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Tag Archives: Productivity Commission

Why must it always be the workers who pay?

The foundation of the Australian Federal Minimum Wage was the 1907 Harvester decision where Justice Higgins, President of the Commonwealth Court of Conciliation and Arbitration, quantified for the first time what was a ‘fair and reasonable’ wage for unskilled labour.

He approached the question by considering a wage which was appropriate to “the normal needs of the average employee regarded as a human being living in a civilised community”. He further articulated this as being a wage sufficient for “himself and his family” and as “a wage sufficient to insure the workman food, shelter, clothing, frugal comfort, provision for evil days, &c”.

In making his judgement Higgins drew upon a range of evidence which was presented in hearings – including by “working men’s wives and others” – on what might be the “necessary average weekly expenditure for a labourer’s home of about five persons”.

His view was that a business which could not afford to pay its workers a decent wage was not a viable proposition in the first place.

Over the years, this definition of the purpose of the minimum wage has been eroded. Effectively the changes have seen the minimum wage held constant in real terms with the role of support of the family being taken up by increases in government transfers for families with children and the decline of the single breadwinner family. In essence this has transformed the minimum wage to a wage for a single person with the state taking on the support for children.

Incidentally, it was not until 1975 that the minimum wage was applied to female workers, Gough’s legacy not only allowing Australians to be Australian, but women to be recognised as people.

Between September 1983 and July 1995 under a series of seven ‘Prices and Incomes Accords’ between the ACTU and the federal Labor Government there were a series of negotiated trade-offs of wage increases in favour of social wage benefits. These included: personal income tax cuts; child care subsidies; increased family payments; health care through Medicare; and the development of employer funded superannuation.

While most of these policies involved government expenditure (or reduced revenue as a result of tax cuts) as a trade-off for wage restraint, this was not the case with superannuation. The first stage of this was implemented in the 1986 National Wage Case which, in lieu of granting a wage increase for productivity gains, agreed a proposal for an employer contribution to superannuation of an amount equal to 3 per cent of wages for those workers employed under awards.

With the government talking about reform in areas such as industrial relations, the gender gap in superannuation, and raising the retirement age to 70, they must consider both the history and the interplay of policy on the goals they are trying to achieve.

Many of our workplace entitlements came as a trade- off for wage restraint and social policy. So when the Productivity Commission talks about winding back the minimum wage and penalty rates, and the Social Services Minister wants to reduce family payments, and the Health Minister tries to introduce co-payments, the worker is bearing the brunt of cuts they have already paid for.

Their concern about women having less superannuation is belied by their actions of rolling back the low income co-contribution and freezing the superannuation guarantee. The Coalition have always fought against employer contributions to superannuation but are very happy to give wealthy people, who were never going to qualify for the aged pension, the opportunity to minimise their tax.

As they talk about crises in both aged and child care, in suggesting we work till 70, they ignore the role that many people in their 60s play as carers. They facilitate their children re-entering the workforce and their parents remaining in their own homes for longer. They may even be caring for their partners as well. Carers’ allowance is a wise economic investment.

Prior to the Harvester decision back in 1907, it was parliament which decided that there should be a tariff exemption to employers who paid a “fair and reasonable” wage.

Perhaps, instead of stripping workers’ entitlements and cutting company tax for those who already don’t pay their fair share, we should revisit that idea of rewarding employers who do the right thing – those who recognise their obligations in the social contract, those who understand the urgency of sustainable production and waste management, those who pay their workers a wage appropriate to “the normal needs of the average employee regarded as a human being living in a civilised community”.

 

Short term sugar hit

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?

Education is the most powerful weapon which you can use to change the world.

When Tony Abbott chose his Ministers one can only wonder at his motivation.

The Minister for Immigration morphed into Border Security, tasked with stopping those who would seek safe haven in our country.

The Minister for Communications was appointed to destroy the NBN.

The Minister for Health, an ex-policeman, after no consultation with the health industry or treasury, set about dismantling universal health care. He also ripped up the National Hospitals Agreement with no consultation with the States.

The Minister for Social Services rescinded gambling reform laws and labelled anyone who used the services of his department as bludgers and leaners.

The Minister for the Environment went on a rampage getting rid of carbon pricing, winding back safeguards and rights of appeal, delisting and endangering world heritage sites, while approving mining, development, and deforestation at an obscene rate.

The Minister for Industry put the final nail in the coffin for car manufacturing and has overseen the death of the renewable energy industry.

The Minister for Trade and Investment signed FTAs which have cost the budget billions in tariff revenue, allowed foreign companies to bring in their own workers, and put our sovereignty over health and environmental laws at risk.

The Treasurer and Finance Minister have destroyed business and consumer confidence by their constant refrain of a “debt and deficit disaster” which they have greatly added to by producing a budget that was so blatantly unfair and poorly researched and targeted that it had no chance of being passed.

But perhaps the cruellest appointment of all was putting Christopher Pyne in charge of education.

On pages 40 and 41 of the Real Solutions pamphlet the Coalition made the following promises:

  • We will continue current levels of funding for schools, indexed to deal with real increases in costs and we will ensure that money is targeted based on the social and economic status of the community.

That unity ticket only lasted as long as it took to finalise the election results after which we were subjected to the greatest load of doublespeak resulting in the Coalition cutting funding for years 5 and 6 of the Gonski reforms, reneging on the signed deals with the states, and abandoning their co-funding and accountability obligations.

  • We will ensure the continuation of the current arrangements of university funding.

Obviously this was a non-core promise.

  • We will review and restructure government research funding to make sure each dollar is spent as effectively as possible.

Apparently, the most effective way research dollars can be spent is in stopping spending them so Hockey’s bottom line looks healthier.

As reported in the Canberra Times,

“Universities are pleading with the Abbott government to abandon its threat to axe funding for major programs supporting 30,000 researchers if the Senate refuses to support the deregulation of university fees.

Peak body Universities Australia warns in its budget submission that researchers on the verge of major breakthroughs in health, climate science and manufacturing will move overseas if funding for the Future Fellowships scheme and National Collaborative Research Infrastructure Scheme (NCRIS) expires.

Education Minister Christopher Pyne has repeatedly said that continued funding for both programs – which have been described as the “backbone of research in Australia” – is contingent on the government’s higher education reforms passing the Senate.

“If Labor, the Greens and crossbenchers block the reform package in the Senate, there will be no source of ongoing funding for these two vital research investments, meaning job losses and irreparable damage to our high-quality research capacity.”

What sort of a myopic dilettante is this man? In an arrogant display of petulance he threatens that if he doesn’t get his way he will refuse to use our money to invest in the innovation and research that will contribute to our future.

“NCRIS has led to major breakthroughs on vaccinations, 3D imaging, drugs to treat heart failure and the production of a new type of steel that produces 70 per cent fewer greenhouse gases than regular steel.

The facilities it supports include the Integrated Marine Observing System (IMOS), based at the University of Tasmania, which conducts long-term ocean monitoring, including of temperature rises linked to climate change.

The Future Fellowships scheme supports 150 leading mid-career researchers, allowing them to continue their work in Australia.

“Without further investment by government in this scheme, many researchers, often midway through their projects and on the cusp of important breakthroughs, will move overseas where other governments are seeking to attract the world’s best,” Universities Australia says in its submission.

Universities are lobbying for $200 million a year in funding. Let’s put that in perspective.

How can we find $244 million for religious school chaplains but we can’t afford university funding?

Exploration by coal and energy companies is subsidised by Australian taxpayers by as much as $4 billion every year in the form of direct spending and tax breaks – 20 times what the universities are asking for.

According to the Australian Strategic Policy Institute Defence Budget Brief 2014-15, the cost of defence is over $80 million per day. Three days defence spending would fund university research for over a year.

The amount being spent on submarines and fighter jets represents about 200 years’ worth of research funding and is going to foreign economies. The two jets we have already paid for and not received would more than cover one year’s research at a cost of just under $US130 million each. We have 70 more on order and have been warned the costs will rise.

Which do you think will bring the greatest return on money invested, or the greatest productivity gains, or the greatest protection against disease and the ravages of climate change, or the greatest advancement for humanity?

While cutting the contribution to universities, the government’s intention to extend financial assistance to people studying diplomas or undertaking degrees at private colleges like the one Frances Abbott attends will cost $820 million.

According to a report by the Productivity Commission early last year, the government spends $3.8 million per private school on average – $8,546 per private school student.

Government schools teach the great majority of poor, disabled (76.6%) and Indigenous (84.7%) students, as well as those who do not speak English as a first language. However, in spite of the additional costs and burdens associated with teaching disadvantaged students, government spending per public school student increased by about 2.4 per cent a year between 2007/08 and 2011/12. In the same five-year period, government spending per private school student increased by about 3.4 per cent a year.

Interestingly, a University of Queensland study of NAPLAN results recently debunked conventional wisdom that having a child in a private school leads to better academic results. Furthermore, there is a disadvantage in sending a child to a private school if they go on to university, as more drop out in their first year.

Tutoring towards exam results does not serve a student well if they have not been encouraged to love learning and given the skills and resources to research. Creativity and innovation should be nurtured rather than stifled by directed learning.

The government are continually asking, with a sneer, well tell us what you would do.

Why don’t we give that $820 million offered to private colleges to the universities instead.

Why don’t we stop funding private schools and introduce a Private School Rebate similar to the Private Health Insurance Rebate. Allow people to claim up to a maximum of, say, $7000 per child at a private school as a tax deduction (adjust that depending what year they are in).

Fee statements would have to be produced and the size of the deduction would be on a means tested sliding scale which cuts out when combined income exceeds $180,000.

Considering our government champions personal choice and responsibility, price signals and market forces, lower taxes and user pays, this should appeal to them.

But I won’t hold my breath.

This is the dawning of the Age of Consultancy

Before the election the Coalition announced a series of inquiries, reviews and white papers that it would instigate if it were elected. They included:

  1. Commission of Audit
  2. Inquiry into the Financial Sector
  3. Review of Competition Policy
  4. Judicial Inquiry – Home Insulation Programme
  5. Review of the Department of Defence
  6. Coal Seam Gas Management and Wind Farms
  7. Inquiries into the National Broadband Network – The Coalition will conduct three inquiries as part of its “Plan for a Better NBN”.
  8. Inquiry into the Australian Tax Office

Productivity Commission Inquiries and Reviews

  1. Inquiry into Child Care Funding
  2. Review of Industrial Relations
  3. Review of the Automotive Industry

White Papers

The Coalition will produce White Papers on the following:

  1. Tax Reform
  2. Direct Action Plan
  3. Federal-State Relations
  4. Defence
  5. Development of Northern Australia
  6. Resources and Energy

Since the election, that list has grown.

Sussan Ley was up and running, commissioning a report from PriceWaterhouseCoopers into child care funding. Apparently she couldn’t wait for the results from the inquiry that the Productivity Commission was already conducting

Coincidentally, the North Sydney Forum, a campaign fundraising body for Joe Hockey whose $22,000 annual membership fee is rewarded with “VIP” meetings with Mr Hockey, was established in 2009, shortly after Joe became shadow treasurer, by Joseph Carrozzi, managing partner at professional services firm PriceWaterhouseCoopers.

Mr Carrozzi is also chairman of the Italian Chamber of Commerce and Industry in Australia and was a board member of the organisation when Nick Di Girolamo was its chairman.

Members of the forum include National Australia Bank as well as the influential Financial Services Council, whose chief executive is former NSW Liberal leader John Brogden.

The FSC’s members, including financial advice and funds management firms, stand to benefit from the changes to the Future of Financial Advice (FOFA) laws. The National Australia Bank would also benefit from the changes.

The chairman of the North Sydney Forum is John Hart, who is also the chief executive of Restaurant and Catering Australia – a hospitality industry lobby group whose members stand to benefit from a government-ordered Productivity Commission review of the Fair Work Act that is expected to examine the issue of penalty rates.

Mr Hart also sits on Prime Minister Tony Abbott’s Business Advisory Council.

The National Commission of Audit was officially announced by Treasurer Joe Hockey, and Finance Minister Senator Mathias Cormann, on October 22, 2013, to be led by Tony Shepherd, former Business Council of Australia president and chairman of Transfield Services.

Mr Shepherd’s appointment was seen as being particularly controversial because as head of the BCA he had been critical of the previous Labor government policies such as the National Disability Insurance Scheme and the Gonski schools funding reforms.

His appointment was also questioned because of his links to companies that had benefited from government contracts.

Mr Shepherd stepped down as chairman of Transfield Services upon his elevation to the Commission of Audit. Transfield, a construction and services firm, won a string of contracts in recent years worth hundreds of millions of dollars, including the contract for maintenance and support services at the Nauru detention centre.

The other commissioners are former senator and minister in the Howard government, Amanda Vanstone, and former senior public servants Peter Boxall, Tony Cole and Robert Fisher.

The coalition predicted in its midyear Budget update that the commission would spend about $1 million but figures show it cost taxpayers about $2.5 million to produce the audit. That’s a 150% budget blowout from the panel advising us how to “live within our means”.

It cost $1.9 million for expert staff drafted in from the departments of Finance, Treasury and the Prime Minister and Cabinet to work on the study.

The head of the commission’s secretariat, Peter Crone, was paid $157,000 to oversee the probe, while the commissioners were paid $85,000 each for their five months work.

Consultants Boston Consulting Group were paid $50,000.

And then there’s the NBN.

As the rollout of superfast broadband slows down across the country, consultants have been the biggest winners, pocketing millions of dollars from numerous reviews and cost-benefit analyses.

A Question on Notice tabled in Federal Parliament revealed the external consulting cost for the NBN was $10.1 million. The cost of implementing the recommendations was not included, the 2016 deadline has been abandoned, and the new agreement with Telstra is yet to be concluded.

Boston Consulting Group, KordaMentha and Deloitte Touche Tohmatsu received the biggest financial boon from the government-commissioned reviews.

Then there are the Royal Commissions.

The Government will provide $53.3 million over two years (including $5.3 million in capital funding) to conduct the Royal Commission into Trade Union Governance and Corruption.

The cost of this measure will be offset by redirecting funding from the Employment, Industry and Infrastructure and Regional Development portfolios.

Even though there have been coronial enquiries, inquests, administrative investigations and a full government audit report into the Home Insulation Programme’s problems, Abbott found another $25 million for a Royal Commission.

We then have the Warburton led review into the Renewable Energy Target. The Climate Change Authority was legislated to conduct this review, which they will still do to “keep them occupied” according to Greg Hunt. To get the results he wanted, he chose to conduct his own review led by climate change sceptic Dick Warburton and representatives of fossil fuel producers and users.

A Senate Committee was told the total cost of the review was $587,329. That figure does not include the salaries of the staff on the secretariat or overheads such as IT and accommodation.

Mr Warburton received fees in the order of $73,000; Mr Fisher $39,900; Ms In’t Veld, $43,900; and Mr Zema, $29,700.

Clean energy representatives were shocked by the panel’s appointment as chief advisor and modeller of ACIL Allen, a consultancy seen as close to the fossil fuel industry, and whose highly contested research formed the basis of the coal industry’s attempts to dismantle the RET in 2012.

They refused to include in their modelling the benefits of renewable energy – including the health benefits, job benefits, and the network benefits – which the panel dismissed as “too hard to model” and little more than a “transfer of wealth”, presumably away from the coal generators and network providers.

ACIL Allen were paid $287,468 for their modelling

We also have seen Christopher Pyne’s National Curriculum Review which cost $283,157 to tell us we need less Indigenous focus and more Judeo-Christian, less creativity and more rote learning, and less about progressive reform and more about business.

Kevin Donnelly and Ken Wiltshire appointed 16 external experts to make contributions, including Barry Spurr, each of whom were paid $8250 for their reports.

This government’s intentions are clear. They have bypassed government departments and statuatory bodies, ignored expert advice and the results of previous reviews, to pay hundreds of millions to consultants, vested interests, and party hacks to produce the results that endorse their stated policies or that damage the previous government.

This is indeed the Age of Consultancy.

Talk about stubborn!

stubborn-e1406190207500 Yesterday I heard Joe Hockey interviewed. When asked about Tony’s pet Paid Parental Leave Scheme he had the unmitigated gall to say that Labor hates paid parental leave. Does he forget that it was Labor that brought in our first PPL on January 1 2011? Does he forget Abbott’s history on this issue?

In 2002, Tony Abbott’s hostility to paid parental leave reached a crescendo, when he declared to the press: “Compulsory paid maternity leave? Over this Government’s dead body, frankly.”

Writing for The Australian in October 2008, he claimed that paid parental leave – like abortion – was part of a “radical women’s agenda” championed by extreme feminists in the Labor movement. He spoke out about his opposition to the scheme based on the ways it reduced stay at home mothers to second class citizens, lambasting then Prime Minister Rudd’s commitment to women workers as an example of “Political Correctness”; extreme lip-service to the feminists in Labor ranks.

In 2009 a Productivity Commission Report stated :

“Payment at a flat rate would mean that the labour supply effects would be greatest for lower income, less skilled women — precisely those who are most responsive to wage subsidies and who are least likely to have privately negotiated paid parental leave. Full replacement wages for highly educated, well paid women would be very costly for taxpayers and, given their high level of attachment to the labour force and a high level of private provision of paid parental leave, would have few incremental labour supply benefits.”

Despite this advice, in 2010 “Mr Abbott first announced his paid parental leave after he emerged from a luncheon event on International Women’s Day. The scheme would pay new mothers their regular wage for six months, up to a maximum of $75,000, and is to be funded by a 1.5 per cent levy on more than 3000 big companies.”

On May 6 2013, Malcolm Turnbull refused to comment when asked if he thought there should be a review into the scheme.

“I’ve said again I am not going to comment on whether it should be reviewed or not. I don’t believe there is any need to review it. I think it has been very carefully costed by Joe Hockey and Andrew Robb so it is certainly in the policy budget envelope but any further deliberations on that or any other policy is obviously something we do in the four walls of shadow cabinet,” Mr Turnbull said.

“This is a key policy of Tony Abbott’s and it is something that we have as part of our policy and I don’t see any probability or likelihood that of that policy being shelved. Tony is very committed to it.”

The next day we hear a little more about Tony’s rationale of wanting women of calibre to breed.

TONY Abbott’s expensive paid parental leave scheme is “all about” encouraging women of “calibre” to have children, the Opposition Leader said today.

“We do not educate women to higher degree level to deny them a career,” he said.

“If we want women of that calibre to have families, and we should, well we have to give them a fair dinkum chance to do so. That is what this scheme of paid parental leave is all about.”

On that same day

Internal dissent about the policy went public this morning, with federal Liberal backbencher Alex Hawke calling it an “albatross” that must be “scrapped”.

Writing for the Institute of Public Affairs backbencher Alex Hawke blasted it as an “unjustifiable impost on business” and said the policy should be reviewed.

“An expansion of the PPL scheme is ill-suited to an economically Liberal agenda,” Mr Hawke wrote.

“Most importantly for Australians, the policy does not pass the fair-go test.”

“Now would be a very good time to revisit this policy with a view to scrapping it before the next election, so we can go to the election without this albatross around the neck of the party,” he said.

In June 2013, when asked to guarantee Tony Abbott’s “signature policy”, Mr Hockey responded: “You will see our initiative in that regard prior to the election…I’m not going to get into speculating about where we’re at.”

The following month, big business and the IPA added their criticism of the scheme.

LABOR is on its own believing a parental leave plan should be paid at “welfare” rates rather than a worker’s real wage, Opposition Leader Tony Abbott says.

But that’s not quite true. Big business joined critics of Mr Abbott’s signature paid parental leave scheme as Coalition MPs prepare to pressure their leader to modify it.

Mr Abbott’s predicament has been summed up by a shadow minister: “There’s only one vote for it in the party room.”

It is one of the most generous proposals in the world but the cost, the need for a tax increase, and the lack of consultation has turned some Liberal MPs against it.

Business is also fighting the plan with the head of the Australian Industry Group, Innes Willox Monday night saying: “There are no positives, no upsides in this policy that we can see for business.

“It’s inequitable,” Mr Innes told ABC TV.

“Only the top 3000 or so companies would be paying and they’d be subsidising for everyone else. That doesn’t make sense on that level.

‘”The current system is operating well. It has very broad business and community support. We don’t see any reason to change.”

John Roskam of the economically dry Institute for Public Affairs said “There’s widespread concern that the Coalition is supporting a tax increase. And at this time, the Coalition should be talking about cutting taxes and cutting spending, not increasing taxes.”

More recently we have had the commission of audit and the Productivity Commission (again) suggesting the money would be better spent on childcare.

May 1 2014

The commission (of audit) also wants Mr Abbott’s generous paid parental leave scheme wound back and the money directed into a streamlined childcare support mechanism. Paid parental leave wage replacement should be capped to average weekly earnings – $57,460 a year, much less than the current proposal of $100,000. The savings should be used to offset the cost of expanded childcare assistance.

July 22 2014

The Coalition has dismissed a Productivity Commission suggestion that funds be redirected away from Tony Abbott’s paid parental scheme and into childcare services, arguing that the two are “separate things”.

On a government website there is an article titled Comparing the Paid Parental Leave Schemes. It states

The designs of both the current and Coalition/Greens schemes contain elements that make them as much like an Australian Government welfare payment as they are workplace entitlements. For example, rather than being funded and run privately by employers or funded (as occurs in most OECD countries) through a social insurance scheme, they are:

•fully or substantially funded from taxation revenue and

•fully or substantially administered by the Department of Human Services.

Critics of both the Coalition and Greens schemes have tended to argue that PPL should better reflect the existing framework of Australia’s welfare payment system, based around targeting flat rates of payment at those most in need. As the Henry Tax Review noted, ‘the primary purpose of government assistance payments to individuals is to provide them with a minimum adequate standard of living’. A further value underlying the Australian system is that there should be incentives for private provision, with the benefit system seen more as a safety net.

The government argues that their scheme aims at gender equity and workforce participation. This is hard to sell when you look at the guys and doll that form their cabinet and the reports from the PC and commission of audit suggesting affordable, flexible, quality childcare is far more important.

Despite a so-called budget emergency and criticism from every direction, regardless of advice from every expert review, unheeding of internal dissent, Tony forges ahead with his “I like women and women like me” campaign. Does Tony really believe that he knows better than all experts on every matter? It’s all just a political game for him and he increasingly shows he has no idea how to prioritise.

Abbott’s signature policy may be something to aspire to in the future but he is signing the cheque with money slashed from those most in need. This mantra of “we took it to the election” won’t wash in light of all your other broken promises from your infamous “no cuts” speech. Give it up Tony!

Failed plans should not be interpreted as a failed vision. Visions don’t change, they are only refined. Plans rarely stay the same, and are scrapped or adjusted as needed. Be stubborn about the vision, but flexible with your plan.

-John C. Maxwell

 

Invisible ink

Image from abc.net.au

Image from abc.net.au

If you are looking for Tony’s signature PPL policy in the budget you will need “a scanning electron microscope” according to John Daly of the Grattan Institute. It only appears in one paragraph.

We are told that the government will cut the company tax rate by 1.5 percentage points (to 28.5%) from 1 July 2015. For large companies, the reduction will offset the cost of the Government’s 1.5% Paid Parental Leave levy but we are not told how much the levy will raise. We are told that provision has been made for PPL in the contingency reserve, a bucket of money reserved for decisions taken but as yet not announced by government, decisions too late to be included in portfolio estimates and so on, but no specific figures. We are told the cap reduction to $100,000 has made a small change in the cost, but not how much.

And that is the only thing that you will find in terms of references to paid parental leave – apart from a single line in the Treasurer’s speech – in literally hundreds and hundreds of Treasury documents about the budget.

Tony’s signature policy is written in invisible ink.

The official Treasury explanation is the Commonwealth is still negotiating with the states about their contribution to the scheme, and the funding is included in the budget’s contingency reserves. The same response has come from Treasurer Joe Hockey.

“We are still negotiating with the states about the scheme and, as you know, we’ve reduced the threshold from $150,000 to $100,000 in relation to the PPL,” he said. That might prove a little more difficult than expected considering how the Premiers are feeling right now.

Mr Daley does not buy this excuse.

“I would note that there are lots of other things about which there are uncertainties which, nevertheless, go into the budget, particularly at the point that they are formally government policy. What that doesn’t explain is why there is so little airplay for an important policy. Even if there are plenty of uncertainties around it, it’s already in the numbers in effect.”

When costing the Coalition PPL scheme, the Parliamentary Budget Office said that its estimate of the cost of the paid parental leave scheme is only of low to medium reliability because it is subject to assumptions including working women’s fertility rates, female labour force participation, the wages parents earn and how much leave parents take after the birth of their children.

The Productivity Commission found that PPL schemes like Abbott’s with “full replacement wages for highly educated, well-paid women, would be very costly for taxpayers and, given their high level of attachment to the labour force and a high level of private provision of paid parental leave, would have few incremental labour supply benefits”.

Studies done by the Grattan Institute showed that for every dollar you spend on paid parental leave, you would get double the impact on female workforce participation if you spent it subsidising child care.

A study last year by the OECD on drivers of female labour participation found PPL schemes definitely did improve participation, but the increase in participation from increased spending on such leave schemes is less tangible.

What it did find, however, was that the link between increased spending on childcare and improved female participation was “unambiguous”.

It compared spending on PPL and childcare and noted that “policies to foster greater enrolment in formal childcare have a small but significant effect on full-time and part-time labour force participation – and these effects are much more robust than the effects of paid leave or other family benefits”.

This reflects the work of the IMF last year, which found that “if the price of childcare is reduced by 50 per cent, the labour supply of young mothers will rise on the order of 6.5 to 10 per cent.”

But participation isn’t everything. If female participation is high, but women are mostly working in low-paying jobs with little chance for advancement, that is hardly a good result. A 2012 study attempted to examine the situation from a broader context.

It looked at the “inputs” each country had in place to improve female participation – from steps that governments and the private sector did to improve the economic position of women to the education attainment of women as well as maternity leave and childcare access.

It then looked at the “outputs” of women’s participation in the national economy – such as the ratio of pay between women and men, as the proportion of women among technical workers and also numbers of senior business leaders.

According to these measures Australia, it may surprise you to know, is ranked equal highest with Norway.

On the “Access-to-Work” input, which included pay childcare access and maternity leave provisions, Australia ranked 6th.

The current PPL scheme is not poor in comparison to most other nations. And some nations with smaller PPL schemes like Canada and New Zealand actually have higher female participation rates among 15-64 year olds than does Australia.

Currently 58.4% of all adult women participate in the labour force (ie. as workers, or looking for work); compared with 70.9% of adult men.

The reason for the gap is because of the decline in participation of women aged 25-34 compared to men.

In the early 1980s the drop in participation for women after 25 years of age could be up to 18 percentage points. And it would never recover. Now there is virtually no difference – in fact the age bracket with the highest female participation rate is the 45-54 age group.

The reality is that given our current position, any gains in women’s participation are always going to be at the margin – our big steps in women’s participation occurred in the 1980s and 1990s owing to societal changes as much as anything else.

Despite all the evidence suggesting that affordable childcare is far more important than increasing paid parental leave, the current review of childcare conducted by the Productivity Commission stipulates any recommendation must “consider options within current funding parameters” – ie. no extra funding.

It seems apparent that in this, like so many other areas, we are ignoring the advice and experience of experts to waste a lot of money satisfying the PM’s vanity.

What really killed vehicle manufacturing in Australia

Image from theage.com.au

Image from theage.com.au

The death knell for Australia’s vehicle manufacturing industry was not because of high labour costs, writes Andreas Bimba in this guest article, but the free-trade agreements that acted to the detriment of the local industry. And who signed them? You won’t be too surprised to learn who.

Toyota, Holden and Ford did not decide to cease local automotive manufacturing because of high labour costs (this is nothing new), nor from a lack of direct financial support (this has been fairly constant but small), although both of these factors added to the pressure. Primarily, it was because of inadequate trade protection of the Australian new car market, the historically high Australian dollar, and finally, extreme hostility shown by the current Federal Government and the Productivity Commission in regard to dealing effectively with the urgent concerns of the industry.

It is quite obvious really, but as we have come to expect, the truth of the matter has largely been ignored by our superficial national media. The main headwind of the many facing Toyota Australia’s local manufacturing operations, and also those of Holden and Ford, is the one-sided Free Trade Agreements (FTAs) signed by our Federal Governments and the almost complete lack of tariff protection.

These FTAs conform to the neo-liberal philosophy of global free trade that is currently in favour with the Coalition Government, the Federal Government’s advisory bodies such as the incompetent Productivity Commission, and also the Australian Labor party.

The Australia Thailand Free Trade Agreement (TAFTA) came into force on the 1st January 2005 and was implemented by Prime Minister John Howard.

This agreement has allowed Thailand’s subsidised vehicles into Australia without restriction but has not prevented Thailand imposing secondary restrictions that have totally prevented Australian vehicles from being sold into the Thai market. Australia’s three top selling vehicles in 2013; the Toyota Corolla (43,498 units), the Mazda 3 (42,082 units) and the Toyota HiLux (39,931 units) all came from Thailand. By comparison, for 2013 the Australian made Holden Commodore sold 27,766 units locally and the Toyota Camry sold 24,860 units locally. I have not included Australian exports in these figures.

Over the preceding eight years not one Australian government has addressed the inequities of this vehicle trade imbalance and have stood back and ignored the inevitable consequences. Perhaps the Australian automotive manufacturers have also not tried diligently enough to address this trade imbalance as most of the vehicles being imported were made by subsidiaries of the parent companies.

This chart from GoAuto clearly shows what has been happening from 2005 to 2013. For the Australian new vehicle market it shows total Australian made vehicle sales (exports excluded) and total Thailand made vehicle sales.

GoAuto The Australia Korea Free Trade Agreement (FTA) came into force on the 5th December 2013 and was implemented by the Abbott Government. Korea has an almost totally protected car market and provides substantial subsidies to its manufacturers. It is also a much larger and more advanced automotive manufacturer than Thailand.

On the 11th December 2013 General Motors Holden announced the planned closure of its Australian manufacturing operations from the end of 2017.

On the 10th February 2014 Toyota Australia also announced the planned closure of its Australian manufacturing operations from the end of 2017.

It looks fairly clear to me that Holden and Toyota Australia concluded that the Australia Korea FTA was the last nail in the coffin and that there was no longer any point in baring their trading losses in the hope that the national industrial policy environment would improve.

The fact that Holden and Toyota Australia made no headway in Canberra with either the Government or the Productivity Commission with addressing their major concerns about viability under such extremely trade exposed conditions showed that the situation in their eyes was hopeless.

A bumpy road I believe that if a Labor Government was in power that the views of knowledgeable and reasonable negotiators such as Senator Kim Carr would have prevailed and that realistic strategies to address or counteract all of the concerns of the Australian automotive manufacturers would have been implemented. This would have occurred at the time of Holden’s threatened closure and I believe would have saved the local manufacturing operations of Holden and subsequently also those of Toyota Australia.

Even though during the Rudd and Gillard Governments (as well as the Howard Government) the issues of the vehicle trade imbalance with Thailand, the lack of trade protection in general, the unreasonable barriers placed against exports, the occasional unwillingness to export and the historically high Australian dollar were not adequately addressed, I believe that Labor would have done whatever was needed to retain the Australian automotive manufacturing industry as soon as it became aware of how critical the current situation had become.

Given the above, the only reasonable conclusion that can be drawn is that the current Coalition Government is primarily responsible for the announced cessation of all Australian automotive manufacture.

Can the Coalition bring themselves to adjust the Australian automotive manufacturing national policy environment sufficiently strongly that Toyota, Holden and possibly also Ford can be persuaded to continue local automotive manufacture beyond the announced closure dates? This is not very likely even though it is strongly in the national interest on so many levels, as it would basically entail the partial abandonment of their neo-liberal economic philosophy which they possibly hold as being more important than the national interest. Perhaps it is time for a leadership spill in the Federal Liberal and National Parties?

Can the next Federal Labor Government, which has every opportunity to win in 2016, bring about a policy environment sufficiently realistic and powerful that Toyota, Holden and possibly also Ford can be persuaded to continue local automotive manufacturing? Despite all the gloom I think that is possible. Even if some or all of the original manufacturers choose not to continue with local manufacturing, it is plausible that other players whether local or foreign may take over the current manufacturing facilities, perhaps even with the original manufacturers holding a minority share of the ownership.

We will see.

Turn back – you are going the wrong way

If we don’t do something to halt the direction that this country is heading then we are in danger of a crash of catastrophic proportions.

While the rest of the world recognises the critical threat of climate change, and moves towards global action to address it, we remove carbon pricing, dismantle all climate change bodies, change environmental protection laws, and move away from initiatives like Marine Parks and the Murray-Darling water buyback.

When the rest of the world begins transitioning from the dependence on fossil fuels, we approve the largest coal mines in the world and the infrastructure to support them. We ramp up CSG mining. Rather than making the polluters pay, we decide to pay them with taxpayer money, and remove the mining tax that would at least give us some share of the money made by exploiting our dwindling resources.

When the rest of the world is increasing the share of renewable energy, we cut $20 million from the Energy Efficiency Opportunities program and $40 million from Australian Renewable Energy Agency, and wind up the Low Carbon Communities program which provides grants to local councils and other groups to make energy efficiency upgrades to community buildings. We cap government spending on reaching our emission reduction and renewable energy targets, and refuse to contribute to the Green Energy Fund.

In the face of rising unemployment, instead of investing a relatively small amount in the car industry, about one tenth of what we give to the mining companies, we choose to let the industry die and put tens of thousands of people out of work. But never fear, Sophie Mirabella has been appointed to build submarines instead.

We cannot afford to have the Salvation Army doing humanitarian work with asylum seekers and we cannot afford the mental health experts that were assessing and treating them, but we can afford $1.2 billion for more tents, and $1.1 million for Special Envoy Jim Molan to do something, though I am not sure what. We apparently can spend “whatever it takes” to stop the boats.

We have just appointed as Human Rights Commissioner someone who told a Senate Committee last year that the Human Rights Commission should be abolished. His main goal is to champion freedom of speech and a free press. He feels there has been far too much emphasis on left wing humanitarian silliness, and that we should have the right to racially vilify people.

We have condoned human rights abuses in Sri Lanka and West Papua, been caught spying on Indonesia and East Timor, infuriated China by taking sides with the US, and Indonesia by our boat tow/buy back rhetoric, ignored the UN by siding with Israel, refused to address whaling with the Japanese, and in general, vacillated between tough guy and fawning friend at a rate that would make your head spin.

In the area of health, Westmead Children’s Hospital will lose $100 million in funding for the first stage of a comprehensive redevelopment, while the Children’s Medical Research Institute will lose $10 million and the Millennium Institute will lose $12 million, amongst many other funding cuts.

Even though we have a gambling problem, we undo the poker machine reforms. Even though we have a drug and alcohol problem, we get rid of the alcohol and drug advisory board. Even though new figures show Australians are fatter than ever, more than $18 million has been cut from obesity prevention programs. Even though we have a disproportionately high number of indigenous Australians in gaol, we cut $43 million from indigenous legal aid funding.

With the looming crisis of an aging population, we scrap the Advisory Panel on Positive Ageing six months before they completed a three year report to help the government design a policy to deal with challenges posed by Australia’s ageing population. We also block pay rises to aged care workers. Rather than encouraging low income workers to invest in superannuation to relieve some of the future burden on the old age pension, we cut the co-contribution and delay the superannuation guarantee increase, whilst giving further tax breaks to very high income earners.

Congestion on our roads, parking, and the pollution from cars is a growing problem. Rather than investing in public transport, we are building more roads, even ones people don’t want, and ignoring Infrastructure Australia’s priorities.

With a slowing economy, rather than looking to raise more revenue, we have employed big business to tell us how to cut spending.

Rather than waiting for the Productivity Commission to finish the many reviews they have been tasked with, we are employing private consultants like Price Waterhouse Cooper to produce reports that say what the government wants to hear.

Even though the Productivity Commission said that replacement wages for paid parental leave would be too costly, inequitable, and of little benefit to workforce participation, we are pushing ahead with a scheme that will cost us over $5 billion a year giving money to people who don’t need it. At the same time we are blocking the payrise to childcare workers, and cutting $450 million from before and after school care programs, something that would help with job retention and productivity.

Even though we have already had 8 enquiries into the home insulation scheme, we are now to have a Royal Commission. To pay for this we have cut $6.7 million from the Caring for our Country program, which grants money to conservation projects.

We are also cutting about $1 billion from education by stopping initiatives like the trade training program.

The minister for education, Christopher Pyne, has appointed David Kemp and Andrew Norton to undertake a review into the demand-driven funding system for universities. Kemp was minister for education in the Howard government and Norton was his adviser on higher education policy.

Rather than continuing with the rollout of FttP NBN, we have gone back to square one and employed Malcolm’s mates to stonewall the Senate Committee. It appears from the redacted documents that some of us will get a far inferior service for much more than anticipated sometime much later than promised, and they will be the lucky ones.

We are rushing to sign free trade agreements in secret which will sign away our rights to make laws in our own country. We will be at the mercy of foreign corporations and our health initiatives and PBS scheme, environmental safeguards, and perhaps even gun laws, could be at risk.

In the face of growing debt and blown-out deficits stretching into the future, we borrow $8.8 billion dollars to give to the Reserve Bank who said they didn’t need it. Mr Hockey denies this was a political ploy to make Labor’s debt look bad and, when he takes out the dividends before the next election, that won’t be just to make him look good. The interest over 3 years will go close to $1 billion dollars. Expensive PR exercise from the party who promised to stop the waste, pay down the debt, and get the budget back into the black.

The government is restricting access to information, appointing cronies to every position, gagging debate, and pushing ahead with an agenda that blatantly favours big business and the very rich and looks increasingly like the IPAs 100 point wish list.

Unfortunately it is at the expense of our environment, our children, our health, our humanity, and the very fabric of our society.

Western Australians could find themselves with a very grave responsibility in the new year. At the moment, the only check on Tony Abbott’s ravages is the Senate.

If you get the chance to vote again next year, think very carefully about what Abbott will hand to the big corporations should he have control of both houses. Think of the repercussions to health and education and social services and workers’ conditions. Think about how minor parties will vote and who they will give their preferences to.

Currently you have voted for these three Liberal Party Senators:

Linda Reynolds. Apart from the fact that she was recruited by Brian Loughnane, Peta Credlin’s husband, I can find little about her.

David Johnstone. Even though he has been Minister for Defence for three months I have not seen or heard anything of him. Actually, I don’t recall much from him in his time as Shadow Minister either.

And of course, Michaelia Cash, the “Minister Assisting the Prime Minister for Woman” as the sign on her door describes her. Who could forget her recent Senate performance.

Perhaps these people represent your local interests well – I don’t know – but, should you be asked to vote again, I would say think wisely Western Australia – the fate of the nation could be in your hands.

Image courtesy of rendezvousofme.blogspot.com

Image courtesy of rendezvousofme.blogspot.com