures have a trivial effect.

ADVERTISEMENT

James Packer pays $60 million in voluntary taxes

So two things happened.  First, Crown Resorts Limited — whose Executive Chairman is James Packer — was awarded an exclusive license by NSW State Premier Barry O'Farrell to operate the A$1.5 billion Barangaroo Point Casino complex in Sydney.  That's a clear win for Crown, and probably for Sydney too.  Second, a few days later, James Packer — the billionaire private citizen, not the Crown Resorts company in which he is a shareholder and Chair of the Board — made a A$30 million donation to the Western Sydney Arts Fund.  Crown Resorts kicked in another A$30 million through its corporate social responsibility fund.

Mr Packer is reported as saying that the Western Sydney contribution was motivated by a campaign by the Telegraph that found that only 1% of NSW's art budget found its way to Western Sydney, which has almost a quarter of the state's population.  He also suggested that his sister Gretel Packer — "a long time supporter of the arts" — put him up to it.  Nice one, Gretel.

Now dark rumblings have erupted through the social media-verse, hinting at the grubbiness of it all.  Many concerned citizens, it would seem, see these two events as obviously related, with a strong whiff of shadiness.  There are circulating calls for Sydney arts organisations to reject the tainted "blood money".

These reactions are naïve.  First, Mr Packer's donation is to independent organisations — such as the Art Gallery of NSW — that can then spend the money in the way they choose.  Second, direct funding from the government is no less troubling, in that this funding is normally paid for through taxes.  Taxes are coerced extractions of wealth from citizens.  Unlike Mr Packer's contribution, the taxes that fund the arts organisations are not voluntary.  If you don't like them, or what they're spent on, you still have to pay them, and if you don't you go to jail.

Consider how different it would be if we instead passed a new law called the "James Packer has to pay A$30 million in extra taxes law".  And let's make this a hypothecated tax, directing the revenue to Sydney arts.  The outcome would have been the same, once it had been washed through the tax system and cleaned as government funding.  Ignore the economic distortions this would create, and the dissipation to overhead costs, or even the inequity.  The only difference is that we would now have an entirely coercive system.  From an ethical standpoint, that is a worse outcome.

Voluntary funding of public goods — whether arts institutions, hospitals or schools — is something we should aspire to, not cringe from.  It is a noble form of citizenship, and if it helps, just think of it as voluntary taxes.

This is of particular value in the field of arts and culture.  Indeed, it can be a much-preferred form of funding for an organisation, which can then choose whether to direct this revenue to line operations, or use the support to take greater risks, or engage in more visionary projects that might otherwise run into the kind of conservatism that the economics of median voter theory predicts.

The A$30 million donation by Crown Resorts is another matter, but that is something between Crown's shareholders and the Board that authorised the payment.  Maybe that was part of the license negotiation, or maybe not.  That's a matter between Premier O'Farrell and his voters.

But it should be perfectly clear that Mr Packer — private citizen — has done a good and generous thing for Sydney arts.  If we will recognise that, we further encourage other good citizens also to consider what voluntary taxes they might also pay.

ADVERTISEMENT

Freedom: the forgotten human right

George Brandis is right.  Sure, the phrase 'the freedom agenda' sounds a bit naff.  But a reorientation of public policy towards fundamental civil liberties is long overdue.

Australia's well-funded human rights establishment has completely vacated the field on basic rights like freedom of speech, freedom of conscience, and freedom of association.

Brandis' freedom agenda consists of two major proposals.

First, he wants to reform the Australian Human Rights Commission to include at least one freedom commissioner along with the six — yes, count them, six — commissioners dedicated to anti-discrimination and social justice.

Second, he wants to repeal section 18C of the Racial Discrimination Act, the provision which Andrew Bolt was famously found to have breached in 2011.

More on 18C in a moment.  The first idea is the most important one.  Institutions are more powerful than laws.

It is utterly indefensible that a body charged with protecting the great pantheon of human rights — according to its enabling legislation, those listed in the United Nations' International Covenant on Civil and Political Rights — should be so myopically focused on anti-discrimination.

That Brandis' plan to add a freedom commissioner — maybe just one, against six — is even in the slightest bit controversial demonstrates how skewed this body has become.

Here's an exercise.  Let's grant the commission the benefit of the doubt and accept it is statutorily obliged to weigh the right to protection against discrimination against the right to free speech.  (Somehow anti-discrimination always seems a bit weightier, but no matter.)  Yet even when such a balance does not need to be struck, the commission does not bother itself too much with free speech.

Take one of the most serious threats to free expression of the last decade:  Stephen Conroy's internet filter.

The Australian community has been debating this for the better part of a decade.  But the first mention the commission made of internet filtering was in September this year — that is, long after it was dumped, and after the government that proposed it was dumped.

Nor has the commission stepped up to the plate on the censorious nature of Australia's film and literature classification scheme.  In fact, the few times it has mentioned classification, the commission has proposed expanding classification to include racism (see, for instance, here).

The commission harbours a systemic, consistent, and unforgivable bias against some of the key rights it is supposed to protect.

Brandis' problem is that the human rights commission is probably unreformable.  But that's OK.  It's almost certainly unnecessary.

The commission's silence on key liberty questions demonstrates that.  Civil society organisations exposed the internet filter's threat to our rights, not the government's official human rights watchdog.

So if the human rights community seriously can't abide a freedom commissioner, then the commission ought be put out of its misery and abolished.

(At Crikey, Bernard Keane has argued we still need the commission's tribunal functions to adjudicate discrimination claims.  Perhaps.  But if so, let's spin off an anti-discrimination tribunal, and stop pretending it is anything but a minor specialist wing of the judiciary.)

Over the next few months we'll be able to watch the commission make the political case for its own abolition better than any outsider could.

Section 18C of the Racial Discrimination Act is one of the commission's darlings.  They are going to oppose its repeal vehemently.  See this piece in Fairfax papers over the weekend by the new race discrimination commissioner, Tim Soutphommasane.

The Coalition has promised to repeal section 18c "in its present form".  The present form makes it unlawful to offend, insult, humiliate and intimidate a person or group on racial or ethnic grounds.

There's an open question as to whether the Abbott Government will just delete the first two words — offend and insult — or all eliminate the whole section entirely.

It's not clear what the former approach would achieve.  Judges have unhelpfully preferred to read all four words together, rather than distinguishing each word individually.

Nevertheless, the most egregious sort of acts which could be considered to be humiliation and intimidation under section 18C are also covered by other state and federal statutes.  There are many laws against intimidation, disorder, stalking, and offensive conduct — to say nothing of state racial and religious vilification laws.

Soutphommasane rightly says section 18C has been used against people who aren't conservative columnists.  But those other uses do it no credit.

I wrote about one section 18C case in the Drum, which targeted a news website for anonymous comments.

In September, another case in the Federal Court fined a lawyer $12,500 for calling a security guard a "Singaporean prick" four years ago, and telling them to go back to Singapore.  Foul and offensive, yes.  But a society that relies on years of litigation to patrol the boundaries of civility is not a healthy society.

Now there's a looming case against the anti-Israel Boycotts, Divestments and Sanctions campaign.  A judge will decide if BDS is anti-Semitic too.  Then it will be "official".

In such a way, we substitute political and moral argument for lawyers and legal acrobatics.

Of course, any freedom commissioner worth their salt would be highly critical of conservative governments.  They would oppose the Queensland Government's bikie laws, the New South Wales government's restrictions on union campaign spending, and the national security state's proposed mandatory internet data retention scheme.

Then they would target our out-of-control defamation laws.

But these are contentious things.  Perhaps it's safest just to eliminate the Australian Human Rights Commission altogether.

ADVERTISEMENT

Authority's new emissions target unrealistic and irresponsible

The Climate Change Authority's recommendation to increase Australia's emissions target is as unsupportable as the policy it was designed to influence.

The authority, established by the Gillard Labor government, recently released its draft report recommending Australia's trajectory for cutting emissions.

Despite Abbott government plans to junk the tax, the emissions trading scheme and the authority, the draft report recommended increasing Australia's targets from a cut of 5 per cent of 2000 emission levels to 15 per cent or 25 per cent by 2020.

The 5 per cent target does sound modest, until it is properly analysed.

According to the authority's report, a seemingly modest 5 per cent amounts to a 23 per cent reduction off business-as-usual emission levels in 2020.

Even that is modest compared with other BAU projections.

One UN dataset suggests that to meet a 5 per cent cut may require Australia to nearly halve its emissions off 2020 BAU levels.

The authority also modelled a more ambitious 15 per cent cut off 2000 levels, equivalent to a 32 per cent reduction off 2020 BAU levels;  and a 25 per cent cut, equivalent to a 42 per cent cut.

Lobbyists and non-government organisations regularly make calls for such deep cuts, but they do so without responsibility.  That doesn't hold true with the authority.  It was designed to be the de facto setter of Australia's emissions targets.

Politicians were expected to accept the authority's recommendations that could potentially come into force if there was no political agreement to reject them.

Having so much confidence in a so-called independent body requires a misplaced confidence in its analysis.

The authority's recommendation to cut emissions by between 30 per cent and 40 per cent off BAU levels wrongly assumes the extent to which other countries are cutting emissions.

At the end of last year the Kyoto Protocol expired, and with it went the only operational, comprehensive agreement binding developed countries to cut emissions.  Before it expired, a skeleton commitment crew of Australia and European countries agreed to give it a last breath of life until 2020.  Previous ratifying countries, including Canada, Japan, New Zealand and Russia, walked away.  The US continued to stay away.  Negotiations are now being held to conclude a successor treaty by the end of 2015 to be operational for 2020.

The Climate Change Authority assumes the pledges countries are making in these negotiations will be met.

Yet negotiation for a comprehensive international agreement among major emitters to cut emissions has not emerged in more than a decade.  Instead, contrary evidence is starting to appear.

Last week there was a report that the Japanese government is considering weakening its emissions reduction target from 25 per cent off 1990 emissions levels to an increase of 3 per cent on 1990 levels.

It's not the first time Yes Minister-style "courageous" assumptions have been made by government agencies to justify significant climate policies.

Similar assumptions were included in the federal Treasury's 2011 Strong Growth, Low Pollution modelling supporting the introduction of the carbon tax.  To prove Australia would not be economically harmed by the tax, Treasury assumed by 2016 developed countries would take on equivalent costs to cut emissions, and that many developing countries would follow by 2021.

There was little evidence then;  it looks even less likely now.

The modelling also assumed 61 per cent of emissions cuts would be purchased cheaply offshore, despite the government then capping offshore permits at 50 per cent.

The assumed extent to which other countries are cutting emissions clouds the judgment of those defending the former government's policies.  There's also a dismissiveness of the structural flaws of these policies.  A government-mandated emissions trading scheme will never give the marketplace the certainty it requires.

To its credit, the authority correctly noted "longer-term guidance on emissions reduction goals is a critical factor for many investment decisions, particularly in long-lived capital items", such as energy investments, that would drive emissions cuts.

But as long as politicians decide the supply of permits, and decide demand by setting who is required to buy the permits, political considerations will influence their decisions and hence the rate of carbon-based taxation.

It's a particular problem when different studies have concluded Australia needs a permit price as high as $51 a tonne to achieve the 5 per cent target that has bipartisan support.

In response to this criticism, government-sponsored bodies argue for complementary mechanisms, such as long-term purchasing contracts for expensive renewable energy and "gateway mechanisms" that set upper and lower long-term emissions caps.

But such measures are tantamount to price-fixing in a marketplace, demonstrating the market is primarily for show and not setting prices.

Such behaviour is consistent with the authority's recommended ambition — by suspending reality.

Legal rights eroded without a whimper

The right to silence is under constant threat from the many new laws passed at state and federal level.  This legal right forms one of the core aspects of our criminal justice system:  that no one should be compelled to incriminate him or herself.

Such a crucial protection against injustice should not be eroded by dictatorial legislation that demands a rubber stamp from a reluctant judiciary.

Our common law has long held that to force people to condemn themselves is oppressive and contrary to justice.

Yet for years state and federal governments have passed laws that have undermined or directly removed this legal right.  Governments, concerned that they do not appear ''tough on crime'', get frustrated when due process in the criminal courts gets in the way of increasing the conviction rate.

A recent decision by the High Court clearly shows the long and sorry history of contempt that our Parliament has for the right to silence.  Lee v NSW Crime Commission concerns the NSW Criminal Assets Recovery Act 1990.

This law allows the police to force people to incriminate themselves, even if they have a criminal trial approaching.  Unfortunately, the court upheld this law and now the accused will have to produce damning information ... against himself.  This means he is helping the prosecutors better fulfil their job, completely ignoring his own right to not make things worse for himself.  Why would the High Court support such a law?

The judgment shows us how the right to silence has been whittled away for decades.  Over the years, legislation that has undermined this legal right has been confirmed in case law and those same decisions have paved the way to trump centuries of legal protection.

As far back as 1909, Huddart, Parker & Co v Moorhead brazenly noted how Parliament has the power to change ''any principle of British criminal law, no matter how fundamental''.  Half a century later, another High Court decision, Lockwood v Commonwealth, noted ''no court'' could declare illegal any law that was clearly stipulated in legislation.  Ultimately, they argued that ''it is a rule of the common law that the common law itself gives way to statute law''.

In other words, a citizen could not possibly refuse to make incriminating statements to authorities when faced with legislation that expressly tells them they have to answer.  Because of the nature of our parliamentary system, the judiciary cannot overrule legislation that comes from our democratically elected Parliament.  The court's role is to apply the law:  no more, no less.  What we need is for governments to stop undermining embedded common-law principles to achieve political ends.

Lee emphatically illustrates that the government is entitled to remove fundamental rights, as long as the legislation they write specifically gives them that power.  So the government can grant themselves the power to remove one of the key protections we have against an overreaching authority.

Lee shows that over the past century, governments have been and are still abusing this power, playing with the fabric of our legal system.

Time and again, arguments of ''the greater good'' have been used to curtail our legal freedoms.  There is always a new enemy that can only be beaten if we just give up another right, another freedom or privilege.

The right to silence is losing the battle being waged by our politicians.  It's time our elected leaders back off the principles that have built the great democracy and justice system that we have today.

Innocent on defence with Bill

The Tasmanian Government should abandon the Bill to introduce unexplained wealth laws.

The new law will not catch the crooks, but has a strong chance of trapping innocent people.

It was once famously noted the "one golden thread" throughout the centuries of common law is the onus of proof lies with the accusers.

As early as 1471 jurists noted the law would "prefer 20 guilty men to escape through mercy, than one innocent to be condemned unjustly".

The burden of proof and the right to silence helped to ensure the innocent were protected.

The Crime (Confiscation of Profits) Amendment (Unexplained Wealth) Bill 2013 will bring in sweeping new laws that would allow the state to confiscate private property.

The legislation plans to fight organised crime, hitting them where it hurts:  their wallet.

If you cannot explain your "wealth", the state will forcibly take your assets.

These powers come at a cost though:  Tasmanians' legal rights.  The rule of law has been shoved aside to chase those who move in the underworld.

The power will give the police a wide net which could all too easily punish those who are simply in the wrong place at the wrong time.

You will be forced to prove your property was legally acquired.

This is clearly reversing the onus of proof.

This puts the defendant in an impossible situation.

The police do not have to do the leg work of proving alleged criminal activity;  instead you have the hard task of producing statements, deeds or any other potentially damning document.

The accused is already on the back foot, working up from the assumption they are guilty until proven innocent.

Too bad if you are a small business owner without the paperwork and lawyers ready at hand;  the police will seize first and ask questions later.

Then there is the removal of the right to silence.

Not only are the authorities assuming your guilt, you are not even allowed to keep quiet until you have a chance to figure out what is going on or until you have managed to find a lawyer.

Any "evidence" that the police or courts demand have to be presented:  they could be papers, receipts or even clothing.

You have to hand it over;  even if there is a chance it may incriminate you.

Apart from Tasmanians' fundamental legal rights being attacked, the financial and emotional cost to individuals is huge.

All of your worldly possessions are up for grabs — your home, your savings, even your business.

All may be confiscated if you cannot prove that they were legally obtained.

Fair enough, you may be thinking:  criminals do not deserve to profit from their crimes.

However, the reversal of the onus of proof means that anyone could be forced to explain their private affairs, and the only evidence needed to remove your property is the police's suspicion.

Your house or business could be taken away just because someone had a hunch.

And not all property is owned outright, and this poses further problems.

Section 153 of the Bill spells out that if you are unfortunate enough to own property with someone who gets their assets confiscated, your share of the property is taken, too.

Your only hope is that you can stump up the cash quickly enough so you can buy out the accused's share, or that the property is readily "divisible".

Otherwise your hard earned is taken away and there is very little you can do about it.

Organised crime is an awful stain on our community.

The violence and destruction it brings must be combated, but unexplained wealth laws are not the answer.  They simply do not work.

They have been largely unsuccessful in catching major criminals in other states, yet it gives the Government sweeping powers to further intrude in our lives.

Yet now the Tasmanian Parliament wants to remove centuries of legal protections.

Your most valuable possessions are at risk — your house, business and assets.

The stakes are too high:  these laws could leave you homeless, unemployed and without a cent to your name, and all because of a mere suspicion.

The Government should abandon this legislation before it is too late.

ADVERTISEMENT

Never trust the 'diary' of a political spinner

Diaries claim to reveal more about their author than a traditional memoir.  They usually reveal much less.

Hopefully Bruce Hawker's diary, published this week as The Rudd Rebellion:  The Campaign to Save Labor, is not, in fact, an accurate account of the thoughts of Kevin Rudd's chief strategist during the 2013 campaign.

If it is, then Hawker has a crippling lack of self-awareness.

Take just one example.  Hawker does not explain one of the most bizarre and ludicrous decisions Labor made throughout the first few weeks — to run a scare campaign on the GST.  The only justification for this scare was the Coalition was going to conduct a broad tax review.

On this thin hook Rudd hung almost his entire economic message.  Don't vote for Abbott:  he'll increase the GST.  Don't vote for Abbott:  he'll increase the GST.  It was unrelenting and desperate and obviously false.  The word "vegemite" does not appear anywhere in Hawker's diary.

So let's be charitable and say there was a lot more to the Labor campaign than Hawker suggests.

The political diary is the falsest, most self-serving form of confession.  No wonder it's grown to be a favourite genre for political warriors.

For a long time it was a tradition that Australian politicians wrote themselves out of their own memoirs.  The political historian Sean Scalmer points out that Australia's insider accounts tended to be an account of political history where the protagonist was strangely missing.

Alfred Deakin's story of federation included this disclaimer:  "Those who desire to know the part the writer himself played in the public debates or campaigns must turn to the Reports published officially or by the press."  What a tease.

Over time such nineteenth century modesty was abandoned.  The audience came to expect more reflection and more personality in political memoirs.

Memoirs are usually written years after the events they depict.  They have a certain distance.  Diaries promise something else entirely — a sense of intimacy with the author.

In theory, political diaries can take readers inside the tent.  More than memoirs, they can convey some of the pace and excitement of politics, the sort of energy and uncertainty that is hard to reproduce in retrospect.  And — most of all — they do so in an unedited, raw and highly subjective fashion.

After all, diaries are where we keep secrets.  That's their appeal.  To read a genuinely private diary — even of someone long dead — feels like crossing an ethical boundary.

The modern political diary is the exact opposite of this.  They are deeply self-conscious.  They are public statements only pretending to be private.

Of course, every political diarist promises their book has been published with minimal edits.  But there is no reason to believe, and every reason to doubt, these books are faithful records of the private inner thoughts of their subject.  These diaries are written to be read.  Hawker is a spinner.  That's his job.

Samuel Pepys — the diarist by which all others are measured — wrote his diary in code and it was not published for 150 years.  Bruce Hawker's diary was published in 50 days.

Why does this matter?  Because it's deceitful.  The modern political diary is narrative construction and score settling and blame shifting masquerading as honesty.

When Hawker skips happily over the most bizarre decisions he and Kevin Rudd made, it's obvious readers are being played.

The interest in political diaries does not come from the revelations about how the author felt in key campaign moments, but what they want the reader to believe they felt.

And it seems, as Katherine Murphy points out in the Guardian, that Hawker wants to be seen as a nihilist.

I don't mean to pick on Hawker specifically.  Few political diaries show the author in a positive light.

The 2010 equivalent of Hawker's 2013 diary was Paul Howes' Confessions of a Faceless Man.  It was as much a confession as the author was faceless.  Howes' diary was obviously supposed to be an apologia for his highly public role in the spill that replaced Kevin Rudd with Julia Gillard.

But as the blogger Piping Shrike has argued, the only impression Howes' diary gives is that high politics is utterly inconsequential.  Howes surely doesn't believe that nicknames and YouTube videos win elections, but — if one were to trust his diary — they seem to have been his primary focus during the campaign.

When Mark Latham released his diary in 2005 it was impressive how unguarded it was.  It was packed with devastating character assessments.  Its depictions of internal Labor politics were so sharply negative they could have been satire.

But since then we've come to realise that bile and insult is actually Latham's usual writing style.  His diaries weren't an expose.  They were an audition.

There was nothing revealed in Latham's diary of his character that he hasn't revealed over and over in the years since it was published.

Just as there is nothing in Bruce Hawker's diary that he didn't want thousands of people to read.

The political class has co-opted the private intimacy of the diary to deliver nothing more intimate than snarky interpersonal rivalries and ham-fisted narrative-shaping.

But that's politics, I guess.

ADVERTISEMENT

You've got $7 billion — so how will you fund the arts?

Last year the Australian Bureau of Statistics did the maths — government spends about A$7 billion annually in Australia on arts and culture.  The exact dollar figure varies depending on what we count, but it includes heritage, broadcasting and botanical gardens, along with all the usual suspects:  performing arts, literature, film, visual arts, and so on.

For the sake of argument, let's assume A$7 billion is exactly the right amount of public funding for the arts.

To make this exercise fun, let's suppose that no political horse-trading was involved in reaching this figure.  Let's assume this figure is the result of disinterested economic calculation of the size of the positive externality in the production of a public good, all wrapped in willingness-to-pay studies, and tied with a big bright cost-benefit ribbon.

So what's next?

Do we put away our box of shiny economic tools and turn to grubby political compromise to allocate the exact market-failure correcting amount of public funding?

In Australia, as in Europe, this is more or less what we do.  Economics to justify an economically efficient level of spending — and politics to implement it.

Estimate market failure, then politically intervene in direct proportion.  This is the standard 20th-century model of applied public goods.

Observe this in action in science (CSIRO), academic research (Australian Research Council), and sports (Australian Institute of Sport), among others.

Yet modern economics suggests that it would be better if we turned the process upside down.  Let politicians determine the level of funding in a given area — and let economists determine the allocation.

Why?  The political model of funding allocation is very bad at creating — or even recognising — new knowledge.  In fact, political allocation mechanisms cause incentives that reward lobbying and punish experimental or innovative thinking.

Only by weakening those incentives can arts and cultural funding seek to be more than a rearguard preservation exercise or sinecure for vested interests.

There are four principles we should consider:

One:  favour indirect over direct funding

Direct funding takes small amounts from many taxpayers and pools it in a few large granting bodies for dispersal to many recipients.  The indirect funding model eliminates those big pools — incidentally the places where all the layers of necessary accountability, governance, expert-committees, lobbying and rent-seeking accumulate.

The indirect model offers tax credits to anyone — private citizen, corporation, foundation or NGO alike — for spending on arts and culture.  This approach has at least three great strengths:

1) It does not require government approval of arts and cultural activities.  Philanthropists can be great patrons.  They can be far more edgy and engaging than government — just look at David Walsh's Museum Of Old and New Art in Hobart and the art collections of advertising tycoon Charles Saatchi.  Tax breaks allow for public support of the arts — without the public judgment of funding criteria (which eventually, inevitably collapses into the politicisation of art and culture).

2) Indirect funding sets up a diversity of funding options:  private and public, philanthropic and corporate, big and small.  This is messy, and it certainly makes arts management more difficult — but such diversity promotes the spread of ideas.  It also serves to protect the quirky idea from being catastrophically overlooked by one dominant funding source.  A diverse funding mix will be a more robust and resilient funding ecology that is actually more likely to find the crazy genius.

3) Indirect funding weakens incentives to capture by lobbyists and bureaucrats.  In other words, less time and resources need be devoted to political organisation and lobbying.  This mitigates the arts and cultural grants "support industry".  The cost of this support industry, as Nicholas Rothwell reported recently, can be observed in Australia's Indigenous arts sector.

Two:  fund outputs, not inputs

We tend to fund inputs for political reasons, specifically as ways of tying funding to particular jobs, groups or regions.  The political reasons may be good — but they always add up to bad economic reasons, otherwise known as deadweight losses.

A practical example of the difference is to fund prizes — which are awarded for achieving some specified output — rather than grants.  Grants often promise some output but they only contractually fund the input.

Prizes have long been part of art and culture, just as they have in sports, science, innovation, and other fields of human endeavour.  The enormous popularity of the various "So you think you can dance/sing/debate ..." franchises illustrates the creative energy and diversity that such prizes stimulate.  We should probably make more use of prizes in public arts and cultural funding than we do.

Funding outputs can also depoliticise arts funding by focusing attention on what we actually want to achieve rather than how we want to achieve it.  Applicants are evaluated purely on their ability to be the best at what has been sought.  There tends to be a lower bullshit component to prizes than to grants.

Three:  fund demand, not supply

Demand-side funding is often superior to supply-side funding because it better aligns producer incentives and it more effectively aggregates consumer preferences.  In both cases you're seeking to fund those who receive the output — in this case, audiences — who therefore are in the best position to evaluate and monitor quality.

Supply-side funding involves a lot of trust and often expensive monitoring.  This is why economists tend to favour demand side funding:  it economises on information and the need for human perfection.  Again, it's a more robust institutional solution.

A useful example is to compare vouchers, where the funding amount is gifted to the consumer, to grants, where the funding amount goes to the producer.  Vouchers are used to allocate money to schools, business innovation, and numerous other public services;  this is a model that could be adapted to arts and culture.

Four:  be more like venture capital

Some of the lessons of venture capital — which is also in the creativity business — have not been learned by public sector arts and cultural bureaucrats.  (I'm not being ironic:  really — there are actual lessons to learn.)

What does this mean in practice?

Adopt a portfolio approach which explicity recognises probabilities of success and failure.  This will inform a funding model that incorporates variance endogenously, rather than getting all upset when things don't work out.

This will often mean aggressively pursing difference — and supporting it not as a sop to the weird, but as a rational risk-management strategy.

Crowdfunding arts and cultural public goods should be considered.

Rather than gift, or what is these days mostly debt funding, take equity stakes in artists to fund training and development.  If we must persist with direct/input/supply funding, this will enable us to at least create a more liquid public asset.

Fund experiments and demand discovery.  Experiments are a public good because they provide new information to others.

Seek voluntary funding models such as lotteries.  Lotteries may even be effective for allocation of funds as well as for raising them — and this would also limit the conformity and conservatism that expert panels tend to exhibit.

Let's encourage unintended consequences

Arts and cultural funding could be improved if we could just agree on a level of funding — and then use economic analysis to design the models of funding delivery.  In short, give the tax system a bigger role — and the expert panels a smaller one.  Make differences at the margins by funding skewed toward outputs and the demand side.

Public funding of arts and culture should concern itself with producing unintended consequences.  The problem with the existing direct, input focused model is that it at best only produces intended consequences, and at worst collapses to a kind of welfare.

We really should be more ambitious than this.

ADVERTISEMENT

The age of entitlement really is over

The hardest task in life is to say no to someone you care about.  A weak government tends to give its citizens everything they wish for.  A strong government has the will to say "NO!''

That's from Joe Hockey's The End of the Age of Entitlement speech at the Institute of Economic Affairs in London in April last year.  The NO in capital letters is exactly as in Hockey's original.

It's an important speech and a good one.

However, it's one thing to say it to a free market think tank in another country while you're in opposition.  Now that Hockey is Treasurer he must say it to his ministerial colleagues while they're sitting at the cabinet table four feet away from him.  Hockey must put his words into action.  He must say NO to Holden's demands for more taxpayers' dollars.  And then he should say NO to calls for taxpayer bailouts of food companies.

Hockey is right.  The age of entitlement is over.  In his speech he talked about the welfare entitlements of individuals.  Everything he said about individuals applies to corporations as well.

"As the electoral pendulum has swung between socialist and conservative sides of politics, the socialist governments — often winning electoral success thanks to the funding from unions — have created a huge array of entitlements for selected classes of individuals."

After "individuals" Hockey should have added "and industries".  It's reassuring that earlier this week he said:  "We are not running down the street, chasing an individual car maker with a blank cheque."

The trouble is it looks like that's exactly what the Coalition is doing.  Which is not anything different from what Labor did.

TRIMMING THE EDGES ISN'T ENOUGH

Hockey's assessment of what "economic liberals" usually do is spot on:  "When the electoral pendulum swings, conservative governments have come in promising to fix the problem, but in most instances have just trimmed around the edges without addressing the real problem of the growing entitlement burden."

Yet another inquiry on the car industry, this time by the Productivity Commission, can only be described as a cop-out.  There's nothing about Australia's feather-bedded, inefficient, indulgent-of-the-unions automotive sector that hasn't been known for decades.  It's a cop-out with consequences though.  Every week a decision is delayed is a week closer to the next federal election.  If ever there was a time to say "NO more money" it's immediately after a resounding election victory.  Hockey identified the two reasons why the age of entitlement cannot continue.  The first is simply that the current welfare system is financially unsustainable.  The second is that the system is unfair.  The Treasurer talked about the unfairness of the current generation borrowing from future generations to pay for a lifestyle that future generations will themselves never be able to afford.

What Hockey could have pointed out, but didn't, was the double standard of much of the political left.  On the one hand, for "the sake of the children" the Left urges a reduction in the standard of living of the present generation by cutting carbon dioxide emissions, yet at the same time the Left supports a burgeoning welfare state paid for by those future generations the Left says it cares so much about.

As Niall Ferguson wrote last year, a few weeks after Hockey's speech, the public debt of governments around the world "allows the current generation of voters to live at the expense of those as yet too young to vote or as yet unborn".  Young people should welcome austerity and "if young Americans knew what was good for them, they would all be in the Tea Party".

There's another point about fairness when it comes to industry assistance.  It's unfair to protect some industries and not others.  Which is precisely the point made by National senator Bridget McKenzie when she called for government money for struggling food producers.  "Governments have supported car manufacturing to the tune of about $10 billion over seven years, while agriculture subsidies remain very low compared to international standards."

That's a fair point.  But the answer is not taxpayers' dollars to food companies.  That's a guarantee our food industry will eventually end up like the car makers.

The answer is NO taxpayers' dollars to either industry.

ADVERTISEMENT

It's in Victoria's interest to get fracking at once

Energy is a hot-button issue this month.

There's the gallows humour from the Gillard appointed Climate Change Authority (CCA), which the Abbott Government is to abolish.  CCA argues that the 5 per cent carbon emission reduction policy shared by the ALP and the Liberals brings insufficient damage and should become 15 per cent.

And in Victoria, former Commonwealth minister Peter Reith's report on gas, features "unconventional" coal seam and shale gas mining policy development, which the government has banned.  In a separate article, Reith together with Paul Howes and Innes Willox discuss the need for early action to remove the ban.

Unconventional gas is identical to conventional natural gas, and is released by "Fracking" — that is, hydraulically fracturing gas pockets.  Predictably, green groups have led the opposition to fracking technology on environmental grounds.  Interestingly, though, that opposition has not extended to fracking used to produce their poster-child energy from hot rocks.

Fracking has been claimed to adversely impact water supplies, cause earthquakes, bring combustible gas through domestic plumbing systems and soon.

Like others before it, the Reith report shows that these claims of environmental distress are baseless.  In the US, the green-infused Environment Protection Agency has conducted many inquiries into such allegations but, even though at least 30,000 wells are in production, it has found no damage.

In NSW, farmers have claimed that Fracking conflicts with the use of agricultural land.  But this is also nonsense — wheat grows and cattle graze oblivious to the gas beneath them being siphoned for use in homes and businesses.

Landowners would clearly like a share of any valuable gas resources under their soils but the fact is that, in Australia, as in England and Canada, landowners do not have rights to subsurface minerals.

For better or for worse, politician that he is, Peter Reith is recommending a share of the gas revenues go to landowners and to regions in order to placate local opposition to exploration.  Generously compensating landowners for damage and inconvenience is one thing but providing them such rights means they obtain windfall gains.

Unfortunately, this means revenues being taken from explorer/developers who take risks and incur expenses in research and exploration.  This will diminish their incentives to seek out hidden mineral wealth, the success of which benefits all in the community.

In the US, unconventional gas production has grown to a level similar to that from conventional wells.  In the process, the country has seen its natural gas prices fall by four-fifths and the nation has been transformed from a net importer to an exporter.

Australia is thought to have comparable unconventional gas resources to the US, meaning long-term prices similar to the current level are possible.  But the Victorian Government is placing the achievement of this in doubt by locking up the gas fearful of political damage from noisy activists opposing any development, perhaps joined by landowners.

Apparently ample Bass Strait gas reserves have reinforced the Government's political timidity in applying a moratorium on drilling.  But with longstanding gas contracts expiring and interstate export facilities coming on stream, Victoria's short-term and possibly long-term prices will rise, hitting consumers and business alike and showing government complacency to have been misplaced.