Saturday’s good reading and listening for the weekend

Mar 13, 2021

What people in other forums are saying about public policy


Housing – a ticking economic time bomb

The latest CoreLogic report on property prices reveals a surge in house prices in February, not only in capital cities, but also in non-metropolitan regions.

On last week’s Saturday Extra Geraldine Doogue discussed housing with Pater Mares of the Cranlana Centre for Ethical Leadership, Hal Pawson of the City Futures Research Centre, University of New South Wales, and Kim Houghton of the Regional Australia Institute – How to inject fresh thinking into Australia’s housing conversation. (26 minutes)

They outlined the history of housing policy in Australia. In postwar Australia the concern was to see everyone well-housed, with policies that were neutral between renting and owning. This gave way in the Menzies years to policies privileging ownership. In this century so far taxation policies, particularly those related to capital gains, have seen the financialisation of housing. Housing has become another item in people’s investment portfolio.

Geraldine’s guests reveal instabilities in housing markets. Although prices continue to rise steeply, rental yields are not rising. This would be consistent with a market where prices are being set by “investors”, lured by low nominal interest rates, believing there is an unstoppable momentum of capital gains. In financial markets, when price/earnings ratios soar because of an influx of cashed-up naïve and highly leveraged investors, a crash is usually not too far off.

The other instability is an imbalance in rental supply between metropolitan and non-metropolitan regions. Although employment opportunities are growing in non-metropolitan regions, there is a severe shortage of decent housing for rent, impeding regional labour-force adjustment.

Renovator’s dream, only 200 km from shops

At last even the Reserve Bank is starting to acknowledge that low interest rates may be contributing to this situation. In his speech The recovery, investment and monetary policy to the AFR Business Summit, RBA Governor Phillip Lowe states “I recognise that low interest rates are one of the factors contributing to higher housing prices and that high and rising housing prices raise concerns for many people”, but he reiterates “that the RBA does not target housing prices”.  (Maybe they don’t target housing prices but don’t they see a dangerous boom developing?)

When borrowers have access to short-term mortgage finance as low as 2.0 per cent (see Table F6 in the RBA statistical tables), the impact of even a small interest rate rise can be significant. A 0.2 per cent rise on a 5.0 per cent mortgage, early in its life when interest payments dominate repayments, results in a four percent rise in repayments, but on a 2.0 per cent mortgage rate it results in a ten per cent rise in repayments. When interest rates are low the shock of even a small rise is amplified.

Jessica Irvine, writing in the Sydney Morning Herald, reminds us of the insanity of rising house prices. There is much that can be done to make housing more affordable by increasing supply and removing tax concessions, but it is possible that politicians know that that home-owners are hooked on the illusion that rising house prices represent rising wealth: that may be why Labor seems to have gone to water in abandoning the responsible policies they took to the last election.

Writing in Eureka Street, Andrew Hamilton reminds us that property has a social license.  The financialisaton of housing not only results in inequality and exclusion, but it also weakens social relationships centered on place when people are forced into mobility by a  housing market responding to the short-term interests of buyers and sellers.

(Next week we should be able to cover the ABS house price data for the December quarter.)


International Women’s Day – slow progress

Women still have it tough in the workplace

The ACTU draws our attention to women’s disadvantages in the workforce, and to the way the Commonwealth’s proposed changes to labour market regulation would worsen the situation – International Women’s Day 2021 a reality check on progress.  Although the principle of equal pay for equal work was embedded in federal law half a century ago, there are still significant gender pay gaps. Our workforce is highly gender-segregated, with women over-represented in occupations and industries with low pay and insecure employment.


Covid-19’s disproportionate effects on women in the workforce

The Australia Institute’s Centre for Future Work has published a briefing paper by Alison Pennington Women’s casual job surge widens gender pay gap.

When the pandemic hit, women bore the brunt of employment consequences:

The COVID-19 shutdowns and resulting recession were felt most severely by women for several reasons: they were disproportionately employed in the service sectors hit hardest by shutdowns; they were concentrated in casual and part-time roles more easily cut by employers; and their already disproportionate share of unpaid caring responsibilities became even more pronounced.

In the recovery women’s employment has rebounded, but because much of that rebound has been in casual and part-time jobs, women are falling behind men as the economy recovers.


How Australia compares

Australia ranks 16th out of 29 countries on  the environment for working women, revealed in an Economistinfographic Is the lot of female executives improving?. Unsurprisingly the Nordic countries continue to be the most friendly to working women. New Zealand also ranks more highly that Australia.

Although the data is mainly about women in executive positions, it also covers conditions for women in the workforce generally. In comparison with other countries our conditions for working mothers – paid leave and child-care costs – are miserable. Only the US and Ireland have poorer paid leave provisions.


Child marriages on the rise again

UNICEF chose International Women’s Day to release its report Covid-19: A threat to progress against child marriage. Worldwide there are about 650 million girls and women who were married in childhood. Five countries – India, Bangladesh, Nigeria, Ethiopia and Brazil – account for about half this number. There has been a slow decline in the rate of child marriage, particularly in South Asia, but there are still about 100 million child marriages a year. This progress has probably stalled, however. As a result of Covid-19 restrictions, including school closures and economic stress there may be an extra 10 million  child marriages before 2030.


The embattled Attorney-General

What is the “rule of law”?

Geoffrey Watson, SC, Director of the Centre for Public Integrity, has a short press statement clarifying what is meant by “the rule of law”.  There is nothing incompatible with the rule of law in conducting an inquiry to investigate the facts surrounding the allegations concerning the Attorney-General.

“The events of the last few weeks have provided a devastatingly clear illustration of how far we are from upholding a substantive version of the rule of law in Australia” writes Cristy Clark of the University of Canberra in Eureka StreetWhose rule of law?  The broader  allegations of sexual assault have been made by women in relatively privileged positions, bringing to our attention the conditions of women who have far less opportunity to speak out.


Is the Attorney-General enjoying special treatment?

If you are a teacher, a lawyer, a priest, a mullah, a child-care worker, any serious allegation of sexual assault must be independently investigated. Although such an investigation may lead to a criminal proceeding, that’s not its purpose: its intent is to sustain confidence in whoever holds such positions.

That’s the message from a number of senior lawyers in relation to Morrison’s refusal to countenance an independent inquiry into allegations involving the Attorney General.  The standards that apply to other lawyers should also apply to the nation’s “first law officer”.  The article by Laura and James Elton on the lawyers’ opinions is essentially a condensation of a segment of the ABC’s 730 Report on Wednesday night (11:56 to 18:30).

It is fortuitous that the Attorney-General is almost always a lawyer: because lawyers are vastly over-represented in politics, governments find it easy to slot a spare lawyer into the role. The lawyers’ discussions are about Christian Porter’s two roles – as Attorney-General and as a lawyer.)

The emergence of a former close friend of the woman at the centre of the allegations, who says he would testify under oath at an inquiry, strengthens the case for an inquiry. It is hard to see how Porter could return to his position unless and until this testimony is dealt with in formally-established impartial process


The embattled government

Problems not covered in Marketing 101

The Morrison Government has been thrown off course (assuming it had a course) by a series of events – some of its own making. Its problems won’t be solved in the usual manner – by directing a loyal political staffer to distribute a set of speaking notes to ministers.

That’s one of the points made in a Saturday Extra segment last week, in which Geraldine Doogue interviewed Anne Tiernan of Griffith University and Don Russell, former adviser to Paul Keating – Governance Crisis (17 minutes).

Morrison and the people around him seem unable to understand what’s going on, and in closing ranks they are making the situation worse for themselves. There are gaps opening up in our society, and these are not around the usual partisan divisions with which the political system usually deals. Rather they are around gender and age.

Russell points out that even the press gallery is bamboozled, as evidenced by their reaction to Grace Tame’s address to the National Press Club (26 confronting minutes) last week.  He refers to his forthcoming book Leadership, in which he deals with our frustration and disengagement with those who are called political “leaders”.

Tiernan and Russell contrast the way the Commonwealth has competently dealt with the organisational and technical challenges of the coronavirus, with its ineptitude in handling the challenges around allegations of sexual abuse. We commend the work of Harvard’s Ron Heifetz, who distinguishes between the way those in authority handle technical problems (for which authority structures are well suited) and those problems involving adaptive challenges (for which leadership is required). We should not assume that those who have the title “leader” can handle adaptive challenges – the work of leadership falls to many – including brave and articulate people like Grace Tame.


A view from inside – Zali Steggall

Zali Steggall as an independent member of parliament and as a barrister brings both perspectives to the issues in an interview – Toxic Canberra Parliament – with Michael Lester on his weekly program Community voices for community radio Northern Beaches. Steggall devotes the first half of the 29-minute podcast to issues around Brittany Higgins’ case – the weird employment conditions of Parliament staff, the culture of secrecy, a toxic masculinity, and a stifling loyalty to party – particularly in the Coalition. The second half is around the political legal issues around the Porter case. Of course there should be an investigation if public confidence in the office of Attorney-General is to be sustained.


Problems not covered in Politics 101

The ABC’s 730 Report on Tuesday night, in a series of quick-grab interviews, considers the political consequences for the government in handling the barrage of sexual abuse accusations. (8:30 through to 16:05). Quantitative polling suggests that women have been particularly turned off by the Government’s behaviour, while qualitative research focussed on swinging voters suggests that while many people are angry, voters still believe the Morrison Government is “on the right track”, particularly in relation to handling the pandemic. That perception of competence is the most important determinant of voting intention.


Things are falling apart for the Morrison Government

That’s how Per Capita’s John Falzon, in an opinion piece in the Canberra Times, sums up the way the Morrison Government is handling, or mishandling, a mounting set of problems.  He lists six interrelated areas where the public has reason to doubt the government’s capacity or willingness to act in the public interest – allegations of sexual assault, revelations of neglect in aged care, its privileging of corporations over workers, its callous treatment of the unemployed, its limp response to climate change, and its refusal to acknowledge the facts of colonisation on the country’s original owners.


Breaking news: Australia is discovered to be a bicameral democracy

When Craig Kelly quit the Liberal Party the media’s attention was on the Morrison Government’s numbers in the House of Representatives, but it’s easy to forget that only on rare occasions does a government enjoy a majority in the Senate. (The final term of the Howard Government was the last time the government had a Senate majority.)  We tend to underrate its importance.

Bill Browne and Ben Oquist of the Australia Institute have produced a major research report Representative, still: The role of the Senate in our democracy, reporting on a survey of our knowledge about and attitudes toward the Senate, and describing its functions and achievements. To quote:

Australia is unusual among democracies in having a second house of parliament that is both directly democratically elected and as powerful, or almost as powerful, as the first house.

The Senate’s growing influence is reflected in its committee work. Between 1970 and 1989, only 55 bills were referred to committees; between 1990 and 2019 there were 2416 bills referred to committees.


The curse of identity politics

It appears that former National Party Deputy Prime Minister John Anderson is seeking to make a political comeback as a NSW Senator.  On the ABC’s Breakfast program Fran Kelly interviews him about his intentions.

Few serious economists would agree with his positive assessment of the Coalition’s economic competence, but few people would disagree with his observation that a focus on identity politics is holding back our capacity to deal with serious problems in an unstable world. Nor would many disagree with his framing of our political choices – that politicians should identify what we have in common and work to securing our future.

OK, perhaps that is what any aspiring politician would say, but the interview itself confirms the point he tries to make. He clearly wants to talk about values and principles, but for the first 6 minutes in the 8-minute time-slot Kelly’s questions are about leadership of the National Party (of course he’s not going to say he wants to knock off Michael McCormack, even if he intends to, so why waste precious airtime?) and on representation of women in the National Party. Not much time left to talk about values and principles.


Our slow transition to a carbon-free economy

Queensland – Labor is not to be outdone on coal

As if to outdo the Federal Coalition’s affection for coal, the Queensland Government has just approved a massive coal mine about 100 km southwest of Mackay, in spite of misgivings raised by the state’s Department of Environment and Science. Farmers in the region are concerned about the project’s likely effect on groundwater and river systems.

Alexandra Blucher and John Stewart from ABC Investigations reveal the role played by the lobbying firm Next Level Strategic Services in persuading the state government to approve the project. One of its two directors is Cameron Milner, former Queensland state secretary of the Labor Party and former chief of staff to Bill Shorten.

One could argue in defence of the project that it is for coking coal, not thermal coal, but in view of progress towards solar-hydrogen technology for steel production it is becoming increasingly likely that any coal project will become an abandoned hole in the ground in the hands of receivers who will lack the funds to carry out environmental remediation.


Australia to pay for its climate change recalcitrance

The European Parliament has voted to place new tariffs on products from countries lacking serious carbon emission reduction programs.  Australia is identified as one such laggard.

The EU’s “carbon border adjustment mechanism”, effective from 2023, is essentially an anti-dumping tariff. Our failure to charge greenhouse gas emitting industries for their environmental damage (“negative externalities” in economyspeak) is effectively a subsidy on those industries, and by the conventions and rules of international trade a nation is quite entitled to charge anti-dumping tariffs on such subsidised imports.

The ABC’s Linton Besser explains the EU’s move in a short (3 minute) AM clip: Australian exporters face new carbon tariffs from European Union.


A step in the right direction

Michael Mazengarb & Giles Parkinson, writing in Renew Economy, explain EnergyAustralia’s plan to close the 47 year old Yallourn coal-fired power station, one of the nation’s dirtiest, in 2028 and to build a rather large battery. The firm has previously said it would close in 2032. That will leave the two Loy Yang power stations as the only generators using brown coal.


Taxes and spending

Taxes buy civilisation, but Morrison has closed the shop

Commissioner Lynelle Briggs has recommended an “aged care improvement levy” of one per cent of taxable personal income dedicated to funding aged care. Brendan Coates and Anika Stoddart of the Grattan Institute point out that the Commission found that the community would support such a tax increase, but Morrison and Frydenberg have been quick to rule this out. Coates and Stoddart suggest winding back superannuation tax breaks, currently costing $35 billion a year, and including the value of the family home in the pension assets test – How to pay for a better aged care system.

Ross Gittins suggests we are stuck with a crappy aged care system because Morrison won’t ask us to pay. In the 2019 election Morrison bound himself politically when he vilified Labor for trying to wind back tax concessions favouring wealthy retirees. Morrison’s priority is to give tax cuts to those on high incomes, rather than funding necessary public services.


Economic recovery will require higher taxes

The simple story is that at some stage countries will have to collect higher taxes or cut public spending to repay the fiscal deficits accumulated during the Covid-19 recession, but that analysis is a bit too simple.

Writing in Inside StoryOn economics, America has moved left – John Quiggin considers the likely trajectory for the US economy following the Biden administration’s $US1.9 trillion pandemic relief bill. That expenditure, combined with suppressed household spending during the pandemic, will see pent-up consumer spending at some point, but because there has been no increase in the productive capacity of the real economy, inflation is a likely consequence. The response should be to maintain support for the least well-off households, while collecting taxes from the wealthiest households in order to suppress demand until the economy’s productive capacity recovers.


Pope Francis in Iraq – peace and fraternity

Perhaps because it was not marked by messages of hatred, fear or paranoia, Pope Francis’s visit to Iraq commanded little media attention.

The Pope’s weekly letter following his visit is published in America: Pope Francis on finding hope in the people of Iraq.  Its language is gentle, but its message is tough. “I asked myself: who was selling the weapons to the terrorists?”

Writing in The Conversation Milad Milani describes it as a mission of peace over politics.

In an era when the message from the pulpit is often about division, and when people who identify as “Christians” whip up fear of those from other Abrahamic faiths, the Pope’s exhortation to fraternity is welcome.


The pandemic’s progress

Australia

Until a medical practitioner contracted Covid-19 in a Brisbane hospital yesterday, it was getting on towards two months since our last known case of community transmission. (Were not health care workers supposed to be first in line for vaccination?)  At the same time sewerage tests in various places are picking up traces of virus (they may be old or quarantine cases). The number of cases detected in returned travellers is running at around 10 a day, and there are now 46 people hospitalised with Covid-19 – 41 of whom are in Queensland.

Presumably these numbers include an influx of cases from PNG handled in Cairns. That’s a timely reminder that the need for vaccination is a global need: “developed” countries cannot isolate themselves from “developing” countries.

The increase in returned travellers, combined with the emergence of new virus strains, means that the consequences of any breakout in a complacent and lockdown-weary population could be significant.  Vaccination is in progress, but is significantly behind schedule (see “Other coronavirus findings from our regular sources ” below).


How the Bureau of Statistics responded to the coronavirus

In these roundups we have often referred to the ABS special statistics that help us understand the impacts of Covid-19. Many are designated “experimental” or “provisional” because they rely on data sources other than those traditionally used by the Bureau.

Writing in The Conversation You can’t fix the economy if you can’t see it: how the ABS became our secret weapon Peter Martin describes how the ABS responded to Covid-19, an event with consequences outside any established economic patterns – for example rendering trend estimates next to meaningless. Government statisticians always dealt with a conflict between timeliness on one hand and accuracy and consistency on the other. In this situation timeliness has dominated. The speed with which the ABS – a technically conservative institution – has responded to the needs of the time is impressive.

Martin draws attention to one of the more revealing of such releases – provisional mortality statistics – from which we have constructed the graph below showing deaths from respiratory diseases.

The early spikes from coronavirus are evident, but the outstanding difference is the absence of the big winter-time hump.

A glance at some of the other mortality figures suggests that there is a different situation for deaths due to cancer and diabetes, which both seem to have risen in 2020.


Deaths and illnesses avoided

Last week there was comment from readers claiming that  “the death toll from these lockdowns exceeds the genuine death toll from this covid and the flu”, suggesting there should be some easing of restrictions.

Although such an assertion is hard to verify, it could be correct (although the above graph suggests restrictions have saved some lives), but even if it is correct it does not establish a case against lockdowns. The proper basis for comparison is the number of deaths that would have occurred without lockdowns, particularly in view of the way the virus spreads exponentially if unchecked.

Such superficial arguments have an easy “common sense” appeal, and they are likely to become more persuasive as the number of cases continues to diminish. They lack such appeal when there are hundreds of deaths each day.

In any event, deaths are not the only indicator of the adverse consequences of Covid-19. A significant proportion of those who contract the virus but experience only a mild version are left with long-term chronic illness – “shortness of breath, heart palpitations, chest pain, fatigue, and brain fog” – according to New York clinicians following up on people who have been infected: Unlocking the Mysteries of Long Covid by Megan O’Rourke writing in The Atlantic.


Our region

It is some time since we have covered Covid-19 in our region.  In some of the countries in our region – PNG, Indonesia, the Philippines – figures could be significantly understated.  Note the recent pick-up in cases in PNG.

We again include figures for the UK and the USA for comparison.  Whichever way we look at these figures, it’s clear that east Asia has dealt with the virus far better than the USA and the UK.


The rest of the world

The UK has made extraordinary progress in bringing its case rate down, as is shown in the graph below. A third of its population has now been at least part-vaccinated (first dose), but it’s hard to conclude that vaccination is the prime cause of this decline, because that one third has probably been among the most vulnerable who are also the least mobile.

In the European mainland cases are rising once again, with the worst case rates in eastern Europe. Only a few countries, such as Ireland and Lithuania are bucking the trend.


Other coronavirus findings from our regular sources

See our separate web page of generally reliable information and analysis about Covid-19, including hyperlinks to those sources.  Norman Swan’s Thursday Coronacast reviews the pandemic’s progress over the last year and our learning from that experience. It was a year ago today that Morrison said, in response to warnings from public health officials about the Covid-19’s virulence, Australians should head to the “footy” on the weekend.

At the end of that session Swan addresses the question “what if the vaccines don’t work on the new variants?”. Covid-19 will be with us for some years: we can look forward to more jabs. His Tuesday Coronacast is about the case for getting the vaccine to poorer countries and progress on the WHO’s COVAX program.

The daily-updated volunteer’s page Covid-19 in Australia now includes charts on vaccination. As at Thursday 112 000 doses had been administered – 0.44 per cent of the population. We are running significantly behind the Commonwealth’s promised schedule.

Note, from The Economist page, that the United Arab Emirates have now achieved a 40 per cent first-dose coverage. This country, with many comings and goings, may demonstrate the effectiveness of vaccines in an open economy in a world where the virus is still raging in poorer countries.


Polls and surveys

Western Australia – polls point to re-election of its conservative government

We don’t normally cover polls for state elections and state breakdowns of federal voting intentions. The small sample sizes generally result in large margins of error.

But it is hard to go past the contrast between state and federal voting intention in Western Australia.  William Bowe’s Poll Bludger reports on a Newspoll predicting a 68:32 TPP victory for Labor in today’s state election. Federally, however, Roy Morgan reports on federal voting intention by state, showing a 50.5:49.5 TPP preference for Labor in Western Australia – essentially 50:50.

John Phillimore of Curtin University, writing in The Conversation, puts McGowan’s rock star support down to Western Australian factors: Meet Mark McGowan: the WA leader with a staggering 88% personal approval rating. Adrian Beaumont, in an earlier Conversation post, attributes at least some of the difference to the benefits of incumbency for Labor in Western Australia and the Coalition nationally.

Or is it simply a manifestation of Western Australian exceptionalism, and a reflection of its extraordinarily good deal from Commonwealth revenue-sharing and the flow of royalties from highly-priced iron ore that has left the Western Australian Government in the unique situation of trying to work out how to handle a big budget surplus?


Ipsos – concern for housing and the environment

Ipsos’s regular Issues Monitor shows “the economy”, “healthcare”, unemployment”, “cost of living” and “environment” as top-ranking issues.  The poll results tend to jump around month-to-month, but it is notable that “environment” is rising in ranking, and just outside the big five, concern for “housing” is rising. There is a fall in concern for “the economy” and “unemployment”.


Remember the days before social distancing?

Wednesday is Saint Patrick’s Day. Some Irish-Australians get drunk, some sing mawkish Irish songs, some do both. Others dance in public places.


See Michael West Media for more analysis of these and other economic and political issues, and watch out tomorrow, Sunday, for Peter Sainsbury’s Sunday environment round up.

 

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