Why protecting the pension is a political con job

You'll only make it in politics if you are willing to be completely shameless.

On Tuesday Social Services Minister Kevin Andrews flagged a major review into Australia's welfare system.  One in five Australians now receives income support payments — 5 million people.  That's a lot, and the Coalition believes it is too many.  The budget has to be balanced.  We don't want to become like Europe.

So far, so good.  Yet 2.3 million of those people — nearly half, and the largest cohort — are on the age pension.  And Kevin Andrews has specifically quarantined the age pension from his review.  So, it isn't quite the major budget-repairing review it sounds like.

Bill Shorten confidently insists that ''the Abbott government is proposing to reduce the rate of increase of the age pension''.  (Never say Shorten isn't trying his little heart out.)

This comically absurd little spat over the pension reveals a lot about Australia's welfare system and the political system in which it operates.

The list of beneficiaries and the conditions placed on those benefits are not organised by any noble principle of need or fairness or morality, but calculations — often highly crude ones — about voting blocs.  Of course it is all dressed up in the language of social justice.

Despite being the largest beneficiaries of the welfare system, pensioners are a protected species.  Remember there's no guarantee a review would recommend a cut to any particular welfare entitlement, nor any guarantee the government would follow through if it did.  No, the pension is too sacred to even be studied.

Australians like to say they're concerned about middle-class welfare.  Defenders of the status quo argue our rate of middle-class welfare is relatively low by international standards.

But this week's little pension quarrel reveals something more fundamental — the modern welfare state is, itself, a project designed to benefit the middle class above all others.

Middle-class welfare isn't a bug or aberration.  It's the defining characteristic of any democratic welfare state.

This observation is known as Directors' Law — named after economist Aaron Director, who argued that redistribution policies in a democracy will benefit the largest voting blocs.  Invariably this is the middle class.  The primary function of a welfare state isn't to keep people out of poverty.  It's to transfer money to the powerful middle class.

Sometimes the system taxes the middle class to provide benefits to that very same middle class.  Such ''churn'' is a political confidence trick that relies on citizens' ignorance of their true tax burden.

You'd be hard pressed to find a philosopher, economist, sociologist or political theorist who could support such a distorting, wasteful, politically motivated transfer system on principle.  But that's what we have.  All the big political flashpoints of Australia's welfare policy — baby bonuses, family tax payments, parental leave — are disproportionately generous to the middle class.

Nor is the age pension solely to protect the poor.  Eighty per cent of people above pension age receive a part or full pension.  By excluding the family home from its income test, the pension protects elderly home owners from having to use the savings they've accumulated in their house to fund their retirement.  And, a bonus:  it protects the inheritance of their children.  No wonder it's popular.

Welfare is a political compact.  Sociologist Gosta Esping-Andersen famously distinguished three models of welfare state capitalism:  liberal, corporatist-statist, and social democratic.

Liberal welfare regimes view income support as a safety net.  Think the United States, where welfare is an emergency, often short-term measure.  The corporatist-statist regimes (found in Germany, France and Italy) uphold traditional class divisions.  Scandinavian countries have a social democratic regime where welfare is less about poverty and more about citizenship.  All classes get something.

Usually Australia is grouped in the liberal camp.  This reflects our English political origins, with a focus on individual rights rather than collective belonging.  And welfare for the rich seems to offend the antipodean sense of the fair go.

That's the theory anyway.

The Abbott government seems intent on destroying the last vestiges of what makes our system liberal.

There's something deeply alien — well, Scandinavian — about the Coalition's paid parental leave scheme.  The government will pay as much as $75,000 to new mothers for 26 weeks, according to their previous income, not their need.

The Coalition insists the parental leave scheme isn't welfare, it's a workplace entitlement.  Nonsense.  But the philosophy behind this talking point is deeply illiberal.  It suggests the state is as responsible for providing your income as your employer is.

Even more symbolic:  just two days after Kevin Andrews announced the welfare review, he also announced the government would give young couples $200 for marriage counselling.  The average Australian wedding costs upwards of $35,000.  Yet the party of free markets and individual responsibility feels the need to chip in another few hundred dollars.

Of course, a review into Newstart and the Disability Support Pension is a good thing.  The latter has grown rapidly in recent decades.  The chief executive of Mission Australia has said hundreds of thousands of disability support recipients should be helped into work.  The social and psychological benefits of employment are unarguable.  This is more than enough justification for an inquiry.

Nevertheless, any serious review of Australia's welfare system must be a review of the entire system.  Even the popular bits.

Joe Hockey has been unable to commit to returning the budget back to surplus until 2023.  But if the government can't slay — or at least scrutinise — some sacred cows, this deadline looks far too optimistic.

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It's not just the rich who benefit from free markets

Proposals in a recent Oxfam report, if implemented, would be a recipe for continuing impoverishment of the many.

The Oxfam report states that inequality is on the march, with about 50 per cent of total wealth owned by 1 per cent of the world's population, with the other half of total wealth owned for the remaining 99 per cent of the population.

In one particularly attention-grabbing headline, the ''Working For The Few'' report states that the world's 85 richest individuals own as much as the poorest half of the global population.

According to the NGO, ''The large and rising concentrations of income and wealth in many countries represent a global threat to stable, inclusive societies for one simple reason:  the unbalanced distribution of wealth skews institutions and erodes the social contract between citizens and the state.''

In an unhampered, free-market economy, the distribution of income is wholly determined by the interplay of mutually beneficial market transactions between sellers and buyers.

Incomes are attained by selling goods and services to customers willing to pay for them, and suppliers who most closely meet the needs and desires of consumers are rewarded with revenues that more than cover production costs.

The resultant inequality, therefore, derives from the personal choices of the millions, or even billions, of participants in the market process.

But unless profitable suppliers can keep pleasing their customers by providing valuable goods and services, their ability to keep accumulating wealth is threatened.

Factoring in other issues, such as the attraction of additional suppliers towards profitable areas of economic activity, technological developments, and changing consumer preferences, it becomes clear that wealth holdings are precarious.

Needless to say, we don't interact in unhampered markets, with an alliance of big governments and crony capitalists littering the scene.

There are great risks that these players prevent others from breaking into the wealthy ranks, but in the real world the ranks of the wealthy can still significantly change within the space of a generation.

Only 25 of the 85 wealthiest people in the world in 2013 were among the 85 back in 1996, with 60 people (including Rupert Murdoch) dropping out of the list during that period.

Entering the list came the likes of Mark Zuckerberg of Facebook fame, the owners of Ferrero Rocher chocolates and Nutella spread, Australian miner Gina Rinehart, and others.

Now, Oxfam does acknowledge that ''some economic inequality is essential to drive growth and progress, rewarding those with talent, hard earned skills and the ambition to innovate and take entrepreneurial risks''.

This is a reasonable point, but the report's subsequent focus on snapshots of the top 1 per cent overlooks the far more pressing issue about ensuring that more people, including the poor, can tap into opportunities for their own enrichment.

The Oxfam report oddly asserts that attitudes to the effect that it is better to focus on impoverishment, or absolute inequality, than relative inequality ''is no longer in fashion''.

This ignores the huge benefits arising from what has been described by some as the ''greatest and most remarkable achievement in human history'', and that is the precipitous decline in global poverty over the last few decades.

As recently discussed by American economist Mark Perry, about 5 per cent of the population lived on $US1 a day or less in 2006 compared with about 27 per cent in 1970, a massive decline in global poverty of 80 per cent.

Far from being a ''winner-takes-all'' system, the growing, but incomplete, embrace of market reforms, such as greater respect for private property rights, free trade and deregulation, has meant new opportunities for people to feed, clothe and house themselves and their families.

And that translates into real wealth gains for many people, in economic terms, which can only be a good thing.

So, what kinds of policy settings are needed to end impoverishment for many more people throughout the world?

Not high-taxing, big-spending and stringent regulatory policies, such as those advocated by Oxfam, that entrenches the cronies and excludes more people from economic participation.

Higher, and more progressive, income and wealth tax rate structures tend to discourage people from engaging in economic activities, including supplying labour where needed, that would otherwise propel them into higher income brackets.

And cracking down on tax havens poses a range of problems all of its own, including for low-income countries seeking to diversify their economic activities.

At the other end of the spectrum, mandated and rising ''living wages'' risks creating additional unemployment, as companies struggle to afford relatively more expensive labour services.

Education and health care are important, but high-cost, substandard services under monopoly government control are usually at odds with what poor people really need to meaningfully climb ladders of opportunity.

If we are genuinely concerned with ensuring that people escape the mire of poverty, then we would advocate policies ensuring that people cooperating in markets are less hampered in buying and selling between each other.

In short, what the world needs is a greatly reduced dose of government intervention, so that wealth becomes the rule rather than the exception.

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Narrow focus confuses intent

Instead of cementing human rights as a foundation stone of Australia's liberal democracy, the national curriculum confuses their history and intent.

The national curriculum primarily introduces human rights under the banner of ''Rights and freedoms'' in Year 10 history.  While the title is broad, the approach is very narrow.

According to the curriculum, human rights are approached as a post-1945 concept focusing on ''the origins and significance of the Universal Declaration of Human Rights, including Australia's involvement''.

It also focuses on the recent struggle for the rights and freedoms of indigenous Australians and the ''US civil rights movement and its influence on Australia''.

As Murdoch University legal academic Augusto Zimmermann wrote in critique of the curriculum, ''there is not a single reference to the struggles for rights and freedoms such as that which occurred during the 1688 Glorious Revolution, and afterwards by American revolutionaries (whose) whole purpose of acknowledging human rights was to protect the citizen against excessive government power''.

Without this background, human rights lack their history and also their framework.

Apart from cursory references to the Magna Carta in Year 6 history, there's no substantive discussion about the evolution of human rights and the influence of key political movements, particularly classical liberalism and enlightenment thinking.

Without it, two essential themes are not covered.

First, human rights as universal individual birthrights;  second, human rights are designed to stop the abuse of government power over the individual.

It's out of this tradition that Australia's common law rights evolved.

Similarly, it's only with this history that Australians can understand the social contract that gives government legitimacy is coupled with human rights to put a brake on its excesses.

Without this background, the national curriculum risks debasing human rights, whitewashes their classical liberal origins in favour of treaties, strips them of their sanctity and consistency and presents them as a modern legal gift of government.

There are numerous cascading problems in approaching human rights this way.  First, whatever human rights government gives, they can also take away.

Second, diluted human rights can then be superseded when they come into conflict with the policy objectives of government.

In the past 12 months there have been clear examples of how they can be compromised.

Last year, the Queensland parliament passed laws that have criminalised free association for bikies.

The last federal parliament considered introducing a state-sanctioned media regulator that would limit free speech because politicians didn't like what newspapers were saying about them.

The last federal parliament also considered laws that could restrict expressing political views in the workplace.

Third, when they're debased from protecting individuals from government abuse then any new aspiration can simply be added to the list of human rights consequently weakening their integrity.

The Victorian Charter of Rights and Responsibilities outlines this problem in practice.

Former British philosopher Isiah Berlin coined the division between human rights that protect individuals from government as ''negative liberties'' and rights that reflect aspirations for society as ''positive liberties''.

Traditional ''negative'' human rights include protecting free speech, movement, association, worship and property.  They're also principles that can be reasonably consistently exercised by individuals.

Yet the Victorian Charter elevates the worthy ''positive'' aspiration of non-discrimination to the status of human rights, despite the tension between the two different concepts.

Apart from limiting discrimination by government, non-discrimination is primarily about protecting individuals from unjust societal prejudice.

There is consistency between both ''negative'' human rights and ''negative'' non-discrimination in stopping government prejudicially discriminating access to government services and employment.

Similarly, Section 51 (xxvi) of the Constitution that allows state-imposed discrimination by giving the parliament the ''power to make laws with respect to the people of any race'' is inconsistent with negative liberties, and hence should be repealed.

But there is tension between ''positive'' non-discrimination and ''negative'' human rights.

It's impossible to protect the integrity of ''negative'' human rights when, as the Victorian Charter argues, ''every person has the right to enjoy his or her human rights without discrimination'' while also protecting the right of women to join gyms that exclude men, gays to have nightclubs that exclude heterosexuals and indigenous groups that require members have indigenous heritage.

Arguably, the whole point of free association is the right to discriminate in associating with some, but not others.

Worse, the Victorian Charter doubles down by explicitly prioritising non-discrimination ahead of human rights by stating that ''measures taken for the purpose of assisting or advancing persons of groups of persons disadvantaged because of discrimination do not constitute discrimination''.

Despite the inconsistency, achieving a society free of unjust discrimination remains a worthy goal, but we cannot ignore that when we prioritise ''positive'' non-discrimination, we are deprioritising human rights, and vice-versa.

The recent introduction of the national curriculum ensures it is not responsible for the cracks that now appear in the human rights foundations of our liberal democracy, but fixing the national curriculum will help future Australians understand human rights and also start the restoration process.

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Renewable energy sources are just a power failure

Much has been written about the contribution that wind and solar have made to Australian energy supply, especially in the recent hot spell.  About 10 per cent of electricity supply comes from renewable sources, two-thirds of this being unsubsidised hydro-electricity, with one-third from wind/solar which needs subsidies to cover more than half of its costs.

During heatwave conditions in the five days to January 18 this year, wind actually contributed 3 per cent of electricity supply across the Australian National Electricity Market.  Nobody knows the contribution of rooftop solar but it could not conceivably have been more than 1 per cent.

Overall, wind facilities amount to 3300 megawatts of capacity, somewhat less than the Loy Yang brown coal power stations in Victoria or Macquarie Generation's black coal facilities in the Hunter Valley.  Windmills produced at an average of 23 per cent of their capacity during the January heatwave.  This was below their year-long average of about 30 per cent because the hot spell, as is often the case, was characterised by still air.  Fossil fuel plants are available 95 per cent of the time.  Gas plants (and hydro-electricity) can be switched on and off at very short notice to fill the peaks in demand.  As a result they generally earn more than the average plant on the electricity spot market.

The below-par performance of windmills in high-demand periods means they not only require a subsidy but are also less valuable than other plants because their availability is reduced when they are most needed and when the price is highest.  Accordingly, windmills actually earn less on average than other plants in the electricity spot market.  Indeed, during the recent heat wave, wind power earned an average of $123 per megawatt hour in Victoria and $182 in South Australia while the average price was respectively $209 and $285 in the two states.

SUBSIDIES ARE EXPENSIVE

Investments in wind and other subsidised electricity generation, according to the renewable energy lobby group the Clean Energy Council, has been $18.5 billion.  By contrast, the market value of comparable generating capacity in Macquarie Generation coal plants is said to be only $2 billion and a brand-new brown coal plant of 3300 megawatt capacity would cost less than $10 billion.

Wind aficionados claim that such costings do not take into account that wind is free whereas fossil fuel plants have to pay for their energy.  But that is also untrue.  Wind plant maintenance is about $12 per megawatt hour which is more than the fuel plus maintenance costs of a Victorian brown coal power station.

Subsidies to renewable energy were once touted not only as a key to reducing emissions of carbon dioxide but also as paving the way to a future source of electricity that would become competitive in price and reliability with fossil fuels.  After two decades of increasing subsidies, this optimism has proven to be unfounded.  Instead we have seen subsidised renewable energy sucking capital into worthless investments.

On present plans, a nominal 20 per cent of electricity is to be sourced from renewables by 2020.  By that year the excessive cost burden on the economy will be $5 billion a year and rising.  This entails crippling subsidies paid by consumers and businesses.  The imposition has been a factor in the foreshadowed plant closures of Holden, Electrolux and the aluminium smelters at Kurri Kurri and Point Henry.

Because of our readily available coal and gas Australian electricity costs are intrinsically among the lowest in the world.  This was formerly crucial to attracting highly competitive energy-intensive industries like smelting.  Australia could once again benefit from low-cost electricity if deregulation freed energy supply from its renewable obligations.  The benefits would be especially welcomed across all agricultural and manufacturing industries that are subject to international competition.

Subsidies on existing Australian renewable plants are planned to run for 15 years.  But Spain, previously the poster child of renewable subsidy excesses, has shown the way forward by eliminating all previously promised subsidies.  Australia needs to abandon its own renewable schemes and allow the energy market to operate on commercial terms.

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Neo-prohibition isn't the answer to violent crime

It wouldn't be a moral panic without demands that the government do something.

And so it is with the alcohol-fuelled violence panic that swept New South Wales over the Christmas break.

Richard Denniss of the Australia Institute made a few proposals in the Sydney Morning Herald here.  Governments could increase alcohol prices by increase taxes or imposing a minimum price.  They could restrict pub opening hours.  They could even set a maximum blood alcohol level for people in public places.

Such proposals are more or less the sort of neo-prohibition public health activists have wanted for years.

Today Barry O'Farrell announced a crackdown on alcohol venues, with mandatory bottleshop closures at 10:00pm, a 1:30am pub lock-out, and no pub service after 3:00am.

Let's lay aside whether it is fair to restrict the liberties of all because of the idiocy of a few.  It is utterly and despicably perverse that our immediate reaction to a highly publicised violent assault is to blame public policy, or market forces, or ''culture'' in general.

It's classic guilt displacement, shifting the responsibility from the perpetrators of violence and onto society.  That is, it's not totally their fault they were violent.  Alcohol vendors were plying them with liquor!  Lazy politicians were neglecting their regulatory duties!  Music videos have been glorifying drinking!

What does this imply for the moral responsibility of the perpetrators?  After all, to punish somebody for an act they had little control over would be a travesty of justice.

Perhaps the number of bottleshops in a suburb should be a mitigating factor in sentencing.  Of course, none of our latter-day prohibitionists have taken their logic this far.  But such perverse reasoning is implicit when we seek social explanations for individual criminal acts.

The perversity increases when you realise that there is no alcohol-fuelled violence crisis.  The rate of violence related to alcohol is stable, even declining.  (This piece in the Guardian sums up the evidence for New South Wales nicely.)

Our alcohol consumption is steady, too.  Australia's per capita alcohol consumption has been hovering around 10 litres a year for the last few decades.  (In the 1970s it was more like 12 litres.)

But regardless of whether it is trending up or trending down, it remains the case that the Australian public consumes a large quantity of alcohol, and gets into very few fights.

There are, as there have always been, brutal thugs who take pleasure from violence.  The correct — and most direct — response is to target the thugs, not to fiddle with tax policy.

The relationship between alcohol and violence is not as clear cut as you might expect.  Yes, much violent crime is caused by intoxicated people.  The doctors and police are right.  But figuring out whether alcohol actually causes the violence is quite hard.

Correlation, as we all know, is not causation.

The most common theory is that alcohol lowers inhibitions.  It directly anesthetises the parts of the brain that we use to regulate our everyday behaviour.  Alcohol changes us physically, and in a way that makes some people more aggressive.

From experiments in laboratory settings we know that people who consume alcohol exhibit more aggressive behaviour.

But the inhibition theory is not the only theory which could explain this.

Some experiments have shown that people tend to get more aggressive even when given a placebo.  That is, when they are told they are going to have an alcoholic drink, but are secretly given a non-alcoholic tonic, they get aggressive anyway.  Thus the ''expectations'' theory suggests people get more aggressive when intoxicated simply because they expect to get more aggressive when intoxicated.  They think aggression is more socially acceptable in a drunk.

There are other theories.  The connection between alcohol and violence could be indirect.  Intoxication reduces intellectual function, causing us to exaggerate provocation and to needlessly provoke others.

But these theories only take us so far.  It's one thing to show in a lab that people who believe they are intoxicated people are marginally more aggressive than those who are sober.  It's quite another to draw policy conclusions from that finding.

The overwhelming majority of people drink without getting violent.  (Some people just get more helpful.)  In the real world, humans are able to regulate their behaviour even while intoxicated.  Even if alcohol ''causes'' violence, it only causes it rarely, and in a tiny fraction of people.

Even drunk people make choices.  Even drunk people can be moral.  We are not machines.  Public policy ought not to treat us like machines.

The more policy-focused researchers try to side-step this issue with macro-level studies that look at correlations between alcohol consumption in an area and incidents of violence.

That's where we get the claims that bottleshop density facilitates violence, for instance.

But these studies often struggle to distinguish between other factors.  The essential feature of bars and pubs and nightclubs and bottleshops isn't that they sell alcohol.  It's that they bring large groups of young men together in close proximity.

Ultimately, the neurological, psychological, and sociological evidence about the relationship between alcohol and violence isn't strong enough to get us away from a simple intuition:  violent acts are caused by violent people, regardless of their level of intoxication.

As one paper from 2008 concludes, ''alcohol may facilitate violent behavior among those who are already inclined to behave that way.  It is also possible that violent adolescents sometimes use alcohol as an excuse for their behavior.''

So the idea that we would be trying to blur the responsibility of violent offenders with alcohol regulation is utterly, utterly repugnant.

It's exactly what the thugs, and their lawyers, want us to do.

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When multinationals go on welfare

Coca-Cola Amatil's net profit in 2012 was $558 million.  In 2011 its net profit was $532 million.  In a few weeks we'll know its net profit for 2013.

CCA owns SPC Ardmona.  SPC Ardmona wants to be paid $50 million by Australian taxpayers — $25 million from the federal government and $25 million from the Victorian state government.

This $50 million payment from taxpayers will, according to SPC Ardmona, be a ''one-off government investment on innovation plans and efficiency improvements''.

There's an obvious question to ask about the company's request — and it's a question few people want to talk about.  Why can't SPC Ardmona get the $50 million from CCA?  It's not as though CCA doesn't have the money.

CCA has said that if SPC Ardmona gets the $50 million from taxpayers then it will give $150 million of its own money to SPC Ardmona.

CCA's commitment raises a further question.  To a normal person (and remember, it's normal people from whose pay packets SPC Ardmona wants to get its $50 million), it's strange that a very profitable company like CCA, which last year had revenues of $5.1 billion, would be willing to spend $150 million on SPC Ardmona but not $200 million.

If SPC Ardmona's prospects are in fact as bright as the company makes out, surely CCA should be willing to invest the entire amount that SPC Ardmona says it needs.

The fact that ­­it is not willing to do so is revealing.

SPC Ardmona and CCA need to explain (in normal people's language) why the federal and Victorian governments should give SPC Ardmona $50 million if CCA itself refuses to do so.

It's understandable that SPC Ardmona and CCA are lobbying the government for a handout.  That's how business in Australia — and how politics — has always been done.

COMFORT IN THE ALP

A revealing article by Stephen Loosley, the former ALP national president and senator, appeared in these pages last week.  It was about the Labor Party and its relationship with business.  Loosley wrote ''elements of business, particularly the emerging generation of leaders, remain comfortable talking to the ALP''.  He's right.  And that's the whole problem.

The next generation of this country's business leaders have grown up in the 1980s and 1990s thinking that if they have a problem the government will fix it.  It's no wonder they're comfortable talking to the ALP.  Anyone running, for instance, a wind farm or an unprofitable manufacturing business would be especially comfortable talking to the ALP.

Four days before the last federal election Kevin Rudd promised SPC Ardmona the $25 million it wanted.  Thankfully, it was a commitment that wasn't matched by the Coalition — and it's a commitment that shouldn't be matched by the Coalition.

For one thing, the federal budget can no longer afford these sort of handouts.  But beyond the issue of cost there's something more important at stake — and that's the principle.  Put simply, government handouts to failing companies are unfair.  And they're unfair for two main reasons.

First, inevitably the handouts go to the largest and noisiest companies such as Ford, Holden, SPC Ardmona and even, potentially, Qantas.  Government handouts don't go to the family-run firm that services machine tools and employs a dozen people.  A worker at Holden (at least until a few months ago) was treated by the government differently from a worker at that machine tool company even though they might both be doing the same job.

Second, the handouts given to companies to support the above-average wages of their employees are paid for by the taxes imposed on everyone, including those who earn much less than those working in the companies receiving the government handout.

(It's ironic that the Left opposes taxes imposed on the less ­well-off to pay for the privileges of the wealthy — except when those taxes pay for ''free'' tertiary education or government bailouts to companies with heavily-unionised workforces.)

Federal cabinet is expected to make a decision on SPC Ardmona by the end of month.  Giving $25 million of taxpayers' money to SPC Ardmona wouldn't just be wrong, it would be unfair.

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Curriculum should be decided by schools and parents, not governments

Labor's national curriculum isn't neutral.  Neither will be any curriculum redrafted by Christopher Pyne.  That's exactly why parents — not politicians — should be able to choose what their children are taught.

So far the debate about the national curriculum revision has been focused on which version of the curriculum will be the most ''balanced'' and ''objective''.

But the debate should not be over which curriculum all students should be forced to learn.  It should be over whether we should have a national curriculum at all.

On Thursday, historian Tony Taylor, on these pages, ridiculed the idea that there was any need to fix the Labor curriculum.  In particular, he mocked the notion that Christianity and Western civilisation deserved greater prominence.

Although Taylor and other defenders of Labor's curriculum like to pretend it is ideologically neutral, the truth is that any curriculum devised by politicians or their appointees will be political.  Labor's curriculum places far too much emphasis on ''sustainability'' and other ideological concepts, and far too little emphasis on how Australia's institutions evolved.

Christopher Pyne is right to recognise that the Labor curriculum does not give sufficient emphasis to the role of Christianity and Western civilisation in Australian history.

But Taylor argues that because Australia is now a multi-faith society, it's now less important to teach students about Christianity in schools.

This misses the point.  The history of Christianity should be taught in schools not because we want to preach Christianity to all Australian students, but because the institutions and the society that we have now are the result of our past.

Over the past 2000 years, Christianity has played a far more profound role in shaping our society than any other major religion.  Even if the proportion of Christians has declined over the past 40 years, we have inherited a society shaped by Christian values.  We cannot understand our nation — and indeed, our world — unless we understand the elements that shaped it.

But the Labor curriculum neglects the role that Christianity and other aspects of Western civilisation — including the Westminster system, democracy and liberalism — have played in shaping our society, for worse and for the better.

Instead, it teaches students to be ashamed of our past by highlighting the wrongdoings of the European settlers.  If there must be a compulsory curriculum, it should present a more balanced view.

Nor does the fact the curriculum was drafted by ''independent'' panels and academics automatically make it immune to ideology.  The fact remains that those panels and academics were appointed by the Labor government and many had left-leaning tendencies.  For example, Stuart Macintyre, who was placed in charge of drafting the history curriculum, may be an eminent historian from the University of Melbourne, but he is also a former Communist Party member and a self-described socialist.

The curricula these appointees drafted were certainly not objective.

But despite all of this, Taylor is right to be concerned about Pyne's assurance that the new curriculum will be ''balanced'' and ''objective''.

A revised Pyne curriculum that gives due attention to Christianity, the British Empire, and the rest of Western civilisation is preferable to the existing Labor version.  But that does not mean all schools should be forced to teach it.

There is no single ''honest'' version of history, just as there is no such thing as an entirely ''neutral'' account of modern-day politics.  There is always more than one historical narrative.  There always has been — ever since the ''father of history'' Herodotus wrote his great work in the fifth century BC.

History is always influenced by politics to varying degrees.  Sometimes it happens without us realising.  As such, any account that claims to be ''honest'' and — worse — ''official'' should instantly set off alarm bells.  The version of history in the Rudd-Gillard curriculum is no exception.  And nor, for that matter, is any version touted by Pyne.

And what happens when governments endorse particular versions of history?  In a democracy — which is what Australia is, thanks to the British Empire — you get the ''history wars''.  In Australia, the beginnings of these ''wars'' in education were rooted back in the Whitlam era, when the Commonwealth indirectly began to influence humanities in schools through the Curriculum Development Centre.

This is exactly why we shouldn't have a single curriculum.  No government should impose its version of history on the rest of the country.  What's more, the national curriculum will likely remain controversial for as long as it remains in place.  Since the two sides of politics are unlikely to ever agree on an ''official'' version, it is probable there will be a sweeping revision of the curriculum every time a new government comes into power — just as is happening now, and has been happening for the past 30 years in Britain.

That's why there should be no national curriculum.  Instead, there should be different private curricula available.  Schools should be able to choose the curriculum they believe best suits their students, and parents should be able to select the school that reflects their own values.  That way there would be no need for Pyne — or any other politician for that matter — to decide what all students should learn.

Campbell Newman must get the privatisation message right

The Newman government faces a challenging political task to convince sceptical Queenslanders of the merits of privatisation.

Reports last year suggest the government is investigating selling the state's extensive portfolio of assets, after recommendations by the Costello Commission of Audit led by former federal treasurer Peter Costello.

That being the case, 2014 is an opportunity for Premier Campbell Newman and his Treasurer Tim Nicholls to try to sell the virtues of privatisation to the public.

However, privatisation has long been unpopular in the electorate.  The defeat of the Bligh government in 2012 is widely pinned on its unpopular sale of the coal railway carrier QR National, port facilities in Brisbane, and other assets, after having said during the 2009 election campaign that it would not go down that path.

So how might the Newman government get the electorate onside on the need for such a big reform?

To help counter perceptions that selling government assets is a radical initiative, the government should emphasise that privatisation is a common economic and financial management practice.

The latest ''Privatisation Barometer'' report indicates governments around the world raised about $US189billion from asset sales in 2012, the third highest total since 1988.

While some of this was accounted for by the US government's withdrawal of its bailout of insurers and car companies, impressive outcomes were attained in mixed-economy Europe, China, the autocratic Middle East, and elsewhere.

Since 1988 governments have sold assets in fields as diverse as aviation, banking and insurance, broadcasting and social services, construction, electricity generation and distribution, manufacturing, mining and telecommunications.

With electricity and port facilities having been successfully privatised, including by other Australian states, it would not be so extreme if Queensland chose to follow suit.

Another argument to be made is that transferring assets from the public to the private sector usually leads to a better long-term economic performance on the part of the privatised entity.

Government-owned entities are forced to adhere to political imperatives, such as providing below-cost services to favoured constituencies, while also being insulated from the direct effects of competition and the threat of bankruptcy or takeover.

Such circumstances necessarily lead to wastage as government entities operate less productively than their private sector peers.

On the other hand, numerous studies, including those in peer-reviewed academic journals, indicate privatisation is generally associated with improved financial performance and productivity gains.

Academics William Megginson and Jeffrey Netter surveyed the privatisation experiences of developed and developing countries, concluding that privatisation works in the sense that divested firms almost always become more efficient, more profitable, and financially healthier — and increase their capital investment spending.

After the electricity sector was privatised in Victoria and South Australia, labour productivity improved and high service reliability was maintained.

The final key argument Newman and Nicholls should consider is that selling assets can allow the government to focus more effectively on core tasks, such as law and order.

Declining production costs, technological advancements and access to global financial markets mean the private sector is more capable than ever of managing assets once controlled by government.

The prospect of billions of dollars to be made through asset sales would no doubt be attractive to the government, given the troubling budgetary circumstances the state faces.

But sound arguments for privatisation should not — and cannot — rest on financial considerations alone, if privatisation is to have any hope of passing muster with the public.

Privatisation critics will try to demonise any proposal to sell government assets, so patient and intelligent political arguments are needed if privatisation is to win over the voters.

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A peer funding model for the arts?

A recent paper by five mathematical computer scientists at Indiana University (published in EMBO Reports, a forum for short papers in molecular biology) proposes a clever new model for science funding that makes use of collective allocation (peer-funding) rather than expert-panel-and-peer-review funding mechanisms.  I want to consider whether this might also work for arts and cultural funding.

Public science and research funding in Australia, as in most of the world, is based on a process that has remained largely unchanged for 60 years.  This begins with calls for submissions of reasonably detailed project proposals.  These then pass through expert panels (e.g. the Australian Research Council) and then on to the peer review process in which carefully selected ''peers'' evaluate the proposals and write detailed reports, before passing these back to the panels for final judgement.  The high-level of process and accountability makes this the gold standard for taxpayer-sourced public funding of research (philanthropic trust funding often mirrors this architecture).

But it is expensive to run, and onerous to all involved.  Perhaps one in ten projects proposed will be funded.  The amounts of time and effort invested by all those seeking funding will tend toward the expected value of the grants, meaning that once overhead costs to panels and reviewers are added in, these function to a considerable degree as a redistribution mechanism.  Rob Brooks wrote about this on The Conversation last year.

The new model the computer scientists propose bypasses this expert-panel-and-peer-review system altogether by simply taking the whole public lump of funding, and allocating it unconditionally (yes, unconditionally) to all ''eligible'' scientific researchers.  It would thus function like a kind of ''basic income''.

They calculate that if the National Science Foundation budget in the US were divided among all who applied for funding, it would deliver about US$100,000 per scientist.  The problem with this, apart from an expected blowout in the number of people who claim to be scientists, is that we've just lost oversight, accountability and peer review.

So here's what the computer scientists propose:  everyone who receives funding gives some fraction (say 50% of their previous year's funding) to other scientists whose work they like or think particularly interesting and valuable.  That fraction can be distributed among one or many.  The idea is that this works as a collective-allocation mechanism that basically crowd-sources peer review, and with the added advantage that it funds people, not projects.  It also gets the incentives right for scientists to concentrate on clear communication of their findings and the value of research.

This method replicates the good parts of the previous model:  those with higher peer regard will receive more funding;  and those same people will have a larger say in the overall allocation (the pledge is a fixed fraction of the previous year's funding).  There would, obviously, still need to be confidentiality and conflict-of-interest avoiding mechanisms, along with careful monitoring to ensure that circular funding schemes are identified and punished.

But it also avoids the bad parts:  in providing a guaranteed basic income, it liberates researchers from continual wasteful cycles of grant-writing by furnishing autonomy and stability of funding;  it avoids the overheads associated with process and review;  it enables a continual updating of funding to reflect the preferences and priorities of the scientific community, without getting caught in legacy priorities or political cycles.

Now might this also work for public funding of arts and culture?  The main reason to think it might is that the same inefficiency arguments apply in arts and culture as they do in science:  namely that those seeking grants spend considerable time and effort writing and preparing grants;  face high uncertainty about funding outcomes;  proposals tend toward conservative trend-following of agency preferences;  projects, not people, are funded;  and all the while arts funding bodies and panels (and the peer review process) consume sizable overhead.

On the flip-side, it's not as neatly obvious who would be eligible.  Research scientists can be reliably identified by the high-hurdle of having PhDs, prior publications, and full-time appointments at accredited institutes.  But let's suppose we can come up with an acceptable solution to that long-list problem.  (I'm not suggesting this is trivial;  just that that's not what I want to focus on here.)

I think that this would, potentially, be a substantial step towards a more open and effective funding model (peer driven, not bureaucratically or politically driven).  It would enable creative resources to be more directly spent on artistic production and public communication, with less time and effort wasted on endless rounds of grant-writing and reviewing.

And while still some distance from a decentralised and fully-incentivised market ideal of ''consumers voting with their own dollars'', it is at least closer to that model in reflecting the preferences and judgements of the actual community of practising producers of culture (which is not always identical to appointed ''expert'' panels).  Like the Oscars, in a way.

Might collective allocation of arts and cultural funding be superior to expert-panel based solutions?  What do we think:  crazy or not?

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Bully law a case of IR overload

It took less than a week for the first anti-bullying application to be lodged.  A Melbourne-based law firm is already advertising for anti-bullying clients.  These are sure signs that Australia's litigious industrial relations system is about to get worse.

On January 1, a new anti-bullying jurisdiction came into operation that will see applications to the Fair Work Commission increase exponentially.  Among other changes, the new Part 6-4B of the Fair Work Act empowers the commission to deal with complaints about workplace bullying and issue anti-bullying orders.

Last year, Bernadette O'Neill, the commission's general manager, estimated that the body would receive 3500 bullying complaints each year, increasing the commission's workload by almost 10 per cent.

There are three main problems with the anti-bullying changes.  First, the new laws are vague on what conduct will constitute bullying and how far the provisions will extend.

The act provides that ''bullying at work'' occurs where an ''individual'', or a ''group of individuals'', ''repeatedly behave unreasonably'' towards a worker and the ''behaviour creates a risk to health and safety''.

It is unclear what ''behave unreasonably'' means.

This ambiguity invites litigation.  Parties will invariably disagree about whether the behaviour was unreasonable, and it will fall on the commission to decide on a case-by-case basis.

This is particularly so when courts have held bullying to include things such as spreading rumours and playing practical jokes.

It is also unclear how far the term ''individual'' will extend.  The term is so broad that it appears to include anyone that a worker encounters on the job.

In this case, the commission could order a customer of a business to stop bullying a worker, and it could order the employer to monitor that customer's behaviour.

The number of expected applications is likely to be a conservative estimate given that the changes expand the number of people who are able to apply to the commission.

Applications are not simply limited to employees.  The inclusion of trainees, contractors, work experience students and even volunteers under the definition of ''worker'' will no doubt add to the surge of new claims.

The second major problem is that the absence of cost incentives presents a further risk of a blowout in the number of estimated applications.

The costs of the new system will fall on employers and the taxpayer.

Application fees to the commission are low and parties generally pay their own legal costs.  The new anti-bullying jurisdiction is no different.  While this combination arguably increases access to justice, it also fosters a ''litigate first'' mentality and removes parties' incentives to only advance meritorious claims and defences.

The saving grace of the anti-bullying jurisdiction is that there is no ''pot of gold'' for applicants to chase, as the commission cannot award monetary damages.

However, applicants may be able to seek compensation by bringing multiple claims.  For instance, a worker who alleges racially motivated bullying may decide to bring an application for an anti-bullying order in conjunction with a general protections claim.

There is a genuine concern that disgruntled and underperforming employees may exploit the new provisions to subvert legitimate performance management and disciplinary action.

Under this scenario, countless employers and managers will be forced along to the commission to justify that their management actions were reasonable.

Every application will cost employers countless hours and thousands of dollars to defend — time and money that employers could use actually employing people to produce goods and services.

Taxpayers will also bear the cost of the new anti-bullying jurisdiction.  In the 2013-14 budget, the commission was allocated $24.4 million over four years to deal with workplace bullying matters.

The third major problem is that the anti-bullying changes are unnecessary because they will duplicate efforts of state governments that are introducing tough anti-bullying laws.

Take Victoria for example.  Under Brodie's Law, bullies can face a 10-year prison term.  In serious cases, and where bullying is likely to continue, the courts can issue intervention orders as a preventative measure.

Additionally, individuals who bully fellow employees can be liable for fines up to $253,512 under workplace health and safety laws, while corporate employers risk fines up to $1,267,560.

What we can be certain about is that the new anti-bullying jurisdiction will make an already litigious industrial relations system worse.

Unfair and unlawful dismissal and general protections applications have skyrocketed in the past four years following the introduction of the Fair Work Act.

Annual reports show that in 2008-09, the Australian Industrial Relations Commission (the Fair Work Commission's predecessor) heard 7994 applications for termination matters.

By 2012-13, applications to the Fair Work Commission for termination matters had exploded to 17,375.  These figures do not include applications for non-termination matters, applications made to the Federal Court or appeals.

Although alarming, the figures are not surprising.  The Fair Work Act extended unfair dismissal laws to an estimated 100,000 previously exempt businesses.  General protections expanded so that workplace rights now affect all aspects of the employment relationship.

In termination matters, the reversal of the onus of proof means that employers are presumed to be at fault.

Of course, there is no doubt that bullying can be a serious problem in workplaces and the physical and mental effects of bullying cannot be overlooked.

However, dignity in the workplace will only flourish when the industrial relations system empowers individuals to work collaboratively to resolve workplace issues.  The present system ingrains hostility by relying on the commission every time a dispute arises.

The new anti-bullying jurisdiction is yet another example of the increasing over-reach of the industrial relations system.

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Game finally up for carboncrats

It was promoted as the voyage to study the melting of ice sheets in the South Pole as well as to retrace Douglas Mawson's perilous expedition a century ago.

Yet the Australasian Antarctic Expedition, led by UNSW climatologist Chris Turney, has become a comedy goldmine.

In case you missed the story during your Christmas break, the researchers became trapped in ice so thick that Chinese rescue attempts could not reach the frozen ship.

''It fell to Professor Turney's ship to play the role of our generation's Titanic,'' Canadian satirist Mark Steyn noted.  ''Unlike the original, this time round the chaps in the first-class staterooms were rooting for the iceberg.''

And Parish-based writer Anne Jolis quipped:  ''Maybe the climate-change researchers even raised a glass, if they had any liquor left.  They certainly had enough ice.''

Humour aside, events such as this indicate dark days for green enthusiasts.

Tony Abbott's likely repeal of the unpopular carbon tax this year reflects a global trend:  the anti-carbon agenda is being subjected to the most intense scrutiny, and is found wanting.

The Kyoto treaty effectively expired a year ago.  Prospects for a replacement are virtually zero.  Rich nations are rejecting climate compensation for the developing world.  Europe is in a coal frenzy.  Germany, a former green trend-setter, is slashing unaffordable subsidies to the renewables industry.  The European Parliament is losing confidence in the EU emissions trading scheme.  No Asian nation has an emission trading scheme in operation.  China's and India's net emissions are growing dramatically and governments, most recently Japan's, are abandoning earlier pledges to reduce their nations' carbon footprints.  Even US Democrats, notwithstanding President Obama's direct action-style energy plan, won't pass modest carbon-pricing bills in the Congress.  Add to this those debunked predictions (remember the vanishing Himalayan glaciers, disappearing North Polar ice cap?), and it is clear that Tim Flannery's moment has come and gone.

Meanwhile, 2013 marked the 15th year of flat-lined global surface temperatures, despite record levels of carbon dioxide being pumped into the atmosphere since 1998.  And as the US shale ''fracking'' revolution shows, the most efficient way to cut emissions is not via command-and-control regulation but by allowing private drillers to expand natural gas production.

Of course, the environmental doomsayers remain apocalyptic.  You try going on the ABC's Q&A and raise doubts about global-warming alarmism.  You will still see the inner-city studio audience treating you not merely with hostility but with open-mouthed incredulity.

The climate-change Cassandras are increasingly marginalised here and abroad.

When they abuse, intimidate and victimise anyone with the temerity to criticise the fanaticism of their movement, the inclination of ordinary Australians is either to shrug their shoulders with a profound lack of interest or to grimace at this moral grandstanding.

Historians will probably look back at the years 2006-09 as the time when the climate hysteria reached its peak in Australia, when rational debate was at its most restricted and politicians at their most gullible.

These were the days of drought, unseasonal bushfires, An Inconvenient Truth, the Garnaut Report and, of course, Kevin Rudd's ''greatest moral challenge''.

Crikey, even Rupert Murdoch was ''giving the planet the benefit of doubt''.

Contrary to media stereotypes, many so-called sceptics — such as Abbott, John Howard, Maurice Newman and this writer — recognised that the rise in carbon dioxide as a result of the burning of fossil fuels led to moderate warming.

But because we questioned the doomsday scenarios and radical, costly government-directed plans to decarbonise the economy, we were denounced as ''deniers''.

Those days are over.

Thanks to Abbott's forceful critique of Labor's ETS/carbon tax, and the persistent failure of the carboncrats to reach legally binding global agreements, Australians have risen up against this madness.

At last, there is recognition not just that there are at least two sides to every story, but that when sophisticates seek to shut down debate, it amounts to an attack on the public interest.

That is why the anti-carbon zealots have become so defensive.  The game is up.

The idea of climate mitigation — carbon taxes, cap and trade, channelling taxpayer subsidies to wind and solar power — destroyed the leaderships not only of Malcolm Turnbull in 2009 and Rudd in 2010, but also of Julia Gillard and Rudd (again) last year.

And although the Coalition's approval ratings have declined since the election, polls also show that opposition to the carbon tax remains high.

Last year's Lowy Institute survey said that only 40 per cent (down from nearly 70 per cent in 2006) think climate change is serious and requires action.

And yet, despite this changing (political) climate, Opposition leader Bill Shorten still opposes the repeal of the carbon tax.

If Labor's divorce from the Greens is genuine, he should support the PM's legislation, lest he meet the same fate as his fellow deniers and become a laughing stock.

The farce of an ideologically neutral curriculum

Christopher Pyne has done irreparable damage to the national curriculum project.

This is fantastic.

The damage hasn't occurred because there's anything wrong with appointing Kevin Donnelly and Professor of Public Administration Ken Wiltshire to review it.

No, it's because the supporters of the national curriculum can no longer pretend that imposing a uniform curriculum on every single student in the country isn't an ideological undertaking.

Donnelly is a conservative and in his work as a political commentator, he has made no attempt to obscure his conservative views.  Not least on the Drum.

Conservatives are such strange and alien creatures that the appointment has turned outrage up to 11.  The teachers' union described it as the ''politicisation'' of education.  Bill Shorten implored Tony Abbott to ''please keep your hands off the school books of Australian children''.

And one of the authors of the history curriculum, Tony Taylor, complained that with the Donnelly and Wiltshire appointment, ''we can look forward to 20 years of tedious culture wars in the classroom''.

But if there is a ''culture war'', it wasn't the right that started it.  The national curriculum is already deeply ideological.

That ought not be a controversial claim.  The curriculum is explicit, open, and unabashed about its ideological content.  It's not buried or implied.  It's as bold as a billboard.

The curriculum nominates three great themes (that is, three ''cross-curriculum priorities'') which are to dominate and define Australian education for the next few decades:  Aboriginal and Torres Strait Islander histories and cultures, Asia and Australia's engagement with Asia, and Sustainability.

All worthy topics, of course.  How are they ideological?  Take sustainability.  The sustainability theme is intended to ''[create] a more ecologically and socially just world through informed action''.  That's virtually the definition of ideology:  a positive description (we are harming the planet) combined with a normative ideal of a better social order (an ecologically and socially just world).

If this isn't clear enough, well, one of its ''organising ideas'' is the sustainability ''world view'':  ''value diversity and social justice are essential for achieving sustainability''.

Perhaps this is an ideology you agree with.  Ideology isn't a bad thing.  Everybody's thought is shaped by ideology, whether they're aware of it or not.  But it's ideology nonetheless.

So it is bizarre to object, as Julia Gillard did on Friday, that the ideological direction of the curriculum was not dictated by the Prime Ministers' Office.  Are we supposed to feel better that a group of independent (read:  unelected) education specialists (Kevin Donnelly calls them ''educrats'') determined the future philosophical underpinnings of our compulsory education system?

(That rule by unelected experts is supposed to be more legitimate and morally superior to rule by elected representatives just shows how anti-democratic our era really is.)

A curriculum is always going to be ideological, in the basic sense that an ideology is a lens through which we make sense of the world.

Alan Reid summarises one view of a national curriculum as ''the major means by which the citizenry, collectively and individually, can develop the capabilities to play a part in the democratic project of nation-(re)building.''

An ideologically neutral curriculum is a contradiction in terms.

So at best the national curriculum faces a sad future of continuous rewriting at every change of government.  Politics is about competing world views, after all.  In the words of Christopher Pyne, ''I don't think the national curriculum is a static document.''

Luckily, in a liberal democracy, we have a way to bypass fundamental disagreements about world views — decentralisation.

There is, simply, no good reason to have a national curriculum.

The first moves towards federal government involvement in the curriculum were initiated, hesitantly, by Malcolm Fraser as John Gorton's education minister, who complained that there were ''unnecessary differences in what is taught in the various states''.

Since then a national curriculum has been a persistent goal of the Commonwealth education department and the small world of education academics.

The intellectual case for a national curriculum, developed over half a century, has involved a lot of theorising about democracy and nation-building and civic virtues.

But now the defenders of the curriculum are trying to pretend these great philosophical goals never existed — that their curriculum is a pragmatic, neutral, unambitious thing.

The utilitarian case for Commonwealth curriculum control has always been absurdly weak.  It rests on the desire for ''consistency'' for the tiny proportion — less than 3 per cent — of students that move interstate during their schooling.

At the very least, the curriculum should be handed back to the states.  It is not a project worth pursuing.

But better yet would be a system of multiple, competing curriculums which schools and parents can choose from, according to their own values, tastes, preferences, and philosophies of education.  This is not as far-fetched as it seems.  Australian schools already offer the International Baccalaureate, Montessori, and Steiner curriculums.

When a population's values conflict, we should look for solutions in political economy.

Don't want Christopher Pyne deciding what your children are taught?  Perhaps a curriculum imposed by the Commonwealth Department of Education is not for you.

Devolving curriculum decisions down to the school level ought to satisfy both critics of Kevin Donnelly and critics of the curriculum as it stands.  And it would instantaneously end the culture war that everybody seems so worried about.

The national curriculum is a high ground.  It was designed to be that way.  Bulldoze the high ground, end the war.

Repeal the economic vandalism crippling shipping

Anti-competitive coastal shipping laws have existed in Australia for more than a century.  While recent changes have made the laws worse, we shouldn't settle for winding back the changes:  the laws should be entirely repealed.

The economic case could not be stronger.  According to an impact statement prepared by the Department of Infrastructure and Transport, repealing coastal shipping laws has the potential to increase Australian GDP by up to $466 million to 2025.

Scrapping the generous subsidies offered to Australian-registered vessels will save more than $254.5m over four years.  Exempting foreign-registered vessels employing foreign crews from the Fair Work Act will cut production costs of Australian manufacturers, saving local jobs and boosting the nation's export competitiveness.

Over time, the coastal shipping trade has become more competitive.  While the number of Australian ships engaged in the coastal trade only slightly declined between 1996 and 2006, the number of foreign ships almost tripled.

Rather than recognising that increased competition was delivering cheaper freight for Australian commodity producers, in 2012 the federal Labor government introduced more than 250 pages' worth of new laws to ''revitalise'' the Australian shipping industry.  Of course, ''revitalise'' meant that the government was going to artificially protect Australian vessels by restricting or prohibiting foreign competition.

Labor's changes meant that foreign-owned vessels employing foreign crews now needed to comply with Australian labour laws.  The changes also overhauled the old licence and permit system with a complicated three-tiered licensing system.

While Australian vessels now have unlimited access to the coastal trade, foreign vessels can only apply for temporary licences that come with extensive conditions and reporting requirements.  Australian vessels are now also subsidised by various tax incentives.

The changes were economic vandalism.  In introducing them, the government consciously placed Australian-registered coastal shipping vessels above Australia's broader economic interest.  The Department of Infrastructure and Transport warned that the more effective the changes were at keeping Australian vessels afloat, the worse Australia's economic growth would be.  Economic evidence from Deloitte Access Economics projected long-term job losses for the shipping industry.

The coastal shipping trade exists primarily to service Australian producers of bulk commodities such as iron ore, alumina, and sugar.  About 85 per cent of all coastal shipping cargo comprises of dry and liquid bulk.

Coastal shipping favours these goods because the market for containerised transport is the most competitive in road and rail.

Astonishingly, the former government's changes to coastal shipping laws have increased the price of the producers of these bulk commodities.

By restricting or prohibiting foreign competition, the immediate economic effect is to drive up domestic transport costs for these commodities.

The Bell Bay Aluminium smelter in Tasmania's north is just one example.  Coastal shipping from Tasmania is already more expensive than shipping between mainland ports, and the 2012 changes have made costs unsustainable.

In a recent submission to the Productivity Commission, BBA gave evidence that as a result of the changes its freight costs had increased from $18.20 a tonne in 2011 to $29.70 in 2012 — an increase of 63 per cent.

BBA's demurrage rates more than doubled, from $14,000 in 2011 to $35,000 in 2012.  As a direct result of the changes, BBA's total costs increased by $4m per year.

BBA is a viable export manufacturer that contributes an estimated $690m per year to the Australian economy.  Yet this poor legislation has decreased its competitiveness at the same time as the price of aluminium is relatively low and the Australian dollar is relatively high.

With manufacturers such as Holden announcing that they will cease operations in Australia and food manufacturer SPC Ardmona looking for government handouts to remain viable, we need to do everything that we can to support viable Australian producers.

The 2012 changes missed the proper focus:  costal shipping reform needs to drive cost efficiencies for Australian producers of bulk goods.

The coastal shipping market will be most efficient if it is free from the burden of these anti-competitive laws.

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Reality is yet to reflect optimism

According to Dun and Bradstreet's (D&B) business survey, firms are optimistic about 2014.

But, following announced departures of Ford, Holden and Sydney's Kurri Kurri aluminium smelter, this year brings serious concerns about the ongoing viability of other key businesses, including Toyota and the Point Henry aluminium smelter.  A strong Aussie dollar, rising energy costs, and poor labour productivity have caused these disappointments.

The dollar is now off its peak level.

And the Abbott Government is attempting to reduce energy cost penalties caused by the carbon tax and other such policies.  Labor opposes such measures and, indeed, the Rudd/Gillard Government left poison pills to impede other energy cost reductions.  These include institutions such as the $10 billion Clean Energy Finance Corporation which appears determined to continue wasting money to thwart the Abbott Government's policies.  The Commonwealth seems reluctant to simply cut off these bodies' access to funds.

Another obstacle to restoring a strong economy is entrenched trade union power aided by labour laws and judicial appointments.

Australia is unique in having a ''Fair Work'' Commission that controls the employment terms and conditions of almost every worker.  The Commission has increasingly become a vehicle for providing jobs, at $350,000-$600,000 a year, for union leaders and their lawyers.  Many of these appointees bring with them their anti-business ideology.  Partisan appointments have also steadily infiltrated the 40 judges comprising the Federal Court.  One third of those appointed by the Gillard/Rudd governments were ALP stalwarts.

The industrial relations system resulted in Holden's factories being loaded with productivity-sapping union controls, which impaired the carmaker's ability to operate efficiently.  Furthermore, a compliant management has allowed union extortions to bring wages that are twice the level seen in other workplaces.  Even with governments funding almost 30 per cent of investment, the labour cost penalty has strangled the firm, with workers preferring redundancy rather than the conditions prevailing in the US and Germany.

Critical to Toyota's survival are exports to affiliates overseas.  To restore competitiveness, management asked its workers to vote on a package of 22 cost savings, none of which involved cutting wages.  In a similar situation, Boeing's employees in Seattle, voted in favour of survival.  But allowing democratic decisions by workers was too much of a risk for Australia's unions.  They took court action before Mordy Bromberg, one of the ALP friendlies appointed by the Gillard government.  Judge Bromberg refused to allow workers to vote on the management's proposal, thus probably signing the death warrant for the last Australian car assembly plant.

With aluminium smelting, Australia was once an ideal location and could recover that position if energy taxes and regulations were removed.  Smelting too however has a cost-padded labour force.  Union heavy Paul Howes, in an attempt to deflect blame for a future closure of Port Henry, claims to have agreed to ''quite good efficiencies'' over the past couple of months.  This is probably a case of too little, too late.

These developments suggest it was the Coalition's election victory rather than genuine underlying improvements that were behind the confidence expressed in D&B's business survey.  Much needs to be done to translate these hopes of the business community into reality.

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There is no such thing as reform without risks

The Australian political class has a complex, neurotic, and self-destructive relationship with the word ''reform''.

On the one hand, every incentive faced by incumbent governments favours the status quo.  Serious policy change is complicated and risky.  Reform is easy to stuff up, it's bound to upset interest groups, and it's a gimme for the opposition.

It's safer to minimally implement your election promises, relax in the comfy chair of government, and focus on distributing the benefits of office.

But on the other hand, ''reform'' is the gold standard of Australian politics.  Journalists and historians like to see big policy changes that reshape the country, and they like to see lots of them.

Australian political legacies are a simple equation.  Good governments are those that reform (Whitlam, Hawke, early Howard).  Bad governments are those that squib reform (Fraser, Rudd).

This trade-off is no doubt what has preoccupied the Abbott Government over the Christmas break.

The Coalition won government by promising to be everything Labor was not:  calm, austere, and rigorous.  But not-being-Labor is an agenda for 12 months, not three or four terms.

Every Coalition government lives in the shadow of the Fraser government.  Those press articles about ''business urging reform'' may be paint-by-numbers but they aren't going to go away.  (Here's one from yesterday in the Australian Financial Review.  Here's one in the Australian today.)

The Coalition's long-term political legacy rests on three major inquiries due to report in the next year — three inquiries that have been specifically designed to provide the Abbott Government with a reform agenda.

The Commission of Audit reports in March.  The review of Australian competition policy will take 12 months once it is formed (presumably in the next couple of weeks).  The financial system inquiry has been formed and will deliver its final report by November.

The Commission of Audit is obviously important to get the budget back under control.  The other two ought to be big deals as well.  Previous inquiries into competition policy and the financial sector fundamentally reshaped the Australian economy.  Think the Hilmer Report that kick-started Keating-era National Competition Policy, and the Fraser government's Campbell Committee which lay the foundation of financial deregulation.

Yet so far the Abbott Government's reviews seem modest, even bashful.

The inquiry into competition policy is supposed to be ''root and branch''.  But its political sponsor is Bruce Billson, the Minister for Small Business, and has been sold almost entirely as a way to level the playing field between small and big business.

Competition policy ought to be about ensuring market forces have free play to drive prices down and spur innovation.  However, the Coalition seems to think competition policy is about ensuring consumer prices are high enough to give farmers a ''fair go''.

The Financial System Inquiry is also peculiarly insular.  Joe Hockey thinks Australian banks should source more capital from within Australia.  It appears the lesson the Government has taken from the Global Financial Crisis is that we are too integrated with the world economy.

This lengthy analysis in the Australian Financial Review from November suggests the inquiry will focus on developing a domestic corporate bond market.  If that's the big policy from the financial system inquiry, then the whole endeavour will have been a bit of a flop.

Indeed, a flop may be what the government is hoping for — that the results of the inquiries are managerial but not bold.

The story of the Rudd government explains why.  In 2010, Ken Henry's review into taxation gave Wayne Swan a whopping 138 separate recommendations to reform the tax and transfer system.  But Swan wasn't sure how to handle reform on such a grand scale, and ended up pursuing just one — the mining tax.  We all know how that ended.

''Reform'' is such a vague and ambiguous concept that any significant policy change is described as reform.  For some, reform is carbon taxes and abolishing negative gearing.  For others, it's labour market deregulation and reducing green tape.

Either way, reform is presented as a good in and of itself.  Every government is desperate to be seen as the Hawke government — the ideal reforming type.  In part that's because of the near universal consensus in Australia's policy community that freeing up the economy was a great idea.

Just as significant are the Coalition's constant reminders that they supported Labor's liberalisations and asset sales at the time.

It's easy to assume in hindsight that the politics of reform were relatively simple.  But the 1986-1987 cabinet papers released last week underscore just how uncomfortable and bitter economic reform actually was.

Take shipping — one of the key liberalisations in the story of Australian productivity.  Greg Jericho tells the story here of how the Hawke government's desire to open up the Australian coastal trade to foreign ships was scotched by the ACTU.  Shipping reform had to wait for the Howard government, for whom broken relations with the union movement was no great loss.

The hero story of the reform era that is told in the business pages every week is no more a reflection of what happened during the Hawke and Keating governments than the West Wing is of the Clinton administration.

If the Abbott Government wants the historical mantle of ''reform'', it will need to take some risks.  And it will need to make some enemies.

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The missing milestone

Last October's bushfires meant that 2013 was not a good year for the Blue Mountains.  It should have been a year of celebration.  However, unless you paid very close attention, you probably missed the fact that last year marked the 200th anniversary of one of the most momentous events in Australian history — the crossing of the Blue Mountains by Blaxland, Lawson and Wentworth.  For 1813 should surely rank with 1788, 1901 and 1915 as one of the big years of Australian history.  It was the year that opened up the interior of the continent to the development of key industries such as wool, wheat and mining.

Yet the only attempts to commemorate the crossing were almost all local and small scale.  The only even moderately high profile effort was News Limited cartoonist Warren Brown retracing the route, which generated some press coverage.  There were no new television programmes about it, although the National Film and Sound Archive did post an earlier documentary about the crossing on YouTube — it was made in 1965.  This does seem rather sparse acknowledgement of such a momentous anniversary.

In the quarter century from the start of the first British Settlement at Sydney Cove in January 1788 until 1813, the colony of New South Wales had only expanded to other coastal locations such as the Hunter and Hobart.  This was all about to change when on 11 May 1813 Gregory Blaxland, William Lawson and William Charles Wentworth set off from Blaxland's property, south of what is now St Mary's, to cross the Blue Mountains.  Following a previous failed attempt, Blaxland had developed a strategy to follow the ridges, rather than the valleys, and the felicitous choice of route is reflected in the fact that the Great Western Highway and main western railway still largely follow it.

Another clever feature of their journey was to treat every stage as a two-day process.  On the first day, the bulk of the party would set off, leaving horses and supplies behind and then, having navigated their way through the bush for a few miles, the advance party would turn back and cut a wider path for the horses to follow the next day.  After three weeks of this repeated process, they had covered about 50 miles and had succeeded in reaching the top of the Divide.  From the top of what became known as Mount Blaxland, the explorers could see what looked like potentially prosperous country stretching away to the west.

By the end of 1813 the colony's Surveyor-General George Evans, under instructions from Governor Lachlan Macquarie, had followed their route and surveyed some of the plain to the west.  Within two years, Macquarie himself had travelled across the mountains and founded the town of Bathurst.

This flurry of postcrossing activity tends to undermine the argument of emeritus Sydney University history professor Richard Waterhouse that the explorers' contemporaries did not share the modern view of the importance of crossing the mountains.  Waterhouse was quoted as saying that ''the report of the successful Blaxland crossing in the Sydney Gazette in 1813 amounted to one paragraph — a similar size to an article on a cockfight''. No doubt many 1813 Sydneysiders, just like their 2013 successors, wanted to read about sport rather than hard news, but Macquarie clearly understood the significance of the discovery.

Waterhouse is far from alone among modern historians in downplaying the importance of Blaxland, Lawson and Wentworth.  Indeed, in recent decades, it has become something of a fashion to sneer at what one writer has referred to as ''the most hackneyed event in Australian history''.  One line of attack has been to question whether Blaxland, Lawson and Wentworth were actually the first settlers to cross the mountains.  From the early days of Sydney town, escaped convicts and other adventurers had sought ways to scale them, most being turned back when the valleys they followed ended in sheer rock faces.  Some have argued that one John Wilson crossed in 1798, but the evidence is not convincing.  Certainly, in 1802, the Frenchman Francis Louis Barrallier got within a day's walk of the top of the Great Divide, before a lack of provisions forced him and his party to turn back.  There was also the botanist George Caley who regularly visited the mountains to collect specimens, but there is no evidence that he got much beyond the eastern foothills.

There are other reasons why the journey of Blaxland, Lawson and Wentworth has come to be seen as more problematic by recent generations.  For decades, people have been deserting Australia's interior and resettling on the coastal fringe which has reduced our collective empathy with, and understanding of, the importance of what goes on beyond the Divide.

Further, where once opening up the interior was seen as unarguably good and progressive, in recent times this has been balanced against the negative impact that this had on the indigenous occupants of those grasslands.  Yet the fact that crossing the Divide magnified several times over the impact of British settlement on Aboriginal Australians only adds to the significance of what Blaxland, Lawson and Wentworth achieved.  From 1813 onwards, the whole Australian continent, not just the coastal fringe, became available for settlement.  This completely changed the economic development of Australia and fundamentally altered the lives of many generations of settler and indigenous Australians.

Geoffrey Blainey pointed out in The Tyranny of Distance that, in earlier years, colonists had no great practical incentive to explore the interior, which he argued was more significant than the mountains' impenetrability in delaying a crossing.  However, with the coastal plain becoming more crowded, that was changing in the 1810s.  If Blaxland, Lawson and Wentworth had not crossed the Blue Mountains in 1813, some other explorers would have done so in the ensuing years.  Whoever did it, and whenever it occurred, it was always going to be a landmark event.

Perhaps when John Dunmore Lang argued in the 1850s that ''the passes of the Blue Mountains are like the Straits of Thermopylae and could be defended by a mere handful of Australian Greeks against the whole power of Persia'', he was guilty of overstating their impenetrability and significance.  In 2013, we did the opposite.

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Let's avoid the slippery slope of mass surveillance

Two US federal court decisions in the past month have once again dragged into the spotlight the National Security Agency's Orwellian program of dragnet surveillance.  Both courts were testing the constitutional validity of the systematic monitoring of civilians' electronic communications.

The judgments of New York and Washington ultimately disagreed, yet both clearly shared grave concerns that this routine spying posed a very real threat to citizens' liberties.

The District of Columbia's judgment scathingly remarked that it could not conceive of a more ''indiscriminate and arbitrary invasion'' than what was conducted by the NSA.  The phone surveillance carried out by the NSA is an insidious and tyrannical program.  It involves the systematic combing of millions of people's metadata, in the vague hope that it may unearth some new plot.

It is not only Americans who should be concerned.  There is every reason that, if it is not already occurring to the same extent in Australia, we are not far off the same level of government control.  As it stands here, organisations such as local councils and the RSPCA are already able to apply for your private phone records.

The ongoing saga of the NSA's scandal is proof that we cannot trust governments with our privacy.  The past decade has seen many of our freedoms whittled away for the alleged greater good.  Australians' security must be taken seriously;  however, the readiness with which we have let the government remove our freedoms to protect us is of grave concern.  A fine balance must be struck to ensure that we are defended without opening ourselves to totalitarianism.  The NSA revelations are forcing citizens of the Western world to discover what a mammoth and invasive intelligence framework has been created on their behalf.

Barriers are always set in place to protect against such an abuse of power, yet these protections are useless unless we hold the government to account.  In theory, all warrants must be granted by an accountable and public court.

The law states that the surveillance cannot be just a fishing expedition and that there has to be a credible reason to justify such an invasion of privacy.  In practice, secret courts such as the Foreign Intelligence Surveillance Court grant clandestine warrants and no one may read the court's decisions.

It seems the legislature and judiciary do not practise what they preach.  It was revealed earlier this year that US telecommunications provider Verizon was ordered by the FISC to hand over to the NSA on an ongoing and daily basis all metadata regarding its customers' telephone calls.

This metadata includes the time the call was made, location data, call duration and any unique identifiers.

Even the chief judge of FISC, Reggie B. Walton, acknowledges that this secret judicial process is merely a rubber stamp.  The judges seemed hamstrung and had to trust that the evidence they were provided was accurate.  The secret court appeared unable to check the veracity of the NSA's claims.  This resulted in decisions being made based solely on information that was provided by the NSA, to justify why the agency should be granted exactly what it wanted.

Turns out that the NSA is way ahead of us and already has at hand technology to decrypt the data of 80 per cent of the world's mobiles.

This is all outrageous enough, yet new reports keep appearing detailing the utter incompetence of the intelligence agencies.  These are the people with their hands on information that can track every waking moment of our lives.

A large number of Americans had their phones accidentally monitored when the NSA mixed up the area codes of Egypt (20) and Washington (202).  Then there were the spies masquerading as orcs and elves on the online game World of Warcraft.  This mission was working just fine and with excellent results — until they realised that the targets were just other undercover agents.  There have been cases of jealous NSA employees using the vast surveillance powers at their disposal to spy on spouses and their love interests.  This included listening in on calls and tracking their whereabouts using geolocation data.

And Australia is definitely taking the NSA's lead.

Leaked documents have shown that the Australian Signals Directorate (one of our intelligence agencies) felt at ease disseminating the private information of Australians to foreign spy networks.  Not just metadata, which already gives a picture-clear map of where you go and who you communicate with, but also the collation of private medical, legal and business records.

This breaches innumerable federal and state laws enacted to prevent such a Big Brother role for government.

Most of us are constantly connected to devices that record everyone we contact and everywhere we go.  Even turning off your mobile phone does not stop the GPS from sending data back to the satellite.

This metadata creates a shockingly detailed road map of our lives and is private information that we should guard closely.  Every opportunity a government is given to dig deeper into our lives, it will seize and rarely cede.  Our loss of privacy is not a concern because governments justify their actions as being for our own good.  The threats change but the response never differs:  give us more power and we will make all your problems go away.

The federal judgments in New York and Washington will certainly be appealed.

Let us hope that the Supreme Court will take a stand for civil rights and protect US citizens from such an arbitrary invasion into their lives by the state.

Our freedoms are what distinguish us from the authoritarian regimes of this world.  We have unwittingly sacrificed our freedoms for our security.  Australia must take heed from the scandal gripping America.  We are already treading the same sinister path and we must turn back.  Otherwise soon we will have our own spy scandals to report.

Beef industry needs greater control of money from levies

The Federal Government's proposed Senate inquiry into the collection and disbursement of levies in the beef cattle industry should be seized by producers.

They should take control of the money government takes from them and reform the way it is spent.

Both the Australian Beef Association and the United Stockowners of Australia have long complained about the government-appointed bodies that dictate how farmers' hard-earned cash is spent.

The peak industry body, Cattle Council of Australia, is dominated by councillors appointed by state farm organisations.

They represent fewer than 20 per cent of cattle producers yet set the mandatory levy all cattle growers must pay.

Beyond that, the Meat and Livestock Australia spends the $56 million of levies with inadequate guidance from the cattle growers.  If that was not bad enough, it is not clear that anyone actually knows who is paying the levy.

There is no definitive record of who has paid the tax (or even how much).

The levy is simply collected from the overall cattle yard sales at the end of the day.

By contrast, Australian Wool Innovation offers a fully democratic model for wool growers.

Not only do they directly vote for representatives on the AWI, every three years producers also vote on the rate of the levy, which can be between 0 and 5 per cent.  Recently growers voted for 2 per cent.

The inquiry should also look at the successes other agricultural industries have had in involving the private sector.

The National Grower Register has been used to great effect in the grain market.  Each producer is given their own unique registration number that keeps track of all transactions, deliveries and payments.  The database is universal across Australia.

Any levies are taken directly and there is a record of how much has been paid.

The cattle industry can take both the AWI and NGR's leads to create an industry body that will properly provide for growers' needs.  Cattle growers could create their own company limited by shares, where each share equals a head of cattle.  The more cattle you have, the greater the amount of votes.

This prevents part-time hobby farmers from having greater sway than the producers who have the greatest skin in the game.

To facilitate this, the industry would need a registration database such as the NGR (or even employ them directly to mimic the success they have had in the grain sector) to create a definitive list of the producers, and thus shareholders, of the cattle industry of Australia.

Such a board would be best served by subcontracting out the marketing, research and development to specialised businesses, who will have to tender for the work.

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