Tag Archives: infrastructure

Delivery Strategies for Australia’s New Infrastructure Consensus

October 23, 2015
Written by: The AIM Network
26 Replies

Denis Bright invites discussion about of the most appropriate delivery models for best practice in bipartisan commitments to Australian transport infrastructure.

The LNP’s conservative template for a low tax, low service state presents a challenge to Malcolm Turnbull.

If the new Prime Minister wishes to preside over the delivery of new infrastructure for cities, Cabinet must come up with the financial priorities to reverse the current cutbacks in the transport and communication sectors in the 2015 Budget.

Joe Hockey’s last budget has left a cupboard that is bare of new funding. Commitments to transport and infrastructure have faced the steepest reduction in real budget expenditure.

Rather than wait for the Mid-Year Economic and Financial Outlook (MYEFO), Cabinet can proceed with a mini-budget to implement the Prime Minister’s new vision for nation building and infrastructure commitments.

This positive vision is cheered from across the political spectrum as shown by the enthusiasm for a more extensive light rail system on the Gold Coast.

So far, Malcolm Turnbull has been tight lipped about any wider commitment to infrastructure funding because the choices available within the LNP’s conservative political template are not so obvious.

Prospects for market based new infrastructure

Private sector options for the delivery of new transport infrastructure are available to the LNP within appropriate regulatory structures. The Australian Competition and Consumer Commission (ACCC) continues to regulate potential restrictive trade practices affecting transport infrastructure.

Market-based infrastructure delivery within the conservative political template of Thatcherism has been an abysmal failure from Canada to Britain and New Zealand.

In places like Mexico and Argentina, privatization of transport infrastructure has left few remaining passenger and rail freight services and new networks of expensive commercial road tollways.

However, since the 1990s, global transport infrastructure firms have emerged with the capacity to supervise the construction and management of essential infrastructure.

Even where rail track is still in government hands, freight delivery by Australian firms such as Asciano and Aurizon competes in the competitive delivery of containers and the motive power for some of the remnants of interstate passenger traffic.

Asciano’s vast transport network

ACCC has temporarily rejected a take-over bid by Brookfield Infrastructure Partners for Asciano. Brookfield’s modified proposals will be reviewed again in December 2015.

Brookfield Infrastructure Partners currently operates the West Australian Government Railway network including train movements along the Indian Pacific Route west from Kalgoorlie under an exclusive leasing arrangement until 2049.

Brookfield Infrastructure Partners is also one of the many companies interested in acquiring the Australian Rail Track Corporation (ARTC) which has been offered for privatization by the federal LNP at a potential sale price of $4 billion.

The LNP government has proceeded slowly on its commitment to privatization of the management of 8,100 kms of interstate rail tracks between Brisbane and Kalgoorlie. The final section between Kalgoorlie, Perth and Kwinana is in fact operated by Brookfield Infrastructure Partners.

Aurizon Holdings is also interested in acquiring the ARTC. This former Queensland Rail public sector carrier is currently the largest integrated rail-road freight business in Australia.

Any future acquisitions of ARTC by Brookfield Infrastructure Partners will have immense implications for Aurizon’s capacity as a freight leader. Both Aurizon and Anciano are likely to face takeover offers by other global transport infrastructure giants.

https://www.youtube.com/watch?v=I-40iQ_ViLE

Even before the accession of Prime Minister Turnbull, there was considerable reappraisal of the decision to privatize the ARTC.

ARTC monitoring does not extend to the Queensland freight lines beyond Brisbane which carry freight trains from Asciano and Aurizon on tracks which are still owned by the Queensland Government.

In the midst of current confusion over national infrastructure policies, there are now opportunities for federal Labor to excel with a more even-handed national infrastructure plan.

So what is Bill Shorten offering to fill the confusion in federal LNP ranks?

Federal Labor’s Alternative Infrastructure Programme

In addressing the Queensland Media Club on 8 October 2015, Opposition Leader Bill Shorten signalled that Labor is also quite pragmatic about the extent of market involvement to end Australia’s infrastructure backlog.

Labor offered $10 billion to support Infrastructure Partners Australia (IPA) as the co-ordinator of transport infrastructure funding.

Logically, IPA would take on the responsibilities of an expanded ARTC with its financial support for rail track maintenance across the network.

Bill Shorten warned Australians that the Australian LNP Government’s investment in infrastructure in the June Quarter of 2015 had fallen by 20.1 per cent compared with the last quarter when Labor was in government.

An excellent case has been presented to support reliance on the social market to deliver nine key transport infrastructure projects. These projects include rail access to the new Sydney Airport, new commitments to Melbourne’s Metro rail projects, Brisbane’s cross-river metro rail link, the light rail extensions on the Gold Coast and major motorway projects in most states.

Prior to the accession of Prime Minister Turnbull, Sydney’s airport project at Badgerys Creek was offered a $3.8 billion motorway and tunnel space for a future unfunded rail connection. Now Prime Minister Turnbull is committed to new rail access.

While Prime Minister Turnbull’s team is currently working on the specifics of its market-based approach, Labor has time to refine its initial proposals to add new financial traction to the proposed IPA.

Adding financial traction to IPA

In these days of national political consensus over rhetorical commitment to new transport infrastructure, more financial traction could be given to an expanded role for Bill Shorten’s IPA.

Labor can learn from the manner in which corporate giants like Brookfield Infrastructure Partners hedges long-term investments in infrastructure with financial gains from equity management funds.

Brookfield Asset Management Fund is a specialist in property development, renewal energy, infrastructure and private equity management for a total of $200US billion with recent links to Brookfield Business Partners in Bermuda.

In a touch of irony that a major multinational company has been a financial adviser through the Brookfield Asset Management Fund to the Investment Corporation of Dubai. This fund operates a sovereign wealth fund to promote new age investment and infrastructure at home and abroad.

Financial activities on behalf of the IPA could multiply the Australian government’s financial support for longer-term infrastructure projects by inviting investment equity from entrepreneurs and corporations in a safe government guaranteed hedge-fund which takes risk-taking investment on financial markets and in established companies.

The McKinsey Global Institute notes that investment in environmentally sustainable infrastructure is now a major niche in the global economy as countries with differing levels of development try to counter the productivity losses from congestion in sprawling cities.

As well as transforming transportation and planning options for Australian cities, the IPA could become an innovative investor and project manager internationally adding more traction to Australia’s currently reduced overseas assistance programmes.

Work has commenced on urban subway systems in both Hanoi and Ho Chi Minh City (HCMC). Most of the funding for the first subway line in HCMC has been donated by Japan and the construction is a Japanese-Vietnamese joint venture which is now scheduled for completion in 2020.

While Australian governments have cut overseas assistance programmes, Japan has embarked on Win Win Approaches to overseas assistance to assists both donor and recipient alike.

The IPA could provide opportunities to share Australia’s renewed commitment to the social market internationally. This would not be beyond the resources of Australia as a significant middle ranking economy.

The financial commitments of overseas sovereign wealth and pension funds have been summarized by the Sovereign Wealth Fund Institute (SWFI). These funds have become an important resource for governments of differing political complexions.

Portfolio assets of major sovereign wealth and pension funds (Billions $US)

Sovereign Wealth Fund Institute (SWFI) 2015 (http://www.swfinstitute.org/public-fund-league-table/)

Sovereign wealth funds do not exist only in distant overseas capitals.

The Queensland Investment Corporation (QIC) successfully handles the investment of superannuation contributions and other financial transactions assigned to it by the Queensland Treasury Corporation. QIC thrives on both canny financial transactions and real investment acquisitions.

Labor’s IPA could follow this model by attracting capital from local and international corporations and entrepreneurs who need a safe haven for both short-term and long term deposits.

QIC uses capital equity for profitable investments on the financial market and in the acquisition of targeted enterprises with a real future.

The QIC has successfully acquired the Iona Gas Storage Facility west of Melbourne on 8 October 2015 for $1.78 billion and the profits are expected to flow back to Queensland from the December Quarter of 2015.

QIC recorded a profit of $100 million in 2014-15 and assets under management base of $73.8 billion on 30 June 2015.

Meanwhile, Bill Shorten has developed a well argued case for staying with the Australian social market to fund assist in delivering nine key infrastructure projects. These commitments include Airport Rail for Badgerys Creek, Sydney, Melbourne’s Metro Rail Project, Brisbane’s cross-river rail metro link and key motorway projects across Australia.

The electorate is still waiting for the details of Malcolm Turnbull’s market-based model for the renewal of Australian infrastructure. It might be a long wait if the LNP infrastructure plans come from the political template in which tax cuts for more comfortable families take precedence over important national priorities.

A real opportunity exists for Bill Shorten to highlight the LNP’s current indecision about the best model for the delivery of market-based national infrastructure. By adding an investment fund to the proposed IPA, Labor could have a real opportunity to avoid the excesses of an ideologically-based market approach.

Denis Bright (pictured) is a registered teacher and a member of the Media, Entertainment and Arts Alliance (MEAA). He has recent postgraduate qualifications in journalism, public policy and international relations. He is interested in developing progressive public policies that are compatible with commitments to a social market model within contemporary globalization.

Give Labor a big tick

October 9, 2015
Written by: Roswell
16 Replies

It was bound to happen and I’m glad it did.

After weekly emails from Labor – that were generally pointless or simply wanted me to sign a petition – I am pleased to announce that something constructive found its way into my inbox.

Instead of garbling on about nothing or inviting me/email recipients to send stern words to the government about whatever horrible policy they were trying to thrust upon us . . . Labor wants my opinion about the policies important to me.

I don’t know how many people received said email but I do hope that a hell of a lot of people are on their mailing lists. I want a hell of a lot of people telling Labor what is important to them.

Now to the email:

We want to make sure our community is heard. We have so many supporters who are passionate about so many different issues.

That’s why we’d like to hold a series of Facebook QandAs with Labor Shadow Ministers so that you can ask your questions about Labor’s plans and policies directly from the source.

So what issue are you most passionate about?

The Budget

The Economy

Education

Environment and Climate Change

Foreign Affairs

Health

Higher Education

Immigration and Asylum policy

Infrastructure

Innovation and Start-ups

National Security

The NBN

NDIS

Regional Australia

Social Security, Pensions and Welfare

Are Labor actually about to start implementing some policies? Are they actually trying to shake off the Liberal-Lite label? Are they actually trying to move forward again now that Tony Abbott and his wedge-style of politics have been swept away?

If ‘yes’ to all of the above, then “thank you, Labor”.

For two years I’ve been dumbfounded as to why the issues important to me have been ignored. There must be tens of thousands of Labor supporters who feel the same way, but at last Labor wants to hear from us.

As I’ve been the first to complain over these two years I will be making sure I am one of the first to tick some of the boxes. Please join me. We are about to be listened to.

The visionary vs the wrecker

September 13, 2015
Written by: Kaye Lee
33 Replies

Proactive is not a word that can be used to describe Tony Abbott – regressive would be a far more appropriate term.

A comparison to another Prime Minister from 40 years ago shows just how far backwards Abbott wants to take us.

Gough Whitlam introduced Medibank, the ancestor of Medicare, as Australia’s first national health insurance system in 1975.

The Abbott government wants to roll back universal health care by introducing co-payments. They also sold off the profitable Medibank Private which is now curtailing benefits.

Whitlam abolished university fees from January 1, 1974 which not only made a university education accessible to all young people, but also “mature-age students”, with a rush of older Australians getting degrees in the 1970s.

Abbott wants to deregulate fees which will make a university education out of the reach of many.

Whitlam established The States Grants (Schools) Act 1973 and the Schools Commission Act 1973 to create a new system of fairer funding for education. He attended Sydney’s prestigious Knox Grammar, but for him the difference in opportunity for private and government school students was “morally unjust and socially wasteful”.

Abbott abandoned the Gonski reforms and said the government has more of an obligation to private than state schools.

Ten days after taking office, Whitlam and his deputy, Lance Barnard, announced a royal commission into Aboriginal land rights and established the Department of Aboriginal Affairs. The findings of the royal commission led to the drafting of the Aboriginal Land Rights (Northern Territory) Act 1976 and the establishment of an elected National Aboriginal Consultative Committee.

Abbott made $534 million in cuts across Indigenous Affairs over five years, and established the Indigenous Advancement Strategy (IAS) advised by Twiggy Forrest. The Indigenous Affairs funding environment “remains a trauma zone” though money has been provided for farmers to fight native title claims. Action on constitutional recognition remains a talkfest and self-determination has been replaced by income management, directed learning, truancy officers, and mandatory sentencing.

Whitlam re-opened the Australian embassy in Beijing, resuming diplomatic relations after 24 years, and became the first Australian Prime Minister to visit the People’s Republic of China in 1973.

Abbott blunders around from one diplomatic embarrassment to the next – shirt-fronting Putin, laughing about Pacific Islands being inundated, telling the Indonesians we don’t need their permission to tow back boats and that we will spy on whoever we please, telling Obama he didn’t know what he was talking about re the Great Barrier Reef, saying the UN lacks credibility – the list is endless and humiliating.

Whitlam changed the Anthem from God Save the Queen to Advance Australia Fair. The Order of Australia replaced the British honours system in early 1975.

Abbott remains a staunch monarchist and reintroduced knights and dames, going to the extraordinary length of knighting Prince Phillip.

The Whitlam government in its first days reopened the equal pay case pending before the Commonwealth Conciliation and Arbitration Commission, and appointed a woman, Elizabeth Evatt, to the commission.

Abbott crowned himself Minister for Women and promptly got rid of gender-reporting requirements for business. He initially only appointed one woman to Cabinet and refuses to entertain the idea of quotas to address the lack of female representation in the Liberal Party.

Whitlam and Barnard eliminated sales tax on contraceptive pills.

Abbott refuses to remove GST from women’s sanitary products.

Whitlam doubled funding to the arts in a year and created the Australia Council for the Arts.

Abbott cut arts funding to the Australia Council by $105 million, diverting the funding to a new fund called the National Program of Excellence in Arts (NPEA) where grants are decided by George Brandis.

Whitlam barred racially discriminatory sport teams from Australia, and instructed the Australian delegation at the United Nations to vote in favour of sanctions on apartheid South Africa and Rhodesia.

Tony Abbott called Mandella’s ANC terrorists and himself went on a rugby tour to South Africa.

Whitlam ordered the Australian Army Training Team home from Vietnam, ending Australia’s involvement in the war. Legislation allowed the defence minister to grant exemptions from conscription. Barnard held this office, and exempted everyone. Seven men were at that time incarcerated for refusing conscription; Whitlam arranged for their liberation.

Abbott has sent us back to war in the Middle East.

Whitlam introduced “no fault divorces” through the Family Law Act 1975.

Abbott wants a return to fault-based divorce as a way to “shore up traditional values”.

Whitlam established legal aid, with offices in each state capital.

Abbott has slashed funding to legal aid and banned them from advocacy work.

The Whitlam government abolished the death penalty for federal crimes.

The Abbott government quietly scrapped an instruction to the Australian Federal Police last year requiring it to take Australia’s opposition to the death penalty into account when co-operating with overseas law enforcement agencies.

Whitlam founded the Department of Urban Development and set a goal to leave no urban home unsewered. His government gave grants directly to local government units for urban renewal, flood prevention, and the promotion of tourism. Other federal grants financed highways linking the state capitals, and paid for standard-gauge rail lines between the states.

Abbott has made a lot of announcements but infrastructure spending has plummeted and the vision of fast NBN to all premises has been abandoned. He also does not consider urban infrastructure part of his responsibility.

One man had a vision for Australia and the strength and courage to enact it. The other is a nasty, vengeful, anachronism who is completely out of his depth and who is determined to unwind reforms purely because they were enacted by the previous government. His only aim is to save his own job and he is prepared to say and do anything to achieve it.

Refugees? Or Infrastructure?

July 25, 2015
Written by: The AIM Network
78 Replies

The following is a guest post by the Alexandria ALP Branch.

There’s an anger in Western Sydney that could cost us the next election – “our schools, trains, roads, hospitals are full of refugees”.

We allowed and encouraged this anger to focus on how refugees can be stopped, a good Liberal issue. We ignored and continue to ignore the underlying issue of our schools, trains, roads, hospitals being full. We allowed a single Liberal issue to displace a suite of good Labor issues.

In 2010-11, a total of 4828 Humanitarian Program visas were given to onshore applicants, not all maritime arrivals. That number is from a total of 13,799 visas granted under the Humanitarian Program, itself a number out of a total of 158,943 new immigrants. Putting that number in wider perspective, new immigrants were part of a total population growth for 2012 of 394,200 people. Australia’s population is 22.32 million. Boat people are about 1-2 per cent of annual population growth which is about 1-2 per cent of our population.

In real terms, the nation is reducing government spending. You cannot have a decade and a half of income tax cuts without consequence. It has been a bipartisan squeeze. The squeeze hurts everyone who depends on public facilities and public services.

This is true not just in the western suburbs. There are stations in the inner city, near where I live, at which peak-hour trains are too full to board. We have kids commuting to nearby suburbs because the local schools are full. I don’t need to tell you what our roads are like. Here in the inner city we blame developers rather than refugees, but the anger is just as real. There’s a reason we’re nimbys. We’re being squeezed. Successive governments have contrived to squeeze public spending. Squeeze spending and you are squeezing the people. The people are the public. That understanding was basic to our civic culture. Used to be.

Here is the problem. Not the one that some people would like to have us believe, not that we have too many refugees, not that we have too many people. No, our problem is we do not have enough infrastructure per person. We are not investing in infrastructure. Cut taxes, you cease investing in infrastructure. That is the basic problem that this government denies.

The UN estimates that about 1% of ‘ irregular maritime’ travellers drown, and this may be an underestimate. Presumably, a similar percentage of turned-back boats sink. A person who chooses not to become a refugee will not die at sea, but they may instead die at the hands of their own government. The calculus is complicated, and we do not have enough information to be sure that turnbacks do more good than harm.

We do know that turnbacks are damaging our relationship with Indonesia, and we know that they are illegal. We also know that refugees, after balancing the risk of drowning against the risk of staying put, sometimes chose the risk of drowning. It is no surprise that, when assessed, almost all maritime refugee applicants are found to be ‘genuine’ refugees – no one takes lightly to these boats.

We don’t need to spend billions on concentration camps. We need to spend billions on rail lines and on schools and on hospitals and on roads. It is not going to be cheap. It is necessary.

Having an adequate revenue base to facilitate spending is a debate we need to have, a debate we will win. Despite our record in recent government, the electorate perceives us as weak on refugees and economic issues, but strong on health and education and public transport. Why then should we indulge the Liberals in a debate on the refugees when we could be having a debate on health and education and public transport?

This article was first published on the Alexandria ALP Branch site.

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Short term sugar hit

April 1, 2015
Written by: Kaye Lee
17 Replies

When even the experts disagree, it’s not surprising that the electorate are divided on privatisation. The only say that Australians get in the sale of the assets we jointly own is at election time but I sometimes wonder if voters fully consider the ramifications of privatisation and asset recycling.

Joe Hockey and Tony Abbott are both determined to use their time on the Treasury benches selling every Commonwealth asset they can and, by making funding dependent on it, they are forcing state premiers to do the same.

Joe wants to follow the Costello fire sale approach to fixing his budget while Tony wants roads, roads, and more roads to be his legacy.

Last year the Productivity Commission released a report into the provision of public infrastructure which concluded that there is “an urgent need to improve how public infrastructure projects are selected, funded, financed and delivered.”

“There are many examples of inadequate project selection that have led to costly outcomes for users and taxpayers. …poorly chosen infrastructure projects can reduce productivity and financially burden the community for decades with infrastructure that is unnecessary and expensive to maintain… The costs of poor project selection and delivery will be exacerbated if governments decide to increase their infrastructure investment programs without reforming their governance regimes…

To sum up, governments are sometimes weak at determining what, where and when infrastructure projects should be scoped and constructed. This stems from deficiencies in using coherent decision-making frameworks to assess the portfolio of potential projects.”

The PC argues that it is critical that governments build a “credible and efficient governance and institutional framework for project selection”, since “selecting the right projects is the most important aspect of achieving good outcomes for the community”.

“Properly conducted cost–benefit studies of large projects, and their disclosure to the public” is seen as key to guide project selection and improve the transparency of decision making and they recommend public disclosure of CBAs for any project over $50 million.

The report mentions the ACT Light Rail Project as an example of poor decision making.

“The ACT Government’s decision to proceed with a light rail project appears to be an example of where the results of cost–benefit analysis have been ignored without a valid explanation…

In a submission to Infrastructure Australia in 2012, the ACT Government analysed a number of options including bus rapid transit (BRT) and light rail rapid transit (LRT). The analysis estimated that the upfront capital costs for the BRT and LRT would be $276 million and $614 million respectively (on an undiscounted basis) (ACT Government 2012).

In its economic appraisal (which is essentially a cost–benefit analysis), the ACT Government found net present values of $243.3 million for BRT and $10.8 million for LRT. The benefit–cost ratio for BRT was estimated at 1.98, with 1.02 for LRT. In the assessment, the benefits of BRT and LRT were similar ($491.8 million against $534.9 million respectively), but the cost of BRT was less than half that of LRT ($248.5 million against $524.1 million, when discounted by 7 per cent). The cost–benefit analysis took into account a range of factors including journey times, and avoided environmental impacts and accidents (ACT Government 2012)…

In summary, a cost–benefit analysis showed BRT to be a greatly superior option than LRT…”

It also warns against the view that private sector provision is necessarily best, noting instead that it brings “additional risks and costs, which need to be weighed against the benefits”, and “only if well-designed and executed does a PPP agreement offer the potential for efficiency gains compared with traditional public procurement”.

– Private financing is not a ‘magic pudding’ — ultimately users and/or taxpayers must foot the bill.

– Government guarantees and tax concessions are not costless and often involve poorly understood risks.

The “poles and wires” are a prime example of this.

Every five years, the federal energy regulator grants the distribution and transmission network companies an allowance to spend on capital and operating costs. In 2009, the networks claimed to need billions to build new infrastructure to meet soaring demand and the Australian Energy Regulator approved a staggering $45 billion of spending.

Not only that, they ruled that the NSW distribution networks could claim an astonishingly high cost of capital of 10.02% per annum, which it said was equal to the borrowing costs of a private company at that time. In fact, they borrow from a triple A–rated state treasury at rates of around 4–5%.

This meant that, for every billion dollars they borrowed to spend on infrastructure, the NSW networks were now able to charge their customers an extra $100 million every year (decreasing over time as the loan was paid off). Gerard Brody, an advocate from the Consumer Action Law Centre, said “This was just pure profit coming from consumers’ hip pockets. There’s no rational, economic reason for consumers paying that sort of money.”

According to the Australian Bureau of Statistics, the electricity industry’s profits rose by 67% between 2007–08 and 2010–11. In this same period, electricity bills rose 40%. With tacit approval from the federal government, they carried on spending billions of dollars on new infrastructure we didn’t need, based on projections that were obviously wrong. According to the federal treasury, 51% of your electricity bill goes towards “network charges”.

The PC report also warns that Abbott’s bribes to the states, otherwise known as asset or capital recycling,

“could act to encourage privatisation in circumstances that are not fully justified and encourage the selection of new projects that do not have demonstrable net benefits. Already, examples of promises to reinvest have emerged in regions where assets are being sold. Tying funds to particular regions is no assurance that the highest net benefit investments are being considered.”

On Tuesday, the head of the NSW state government’s infrastructure advisory criticised the Abbott government’s refusal to fund public transport projects.

“I can’t really understand the logic of saying we will only invest in a transport project if it involves bitumen as opposed to one that involves steel rails,” said Jim Betts, the chief executive of Infrastructure NSW.

“It seems to be arbitrary,” he said of Mr Abbott’s stance. “I can’t understand how public transport is somehow beyond the pale. It’s a shame because particularly I would like to see bodies like Infrastructure Australia able to give modally agnostic advice.”

As a short term budget fix, Hockey is also considering selling six government-owned buildings in Canberra, including one that houses the Treasury Department.

The scoping study will look at options for the John Gorton and Treasury buildings, as well as East and West block and Anzac Park East and West, which are in Canberra’s Parliamentary Triangle.

As Peter Martin points out

“Once sold, they would be leased back to the departments of Treasury and Finance and whoever needed to use them. For the next four years (as far out as the budget’s detailed forecasts go), Hockey’s accounts would look good. He would have raised serious money. Beyond that, his successors would be paying out serious rent.

The Howard government sold the purpose-built Foreign Affairs headquarters to the to the Motor Traders’ Association super fund for $217 million in 1998. By 2017 it will have paid out $311 million in rent. Foreign Affairs can’t move out, and what dressed up the budget nicely in 1998 will cost $20 million or more per year in rent forevermore.”

Medibank Private has already been sold, raising $5.679 billion which will be invested in roads.

In the four years after the Rudd government converted Medibank Private into a profit-making insurer, the Commonwealth collected $1.366 billion in dividends and taxes. This amounts to a 16-fold return on the $85 million it put into Medibank.

The federal government is studying whether to sell the Royal Australian Mint, hearing-aid provider Australian Hearing, Defence Housing Australia and the Australian Securities & Investment Commission’s corporate register, according to its budget papers.

The national commission of audit also recommended selling assets including Australia Post, power generator Snowy Hydro Ltd. and Australia Rail Track Corp., the main interstate rail network.

Not to be left out, Christopher Pyne has refused to rule out selling the HECS debt.

The Commonwealth would sell the rights to its $30 billion stream of long-term debt repayments at a reduced price of, say, $15-$20 billion today. While the Government would receive some funds up-front, it would lose the ongoing cash flow as loans are repaid – in effect substituting a future income stream for a much smaller lump-sum.

To make Hockey’s budget look better temporarily, and to pay for Tony’s road fetish, we are selling off assets that would provide a future revenue stream. What will our children do with less revenue, no assets to sell, and increased costs to pay the private sector for what used to be ours?

The government that doesn’t want to govern

August 26, 2013
Written by: ozfenric
9 Replies

On 1 October, the Affordable Health Care Act comes into force in the United States. It has split the US down the middle – by some polls, over half of the population hates the Act. Detractors call it “Obamacare” as if to identify it with a single person is to devalue the raft of policy and the nation-changing effects it will have. Republicans, quite simply, hate it outright.

I recently requested clarification from a right-wing, evangelical Christian blog as to why, if the Act is of so much benefit to the poor and downtrodden of America, the right oppose it.

I received in response a bullet list of seven reasons “Obamacare” is a disaster for America. Of these seven objections, one is a moral statement: the argument that some aspects of the law don’t suit all people, but will apply to all people. The argument was made that funding for abortions may be made available through the Act. This is highly arguable, at least in the law as enacted, but fair enough; this seems like a valid objection.

It is entirely legitimate to oppose legislation on the basis of disagreement with the moral outcomes. Two of the objections question the effectiveness of the legislation. Similar to the Australian Coalition flatly stating that Labor, even when in possession of a good idea, cannot turn it into effective action, opponents of the AHCA point to other countries with national healthcare systems and claim that they’re not perfect.

They argue that such systems will be open to abuse, rorting and fraud. You could argue that all systems are open to abuse, rorting and fraud and that this is a good reason to refine the legislation to progressively remove these opportunities; however, it’s not an entirely invalid objection.

And three of the objections boil down to the basic assertion: “We can’t afford it”. The policy will cost the US government, and thus the taxpayer. The US is already debt-ridden. The government ought to concentrate on paying down debt before engaging in further expenditure. Fair enough. That does seem a valid, and eerily familiar, objection. Except…

“We can’t afford it” has become a catch-cry of conservatives the world over. The Affordable Healthcare Act? Can’t afford it. National Broadband Network? Can’t afford it. Public servants? Can’t afford them. Social support and welfare? Can’t afford them.

Government is a case of competing priorities. All governments work within limitations of resources, in terms of finance and political goodwill and legislative time and personnel; every potential advance in society which government needs to enact comes at the expense of other needs. To evaluate whether “can’t afford it” is ever a valid objection to policy advances, let us take a step back and examine what it is that we have a government for.

The human species is gregarious by nature. Since the formation of the first agrarian communities, we have instituted some kind of authority structure. All governments throughout history have entailed a personage, or group of personages, to which the people voluntarily surrender power and authority. The people sacrifice their autonomy, their time, and their taxes, for the sake of the benefit of the whole.

For many centuries, the fundamental purpose of government was law and order, and peace/protection from invasion. In other words, government’s areas of responsibility went no further than setting the legislature and maintaining a standing army which, in addition to its function of protecting the people against hostility from outside, also enforced the law.

Some empires also dabbled in infrastructure. The ancient empire of Rome is famous for its network of roads; after the fall of the Roman empire, significant expenditure on roads would not be seen again in Europe until the 1800s. Rome also built aqueducts to service its wealthy citizens. The Roman empire was centuries ahead of its time, but in modern society, we expect governments to spend some resources on infrastructure. Roads, water, sewerage, power, telecommunications – these things that modern society relies upon are part of the bread and butter of modern government.

Governments of old, however progressive in their approach to infrastructure and law and defense, had no interest in some of the areas we currently consider to be expected parts of civilisation. Rome implemented a “corn dole” for citizens too poor to buy food; the Song dynasty in China (circa 1000 AD) managed a range of progressive welfare programs. Apart from a few stand-out examples such as these, however, social support was nonexistent.

Modern-day welfare came into being in the 19th and 20th centuries. We now consider a certain level of unemployment benefit, disability benefit, aged care benefit, etc. to be a reasonable imposition on society. Before the 1900s, the unemployed and the aged (and unmarried women) were the responsibility of their families, not of society as a whole.

It wasn’t until the 1700s that history saw the first public, secular hospitals being created. Prior to this, health care would have been taken care of by organisations other than government; primarily, in Europe, by the Church and the monasteries. Education is a similar story. Before the emergence of universal education for the populace – as early as the 1700s in some parts of Europe, but not widespread until the 19th century AD – education was reserved for the elite and provided by the churches.

It is important to note that for all of this time, the churches and other bodies responsible for providing these services – education, health care, welfare – were accepted and fundamental parts of society, and society contributed to them regularly and generously. Everybody gave alms to the churches. The monasteries were at the center of landholdings in their own rights and levied taxes upon their surrounds. In a way, these organisations were analogous to government – they received support from society as a whole, and in return, they provided certain necessary services.

In the modern world, the social bodies that would have been responsible for education and healthcare are declining or have died. Catholic schools and hospitals still exist, but not to the extent required to support our population. For the past 200 years governments have taken on these responsibilities, as the world gave way to secular sympathies, and governments took on these responsibilities as key determinants of national progress and success. A healthy, educated populace was the key to national prosperity.

Which brings us to the present. In 2013 we have conservative groups and political parties wanting the government to get out of the way while the market takes care of these things. On infrastructure – for example, the NBN – let it be driven by market forces. Environmental action, likewise: rather than a carbon tax operated by the government, a “direct action” policy will find the emissions abatements efforts that already exist and support them, rather than mandating change from the outside.

We have Republicans and Liberals wanting the government to get out of the business of mandating healthcare because it ought to be driven by market forces. We have governments of all persuasions pursuing privatisation and outsourcing of previously fundamental responsibilities in the name of efficiency and cost-effectiveness. And we have governments preferring to return the community its taxes in the form of tax cuts (to individuals; to business) and infrastructure spending. All of this comes with a wave of the hand and a “we can’t afford [whatever]”.

But can the government really abrogate its responsibilities in these areas? Without other bodies or structures to take on these responsibilities, it’s not ethical to stop providing them. So can the free market be relied upon to do this?

Money to pay for education, fire services, health, broadband, has to come from somewhere. The social structures – primarily church – which previously might have supported these things no longer have the resources or the popular support to be able to take up the slack. Charities around the country are crying out for support and berating the government for not providing enough basic resources/support; something has to give. In this environment, the idea of “small government” doesn’t make sense.

The government has to be big enough to do the things that the monasteries aren’t around to do anymore.

The Republican right in the US and the Lib-Nats in Australia run on a platform of “individual empowerment”. With the exception of a few big-ticket items, where they have specific, active policies – policies towards boat people come to mind – the Coalition’s ideology is to get out of the way, reduce government’s interference in society, reduce the tax burden on individuals and corporations, and let the free market have its way. It believes that everyone will benefit if there are lower taxes and more money moving.

Let’s put aside for a moment the fact that trickle-down economics doesn’t work. Even in some fictional world where successful humans were altruistic enough to plough their profits back into providing more employment and more productivity, rather than squirreling away the proceeds as profit, we still need these other functions to happen.

And these other functions – hospitals, schools, heavy rail, telecommunications infrastructure – don’t happen at the behest of successful capitalists. They happen because the community needs them and the community as a whole will pay for them.

Individualism is what you have when you don’t have strong governments. Individual empowerment is what you get when the strong ride roughshod over the weak.

Now we seem to be on the verge of voting in a Coalition government which will be forced to cut back on all sorts of areas of service provision and expenditure if it is to meet its overriding goal of bringing the budget back to surplus.

A government whose budget figures and estimates we’ve not been allowed to see, which is promising to repeal several sources of revenue and increase expenditure in several areas, whilst not increasing taxes. Something has to give. It seems certain that “We can’t afford it” will come into force after the election in a big way.

“We can’t afford that” is never a valid excuse. That’s what government is for: to find a way to be able to afford the basic things we need our government for. If that involves raising taxes in an equitable manner, then that’s what you do – it’s exactly why we pay taxes in the first place.

If it involves an imposition on businesses to achieve an end that the community desires – for example, a carbon tax – then that is why we have a government. The whole purpose of government is to place impositions on the strong to benefit the weak and to regulate the individual to offer benefits to the whole.

A government that doesn’t want to do these things is not governing.

A government that doesn’t want to provide these things is a government that doesn’t want to govern.

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