SATURDAY’s GOOD READING AND LISTENING FOR THE WEEKEND

What people in other forums are saying about public policy


 Those employment numbers

Job losses, but so far it’s not too bad for blokes with full-time jobs

The ABS has released its monthly Labour Force figures for April, and as is the case with so many economic series in this period, graphs of employment suddenly plunge downwards.

Between March and April the headline unemployment rate rose by only 1.0 per cent to 6.2 per cent. But the underemployment rate (referring to people who would like more work) has risen by 4.9 per cent to 13.7 per cent. Add 13.7 per cent to 6.2 per cent and the total labour underutilisation rate is 19.9 per cent. Over the same period the labour force participation rate has fallen from 66.0 per cent to 63.5 per cent, the lowest since 2003.

The other way to consider these figures is in terms of employment. From March to April employment has fallen by 590 000, but the brunt of job losses have been part-time, while men with full-time jobs have been comparatively unaffected, as shown in the graph below.


Australia post Covid-19

Morrison’s fossil-fuel mob

Little attention has been paid to a government body called the National Covid-19 Coordination Commission. In Parliament the Prime Minister said it is “tasked with the job of bridging the gap between the private sector and the government sector principally to deal and troubleshoot problems that have arisen in relation to supply chains that have been impacted as a result of the Covid-19 crisis”.

Zali Steggall, independent MP for Warringah, has pointed out on the ABC Breakfast program that the commission actually has a much broader brief than that described by Morrison. Its function, spelled out on the Department of Prime Minister and Cabinet website, is “to coordinate advice to the Australian Government on actions to anticipate and mitigate the economic and social impacts of the global COVID-19 pandemic”.  As Sandi Keane has pointed out on Michael West Media, the Commission “is stacked with executives from the gas and mining lobbies in what is turning out to be a bonanza for multinationals and yet another destructive blow to Australia’s efforts to curb global warming”.

Steggall is concerned not only with its broad brief, which allows it to lay out Australia’s post-Covid-19 economic path, and the absence of any person with renewable energy knowledge and expertise, but also with its lack of accountability. There are echoes of the sports rorts process, except that this time what’s at stake is far more serious than the change rooms at the Betoota shooting club: it’s the future of our energy sector.

3Fe2O3 + 9H2 → 6Fe + 9H2O

That’s the formula for reduction of iron ore to iron using hydrogen instead of coal in the process. Tony Wood and Guy Dundas of the Grattan Institute have published a report Start with steel: a practical plan to support carbon workers and cut emissions. They look at the potential for Australia to make a transition to a green energy superpower, starting with re-establishing a steel industry, using hydrogen rather than metallurgical coal to reduce iron ore to iron.

They consider not only the industrial processes, but also the political geography of the possible transition.  “Carbon workers” – workers in mining regions and other carbon-intensive regions – who were so influential in swinging the 2019 election against action on climate change, tend to have the same skill set as is required for steel-making, and the existing carbon-intensive industries are located in regions rich in solar and wind resources.

Ross Gittins gives the Grattan Institute’s work a strong endorsement – How Morrison can give us a bright economic future. The government “can fix the dysfunctional attitudes to energy policy that are blocking much-needed investment in next-generation electricity production” he writes.

Coal on the rocks

The ABC’s Mike Pritchard and David Claughton point out that with the collapse in the world thermal coal price, 30 per cent of Australian coal producers are now losing money: Thermal coal spot price tumbles 25 per cent, putting pressure on some producers.  The fossil-fuel industry claims that the coal price will recover once the world gets over the Covid-19 recession (whenever that will be), but it has been steadily falling for two years, well before there was any hint of a global recession.

We’re headed for a novel recession

The coming recession is like no other, explains former Reserve Bank board member Bob Gregory on the ABC program The Economists. There is an established business-cycle pattern of high inflation, countered with high interest rates, which in turn lead to a fall in activity and a recession. But this time the path to recession is almost entirely different, particularly in the speed of its onslaught, and in the way it has come about – through shutdowns of industries rather than through normal business cycle developments.

Along the way Bob Gregory suggests we shouldn’t bother reading last Friday’s Statement on Monetary Policy from the Reserve Bank, but we’re providing a link to it in case you really want to read a carefully-worded and heavily-hedged economic prognosis.  If you get to Part 6 on the economic outlook you may wish to check out the Bank’s assumptions, and you might look at the “baseline scenario” in the forecast table.  Will GDP really be growing at 7 per cent in June next year?

In the last 7 minutes of the 29-minute program Peter Martin and Gigi Foster talk to Bob Slonim, former head of the Prime Minister’s behavioural economics unit, on why uptake of the CovidSafe app has stalled at less than six million downloads.  He has some practical suggestions to get people on board. If his final suggestion is adopted, we would nominate Angus Taylor to be the chosen politician.

An opportunity for private transport?

Crowded buses and trains were never very pleasant in the first place, and we are now coming to see them as spaces for Covid-19 distribution. Understandably that means many people will switch back to private transport. The UNSW Built Environment Group outlines how, with a little investment, our streets and public places could become much friendlier for private transport.

A glimmer of good news on housing

As a consequence of lower rates of immigration and a retreat to less speculative forms of saving there could be a significant fall in house prices. It is possible that capital city prices will fall faster than prices in other regions, as people reflect on the association of the virus’s intensity with large urban centres.

Strangely, however, while most media commentators see inflation in milk or gasoline prices as undesirable, they fail to see more affordable housing as a benefit.


The pandemic’s progress

Time to open up?  It depends on where you live

Is it geography or good management? Over the last ten days (to 14 May) 201 out of our 211 new Covid-19 cases have been in the eastern mainland states. Those figures are boosted by two clusters in Victoria, one at the Cedar Meatworks, the other at the Fawkner McDonald’s. The Victorian Opposition is rightly critical of the Government for its tardiness in dealing with the Cedar Meats outbreak, but at the same time state Liberal frontbencher Tim Smith has savaged the Victorian Government for its caution. In New South Wales, even though that state is making impressive progress, the premier and the tourism minister are calling for interstate travel restrictions to be lifted which would expose them to risks from Victoria where the government is clearly having trouble containing the virus..

Is the Liberal Party possessed by some desire to emulate the criminal incompetence of the US and UK governments, or is it just interstate rivalry – if the smaller states have done well they should be made to share the burdens of the larger ones?

Country curves

At last it seems that cases in the US and the UK may be falling, but Anthony Fauci warns  that because there is too much haste in re-opening the US economy, small spikes in cases could become uncontrollable outbreaks. Sweden’s light-handed approach does not seem to be working. Germany and Italy are still making good progress but at a slowing rate – that’s the nature of compound decay.

One reader points out that because European countries were slow to become aware of the virus and even slower to test for it, those steep upward curves in March may overstate the speed of the virus’s growth: in reality it probably grew steadily over January and February. It’s an important point, because it goes to the basics of the virus’s reproduction rate in an uncontrolled environment: it may be lower than we infer from the official data.

Below, as presented in previous weeks, is the focus on South Korea, Australia and New Zealand.  Unless these countries manage to eliminate the virus, and unless they mess it up and allow a second wave to break out, we can expect the curves to bounce around near the axis for the foreseeable future.

Information sources

These are the same sources as we have been presenting.

The WHO daily situation report;

Our Department of Health Coronavirus (COVID-19) current situation and case numbers;

Our Department of Health Coronavirus (COVID-19) health alert;

A group of volunteers’ daily-updated site Coronavirus (COVID-19) in Australia;

The ABC’s daily-updated site Charting the COVID-19 spread in Australia;

The Johns Hopkins University Coronavirus Resource Center;

Norman Swan’s Coronacast;

The Economist paywall-free Coronavirus hub;

The coronavirus update from the Harvard Gazette;

The ABC’s The one Covid-19 number to watch, tracking the reproduction factor (R)

The ABS program of special statistical releases.


How other countries are coping (or not coping) with the pandemic

Spare a thought for our American friends

In the third week of January the US and South Korea both recorded their first case of Covid-19.  Four months later 86 000 Americans have died of Covid-19, compared with 260 South Koreans. (Allowing for population that’s a 40-fold difference.) The US has an unemployment rate of 15 per cent while South Korea’s is 4 per cent.

The world is taking pity on us is an article in the New York Times by Timothy Egan, recounting “how much of the world has started to feel sorry for a nation laid low by the lethal ineptitude of President Trump”.  This is a country that spends more on health care than any other nation, but “could not even produce enough 75-cent masks or simple cotton nasal swabs for testing in this pandemic”. He asks if American prestige will ever recover: if it does it will be thanks to its scientists, its creative businesspeople, its state political leaders, rather than the “family of frauds in the White House”.

Vietnam and Southern India – compliments to Karl

In response to last Saturday’s roundup, Dufa Wira wrote “when we speak about ‘early responders’ we seem to gloss over Vietnam and Kerala, both communist mixed economy states, that have performed remarkably”.

According to the Johns Hopkins website, Vietnam, a country with a population of 95 million, has just 288 cases of coronavirus and no deaths. Beyond credibility? Quite believable according to the ABC’s Max Walden How has Vietnam, a developing nation in South-East Asia, done so well to combat coronavirus?.  Foreign experts have scrutinised the data and have no reason to doubt it.  Walden attributes Vietnam’s success to early movement, isolation of those with the virus, and use of low-cost test kits.

The Economist has a similar story covering Vietnam and the Southern Indian state of Kerala – Vietnam and the Indian state of Kerala curbed covid-19 on the cheap. While Covid-19 has taken off in India as a whole, in Kerala the virus is in check, with fewer than 50 active cases at the time of writing (early May). The authors attribute success to both countries’ investment in strong public health systems, guided by past experience with pandemics.  They write:

Not coincidentally, communism has been a strong influence, as the unchallenged state ideology of Vietnam and as a brand touted by the leftist parties that have dominated Kerala since the 1950s.

Sweden – how did they get this experiment through the ethics committee?

On the ABC’s Saturday Extra last weekend Geraldine Doogue interviewed journalist Erik Palm and virologist Lena Einhorn on Sweden’s unique approach to coronavirus – an approach that relies more on moral suasion and people’s individual responsibility to maintain social distance and to take other precautions rather than strong government controls and systems to test and trace. It is doing far worse than its Nordic neighbours (see the table below). What’s particularly unusual about Sweden is that this approach, rather than being imposed by a hard-right government, is as recommended by the country’s public health agency.  (14 minutes)

Palm’s article in Slate, to which the program refers, is  I Just came home to Sweden. I’m horrified by the coronavirus response here.  He explains Sweden’s approach in terms of its culture which includes “a strain of passivism and moral superiority”.


Australian party politics

 “We are not just an economy, we are a society” –  Labor’s fifth vision statement

On Monday Albanese delivered Labor’s “Fifth vision statement” Australia beyond the coronavirus.  It’s a carefully-written policy statement, integrating rhetoric about Labor’s traditional values, criticism of the government, and articulation of a policy platform for a Labor government, a platform that’s clearly differentiated from the Coalition’s. The reader seeking the traditional sub-headings of “economic policy”, “social policy” and so on won’t find them in his speech. “There is such a thing as society” he reminds us: economic policy must contribute to people’s well-being and not just to impressive numbers in statistical metrics.

Unshackled from the political need to frame all policy within the narrow constraints of the budget cash outcome, Labor has been able to outline a convincing and coherent economic policy. It is strong on economic growth, but on a different, more inclusive growth path than that seen by the Coalition.

A tale of two electorates

The Coalition’s battles over pre-selection for the Eden-Monaro by-election have pushed aside any consideration of minor matters such as public policy. While Kristy McBain, the Bega Valley shire mayor, is standing for Labor, the Liberal Party will not have a candidate until after their pre-selection ballot of May 23, and the National Party has a few fights to settle before it decides whether to contest the seat.

Initially many assumed that John Barilaro, the NSW Deputy Premier and National Party state member for Monaro, had a good chance of winning the seat, but there are important differences between the state seat of Monaro and the contested seat of Eden-Monaro, shown in the maps below.  The map on the left (Australian Electoral Commission) is of the larger federal seat of Eden-Monaro while the map on the right (NSW Electoral Commission) is of the smaller state seat of Monaro.

The federal seat entirely embraces the state seat, and apart from taking in Yass and some very small settlements in the Snowy Mountains, the main difference is that it takes in all the coastal regions to the east – regions that were severely affected by the bushfires, and where there was palpable anger directed at Morrison for his government’s attitude to the fire disaster. Acknowledging and dealing with the effects of climate change are not the National Party’s strongest points.

William Bowe’s Poll Bludger reports on a poll published in the Financial Review that gives Labor a small 2PP lead, but because we don’t yet know what parties will be standing (the National Party, One Nation?) it should be interpreted with caution.


Other Australian political and policy issues

It’s our ABC, stop preventing us from funding it properly

Per Capita, in association with GetUp!, has produced a paper It’s our ABC. It reminds us that in 2018 Liberal Party members voted to privatise the ABC. It details a history of budget cuts imposed by Coalition governments: in real terms the ABC’s budget is now 30 per cent lower than it was in 1985-86.  It reports on the extremely high level of people’s trust in the ABC – way above the trust shown in commercial TV and newspapers and well above trust in social media.

Public broadcasting exists to serve the interests of the public as citizens, not as consumers. It is essential to the effective functioning of democracy that public broadcasting remain independent and comprehensive in its service to the public.

Yet in spite of the high regard Australians have for the ABC, and their yearning for news and information free from political and commercial agendas, the Morrison Government is not backing away from its 2018 budget plan to slash $84 million from the ABC’s budget over the next three years – even while it provides almost $100 million in direct funding and budget relief for commercial broadcasters.

(Australians spend less than $1 billion a year to fund the ABC, an amount collected through the publicly-accountable mechanism of taxation. Dwarfing this figure is the $8 billion we spend on commercial TV and radio – the amount of advertising expenditure directed to these media. This is collected essentially as a sales tax on our goods and services and is subject to no public accountability.)

GetUp! is raising funds for a political campaign in support of the ABC.

Australians subject to racial vilification

Anyone watching the video of a racist attack in the centre of Melbourne must be wondering what sort of society we have allowed to develop. Ms Li is subject to not only a torrent of foul language but also to an attack from a thug who tries to stop her filming the incident.

Such vile behaviour is on the rise worldwide according to a report by Human Rights Watch: Covid-19 fueling anti-Asian racism and xenophobia worldwide. In part it takes the form of attacks on people who appear to be of Chinese ancestry – possibly a re-assertion of dormant prejudices, awakened perhaps by politicians’ intemperate language such as Trump’s reference to the “Chinese virus”.  And in part it seems that authoritarian nationalist governments are using the emergency to evoke a general fear of foreigners and ethnic minorities, as has been the case with the rise of anti-Islam sentiment in India.

It is telling that sixteen prominent Australians have found it necessary to write an open letter calling for national unity and calling for what should be considered normal behaviour in any country claiming to be civilised.

It is also telling that while our prime minister has properly condemned racist attacks, in his call for an inquiry into coronavirus, he has focussed on its origins in China, rather than the broader questions of live animal markets in many countries, the criminally inept way some national governments have handled the epidemic, and the pressing need for global cooperation on public health.

A quarter of workers are penalised if they don’t come to work when sick

Many outbreaks of Covid-19 are traceable to people coming to work when they are feeling unwell. Permanent workers, even though they are covered by sick leave, can be subject to the pressure to “soldier on”. For casual workers, many of whom are in precarious financial situations, there is the added issue of loss of pay.

Peter Whiteford of ANU’s Crawford School and Bruce Bradbury of UNSW’s Social Policy Research Centre write If we want workers to stay home when sick, we need paid leave for casuals in The Conversation.  They point out that a quarter of Australian employees are casuals without access to paid leave, and suggest ways that can be rectified, with the public purse picking up the cost of such leave – after all it is to the public benefit when casual workers with illnesses absent themselves from work.

(If policymakers are to consider the issue in its broad context they might think about the “sick certificate”, an easily-forged document.  Why should a firm trust a medical practitioner or a pharmacist any more than its own employees, and why should those with known infectious conditions be forced to interact with others in medical clinics rather than isolating themselves?)


Polls and surveys

Essential poll

The latest Essential Poll is once again focused on Covid-19 with a couple of questions on immigration added.

On coronavirus:

  • 30 percent of us still think it is likely we will develop Covid-19;
  • satisfaction with the government’s response to the virus continues to rise – now 71 per cent;
  • satisfaction with the WA and SA governments (states with very low rates of infection) remains strong;
  • there is some more support for easing restrictions, but we’re in no rush – only 13 per cent agree with “as soon as possible”;
  • we’re still lukewarm about the tracing app – a small majority agree it will help limit the spread, but many are concerned about privacy;
  • we’re keen to see strong action such as travel restrictions and increased fines as ways to deal with and prevent the outbreak of new clusters;
  • in relation to the Ruby Princess disaster, we want to throw the blame around, with NSW public health officials assigned the largest share.

On immigration-related matters we’re strongly in support of “Australia-first” hiring, but surprisingly younger people are less in support of the idea than older people, and also notable is that Coalition voters are more in favour of the idea than Labor or Green voters.  We’re reasonably relaxed about temporary migrants without much sign of party differences.

Lowy Institute poll

The Lowy Institute has polled Australians on attitudes to the way Australian and other governments and other institutions have handled the pandemic:

  • we’re impressed with the way Australia has handled the virus, but very unimpressed with the UK and US;
  • we believe China will emerge out of the crisis with more power, but we’re not enamoured with their system of government;
  • the proportion of people who believe globalisation is “mostly bad” for Australia has doubled over the last three years – from 15 per cent to 29 per cent, but a majority still believe “we need more global cooperation rather than every country putting their own interests first” (confirming that the word “globalisation” is too all-encompassing to have much meaning);
  • we’re more trusting of chief medical officers than of state governments, and in turn are more trusting of state governments than of the federal government;
  • among media the ABC is our most trusted source of information, with newspapers and other commercial media well behind.

Australia-US-China relations

“Murdoch is campaigning full-bore for Trump”, and sucking Australians into the campaign

Writing in The Guardian Kevin Rudd comments on the “Wuhan laboratory leak”, supposedly prepared by the “Five Eyes” intelligence community, asserting that the Chinese Government is responsible for unleashing the coronavirus on the world.

This story, published in Murdoch’s Daily Telegraph, was headlined “China’s batty science – bombshell dossier lays out the case against the People’s Republic”.

In his article The Murdoch media’s China coronavirus conspiracy has one aim: get Trump re-elected Rudd does not deny the need for a full inquiry into all aspects of the disaster, but he is critical of the way the Morrison Government, while not endorsing the document, has failed to inquire into what appears to be a serious campaign of deception by foreign interests trying to manipulate Australian public opinion: “is the government fearful of what it might discover if, as is likely, the dissemination of this document has been driven by political and electoral interests within the US”.

Commenting on the same incident, Gareth Evans is quoted in The Sydney Morning Herald:

Pushing the Wuhan lab line in defiance of all intelligence assessments is just another nail in the coffin of US international credibility – and it’s crucial for our own that we don’t get further sucked in to Trump’s political agenda.

A testing relationship

Daniel Flitton has an article For Australia, a testing relationship, on the Lowy Institute’s site The Interpreter. He draws on Malcolm Turnbull’s carefully-considered advice in dealing with the two great powers, and points out that the Canberra-Washington relationship is the more difficult of the two:

… it is important to recognise that for all the tetchiness of dealing with Beijing, the demands and opportunities drawn from Washington of years in war and peace are greater. Sometimes friends can be hard work.


Resilience

The case for resilience

Last week we linked to an article critical of the Just-In-Time (JIT) practice.

The JIT philosophy is one reason why around the world health care systems are without stocks of protective equipment, why manufacturers’ supply lines of crucial parts have been interrupted, why firms lack the working capital to cover a couple of weeks’ wages, and why households living pay-to-pay have all been caught short by the pandemic.

In response Nick Ferris sent a link to a New Yorker article by Siddhartha Mukherjee What the Coronavirus crisis reveals about American medicine. It’s about JIT in the broader context of system resilience. Problems such as shortages of masks are aspects of wider system failures. He writes that “clinical medicine is, among other things, an information system, and a central part of that system is broken”.  Systems that should be yielding useful clinical information are failing because they’re set up more for financial control than for clinical needs, and data analysis is rendered slow and cumbersome by bureaucratic regulations on privacy (even though it should be easy to de-identify records for data analysis).

Writing on The Strategist, Liberal Senator for South Australia (and chair of the Joint Standing Committee on Foreign Affairs, Defence and Trade) David Fawcett warns that Covid-19 shows Australia needs a national sovereignty strategy. National sovereignty is about building resilience, but not through traditional costly mechanisms such as industry protection. Rather it’s about risk management, assessing “what constitutes an unacceptable risk of systemic failure in critical facets of our society, economy and governance structures from external factors” and applying appropriate engineering principles.

We neglected climate change, now we have to start paying for our neglect

On the ABC’s Future Tense Antony Funnell interviews four scholars who have considered the way the effects of climate change are changing the global insurance market – Insurance, resilience, risk. Insurance companies are adept at handling statistically predictable events by drawing data from a history of past events. (That’s the actuarial definition of “risk”.)  But dealing with the consequences of climate change brings insurers into a realm of uncertainty where there is no experience on which they can build statistical models.

When it comes to climate change, in setting premiums insurers have to do better than using crude indicators such as postcodes. Rather, they should assess each property’s vulnerability. When they do so, the premiums for properties particularly subject to climate change events (flood, bushfire) may become so high as to make them uninsurable.  When this happens the problem becomes a planning one, not an insurance one, and there can be a case for public funding for re-location.

They also describe how the reinsurance market works. Because of lags in the chain of insurance-reinsurance we can expect to see significant premium rises ahead resulting from losses in the bushfires. (29 minutes)


How the epidemic is keeping old house-bound analysts busy

Not since Henry VIII started messing around with the church has there been such an exciting time for policy wonks and armchair political analysts.


Saturday’s Good Reading and Listening is compiled by Ian McAuley

Watch out tomorrow, Sunday, for Peter Sainsbury’s Sunday environment round up.

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Ian McAuley is a retired lecturer in public finance at the University of Canberra and a Fellow of the Centre for Policy Development.

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