Saturday’s good reading and listening for the weekend

What people in other forums are saying about public policy


The budget

Uninspired, unimaginative and unworthy

At his National Press Club Address on 14 October, commenting on Frydenberg’s budget and on the Coalition’s economic policies more generally, Labor’s shadow treasurer Jim Chalmers said that Australia “needed a plan to respond to the recession, kickstart the recovery and redefine the future – instead we got a grab bag of limited opportunities and lowered horizons.” The budget “wasn’t just uninspired and unimaginative – it was unworthy. Unworthy of the moment and the challenge before us– and unworthy of all those Australians who have carried us through this crisis”.

He went on to list five ways in which the budget fell short of our country’s needs.

You can find a transcript of his address – “Opportunities lost” – on his website. But that’s just the prepared text. On the ABC’s iview is the whole session, including his response to questions (which start at 26 minutes into the 63-minute session).  He responds clearly and directly to a wide range of questions – including those from Murdoch journalists who are obsessed with the possibility that the market value of aspirationals’ investment properties might fall.  Chalmers wants to see Australia emerge from this recession with something meaningful to show for all the sacrifices people have made, not just a return to the economic stagnation of 2019.

The IMF sends a warning about governments like ours

The IMF’s World Economic Outlook: A long and difficult ascent sees the world economy “climbing out from the depths to which it had plummeted during the Great Lockdown in April”, but with a great deal of uncertainty about the pandemic.  In words whose author could have had Frydenberg in mind, it warns against “ill-targeted subsidies or wasteful government spending”. It goes on:

Investments in health, education, and high-return infrastructure projects that also help move the economy to lower carbon dependence can further those objectives [of lifting growth]. Research spending can facilitate innovation and technology adoption—the principal drivers of long-term productivity growth. Moreover, safeguarding critical social spending can ensure that the most vulnerable are protected while also supporting near-term activity, given that the outlays will go to groups with a higher propensity to spend their disposable income than more affluent individuals.

Its economic forecasts for our region are more optimistic than for Europe and North America, but its forecast for Australia is somewhat more cautious than the forecasts in our government’s budget.

We’re on the wrong economic track

The Frydenberg budget is guided by the Reaganomics “trickle-down” model: through tax cuts and other concessions it gives money to the well-off, because those concessions and relief from high marginal tax rates are supposed to incentivise them to invest: in so doing they will pull the economy out of recession, while providing jobs for the masses.

The ABC’s business reporter Gareth Hutchens reviews a paper exposing fundamental flaws in that model. Hutchens’ review How lessons from the past 40 years could show us the way out of the coronavirus recessionexplains why prosperous “developed” countries such as Australia have been through 40 years of slowing economic growth, low rates of business investment, lowering productivity and, more recently, unhealthily low inflation. In these countries an expansion of debt (mainly household debt rather than government debt in Australia’s case) has seen a huge transfer of wealth to the already well-off, leading to what economists call “secular stagnation”. Using loose monetary policy to allow governments or individuals to accumulate debt may stimulate activity in the short term, but in the long term the accumulated debt burden suppresses demand.

If government deficit spending is to be used to get us out of the recession, it has to be accompanied by progressive taxes and other redistributive mechanisms to ensure that those with lower incomes can spend without having to go into further debt. That means taxing the super-rich through progressive income tax and through wealth and inheritance taxes.

The paper to which Hutchens refers is Indebted demand by Atif Mian, Ludwig Straub and Amir Sufi. It has a very readable section “Motivating facts”, before they get into the serious business of mathematical economic modelling. That section is a straightforward outline of evidence, showing trends in debt, rising inequality (particularly wealth inequality), and falling investment in “developed” countries.

If you have 100 minutes to spare you can hear former Reserve Bank Governor, Ian Macfarlane, discuss monetary policy, modern monetary theory (he doesn’t see MMT as particularly radical) and the Indebted demand paper on Joseph Walker’s Jolly Swagman podcast – The Rise And Fall Of Monetary Policy. From 71 minutes he discusses secular stagnation, and from 79 minutes he discusses the paper itself. He credits the authors – Mian, Straub and Sufi – for presenting the long-term fall in real interest rates alongside the long-term increase in debt, and linking both phenomena to financialisaton and the growth in wealth inequality. Where there are people (the financially wealthy) with a surfeit of financial assets there have to be others – a much larger number usually – in debt. That states a simple mathematical equation: debits and credits have to balance.


The government’s war on renewable energy

Reserve Bank undermines Government’s plan to support fossil fuels

Wind farms and solar plants are becoming cheaper to construct and once constructed, are cheap to keep operating. The latest International Energy Agency World Energy Outlook 2020 points out that low interest rates, as is the case in the current period, favour such capital-intensive industries, which is why it forecasts that renewables, being cheaper than coal or gas, will meet 80 per cent of growth in global electricity demand to 2030.

John Quiggin draws on the IEA prediction in his article Too cheap to meter: Ultra low interest rates have fundamentally changed the arithmetic of renewable energy, published on Inside Story.

Quiggin takes the argument to the extreme – if real interest rates are zero, electricity from renewables could be free.  (He could have gone further and mentioned the budget’s measures to realise business tax losses and instant investment write-offs.)

Joe Hockey didn’t like them but the Reserve Bank does

How about those promises of cheap gas?

Central to the Taylor-Morrison energy policy is an expectation of cheap gas to fuel thermal power stations.  In a report to Nasdaq, Origin Energy has warned that such an expectation may be optimistic:

… it [Origin] continues to caution against arbitrary or unrealistic gas price expectations, noting the cost of domestic gas must reflect the lifecycle cost of production, and that gas producers should be able to earn a return on the significant capital required to bring gas supply to market.

In the same announcement Origin re-affirms its aim to achieve net-zero emissions by 2050.


Aged care – the dismal legacy of privatisation and deregulation

Three papers

The Commission into Aged Care Quality and Safety has received its final submissions. The submission by the counsel assisting has released a set of 124 specific recommendations as a separate document.  Their recommendations, grounded in a principle that older people have a right to “quality, safety and timely support”, emphasise standards such as staffing ratios, staff qualifications and competencies, and pricing.

In addition, two more reports on aged care have come out this week.

The first is by Stephen Duckett and Hal Swerissen of the Grattan Institute: Rethinking aged care: emphasising the rights of older Australians.  It gives a policy-related history of aged care in Australia. What we now have is a “shameful mess … a top-down, provider-centric aged care system that is under-funded, poorly regulated, and failing older Australians”. They do not heap all blame on to the government or on to commercial providers: the situation we now have “reflects society’s disdainful attitude to the aged”.

They recommend a set of defined and understood rights of older Australians as a basis to shape public policy and therefore the design of the system.

The other is a research paper by the Commission – Inside the system: aged care residents’ perspectives.  It covers many dimensions to do with quality of care, life satisfaction, and specific complaints. What comes across is an impression of people who feel constrained by a bureaucratic system. There are shortcomings in all dimensions, but the most persistently recorded shortcomings have to do with the extent people feel they actually live in a “home”:

… about 41% of residents were “rarely” or only “sometimes” satisfied with the amount of time staff spent with them. Inflexibility in staff care routines was noted by 44% of residents. When asked about the living space, 49% of residents “rarely” or only “sometimes” felt at home in the shared space of the facility and 36% “rarely” or only “sometimes” felt at home in their own room. Nearly 12% could not access outside and gardens, and around 16% could only “sometimes” gain access. About 57% felt that they were “rarely” or only “sometimes” offered things to do that made them feel valued.


Other Australian politics

Andrew Leigh on social capital

Many people assert that we are becoming less connected with one another and more isolated, less involved in public life and more concerned with our private lives, less inclined to spend time with friends and more inclined to spend time attached to a screen.

That’s all so, but few people approach the issue of our declining social capital with the rigor and attention to evidence exercised by Andrew Leigh – Labor Member for Fenner in the ACT, and former Professor of economics at the ANU.

On the ABC ‘s Late Night Live he and Phillip Adams discuss his new book, co-authored with Nick Terrell, Reconnected: A community builder’s handbook. In the 21-minute session — How are Australia’s communities changing and connecting? – Leigh outlines some of his main findings: “compared with the 1950s the church-going rate has gone down by two thirds”, “compared with the 1980s the union membership rate is also down by two-thirds”, “Australians have half as many friends as in the 1980s”, “there are more people on the waiting list for the Melbourne Cricket Club than in all the political parties combined”. We have become less a society of “we” and more a society of “me”. (21 minutes).

Joseph Walker’s Jolly Swagman has a 50-minute discussion with Leigh – A Labor intellectual’s plan to rebraid our frayed social fabric. Besides the ground covered in his Late Night Live presentation, Leigh goes into his personal and academic life, including his work with Robert Putnam at Harvard’s Kennedy School.

Scholars such as Putman and Leigh demonstrate why we should show the same respect for social sciences that we do for the physical sciences. Leigh does not abide by the notion that there is some trade-off between social and economic values. He points out that “societies with thicker networks of trust tend to be more affluent.”

That petition for media diversity

Last week we had a link to Kevin Rudd’s call for a commission to consider media diversity – in essence an inquiry into the power of Murdoch media. This week the ABC’s Media Watch puts some flesh on Rudd’s assertions.  (This coverage is in the first 8 minutes of the 16-minute program.)

News Corp owns the biggest-selling daily papers in Sydney and Melbourne, and the only daily papers in Brisbane, Adelaide, Hobart and Darwin – as well as print media in non-metropolitan Queensland.

There is no doubt about the bias of News Corp media: in every one of the last 18 state and federal elections Murdoch media has run anti-Labor campaigns as editorial policy. Numbers show that the Murdoch media is not so much pro-Coalition as anti-Labor. Another persistent bias is an opposition to coverage of climate change: often they simply ignore stories covering climate change.

Albanese has not dared raise any complaint against News Corp, and Morrison basks in its support. But Turnbull has made his voice heard: “The Murdoch press runs now as a political operation; it is effectively a political party; it is ruthlessly partisan.”

You can still sign the petition which on last count had 370 000 signatures.  It is accessible on the Parliament House website.  Note the two-stage process involving a confirmatory email.

The media as political motivators

Writing on Club Troppo, Nicholas Gruen considers the success or otherwise of populist governments in handling the Covid-19 virus: From Trump to eternity: The fate of the political arts in the modern world. The Trump and Johnson governments, to name two, have done a terrible job in controlling the virus. He asks therefore if populist governments really are interested in governing, or are populists simply interested in governing as performance – how they come across in the media, as may be the case with a theatre company more concerned with its critics than its audiences.

His analysis draws on a framework of “internal” vs “external” drivers of politicians’ performance (a framework that seems to be very similar to the psychologists’ ideas of intrinsic versus extrinsic motivation). Some are in it for the performance, some are in it to practise the art of politics to deliver good government, but the external reward of performance assessment seems to be dominant. Rather than yearning for a return to some imagined past when all politicians were more nobly motivated, he calls for more citizen-oriented ways of assessing governments’ performance.

Australia’s standing in Asia

What is Australia’s standing in Asia?  The Lowy Institute has developed an Asian power index, presented as an infographic with drop-down links to further details, for 26 countries in Asia or on its periphery. The index collates eight dimensions of resources and influence.

Australia ranks highly on defence networks and on diplomatic influence, but quite poorly on its own military capability and economic capability. Overall, we come in at sixth place behind the US, China, Japan, India and Russia, but we’re one of only three countries (the others are Vietnam and Taiwan) with growing power in the region.

(Any such competence index is very sensitive to the weightings applied to specific dimensions. North Korea, for example, ranks highly in its nuclear weapons capability, but pretty poorly on almost every other indicator.)

Big governance and administrative failures

On Last week’s Saturday Extra Geraldine Doogue interviewed Alan Fels and Wendy McCarthy about some of the failures and tribulations of those in positions of authority – Crown Casino board members, Gladys Berejiklian and Daniel Andrews.

Although it was titled Big leadership failures, it was really a rich discussion about governance and administrative structures, and the pressures and contradictory demands placed on those holding positions of appointed authority. McCarthy stressed that standards of behaviour are the responsibility of everyone in the organisation, and not just the person called the “leader” (a term that has become conflated with the position of authority).  We place too many expectations on those in authority positions – Gladys Berejiklian would surely agree. (19 minutes)

Without detracting from the wisdom of Fels and McCarthy – both experienced and thoughtful administrators – they hardly touched on leadership as an issue separate from the exercise of authority. They did so briefly when they mentioned the difficulties faced by Daniel Andrews, who has managed to attend to his authority role as premier, while exercising leadership through the pandemic. These are different tasks and are often in conflict; the former is about keeping the organisation running; the latter is about helping the community handle difficult adaptive change – acknowledging people’s disruptions, disappointments and sufferings, sharing hard news in a way that people can accept without turning off, stressing individual and collective responsibilities – because the hard work of suppressing the virus has to be done by the community.

Politicians who raise hard issues in plain language, rather than glossing over them with comforting statements of false hope, or by parroting “speaking points”, get little thanks, and as Andrews’ experience demonstrates they place their political survival on the line. Leadership is a precarious activity.

In this context Geraldine Doogue mentioned an article in the New York Times In the world’s longest lockdown, one man is omnipresent.   It’s about how Andrews is exercising both leadership and authority and about the stress of handling both roles.


The pandemic’s progress

Victoria and New South Wales

In terms of case numbers, Victoria and New South Wales now seem to be on similar tracks, as a glance at the most recent week’s data on our regular chart suggests, but New South Wales has far fewer mystery cases than Victoria. There is a big difference between dealing with the messy tail end of a big outbreak and a situation where the virus is close to local elimination but with the occasional outbreak.

That distinction hasn’t saved Victoria’s premier, Daniel Andrews, from a vile campaign of insult from the Liberal Party and right-wing media. As Michael Tanner suggests, writing in Michael West Media, the Liberal Party has been trying to undermine public trust in the Victorian Government’s handling of the virus.

You’ll be back here soon

There are plenty of grounds for considered criticism of the Victorian Government, but not for fabrications of data, misrepresentations of incidents and personal vilification.  Many people, particularly among some immigrant communities, start from a default basis of distrusting government. The Victorian Government has a hard-enough job in securing their cooperation without the Liberal Party and the Murdoch Media adding to their mistrust and confusion.

Are they simply stupid, or are they trying to impede the government’s efforts  in an attempt to make Andrews and the Labor government look bad? If it’s the latter, their behaviour is disgusting by any moral standards.

We can understand and sympathise with small business people calling for the state to open up, but not with those who have access to expert opinion but are urging the government to put the community at risk of another costly wave of infection.

Other “developed” countries

Donald Trump says America has turned the corner on the virus. It has indeed, towards a new wave of infections, as shown on our regular graph of the US and Europe. Note that the Y-axis of daily cases per million population has been extended to accommodate Britain’s outbreak. If we were plotting other individual countries we would have to extend the axis even further to accommodate the Czech Republic (860), Belgium (590), Netherlands (460) and France (380).

To understand what a rate of 300 daily cases per million means, which is where the UK is heading, we could imagine Victoria dealing with 2000 cases every day, with the numbers on the rise. (Victoria’s one-day peak was 723.)

Sources

Sources of generally reliable information on Covid-19 are on a separate web page.


Elections – are social democrats awakening from their slumber?

The ACT turns green

At the time of writing two seats in the ACT’s 25-member assembly are too close to call, but its composition will be a Labor-Green government, either in coalition or in close cooperation, with one, or probably more, Green ministers, following a strengthening of the Green vote at the expense of the Liberal vote.  (The ACT is blessed in having no National Party.) The Greens’ representation in the assembly will be 5 or 6 seats, up from 2 in the outgoing assembly.

One would generally expect the ACT’s Hare-Clark system to return two Liberal and two Labor candidates with the fifth seat up for grabs in each of its five electorates, but in the central seat of Kurrajong the Liberals now have only one member, while the Greens have two.

The summary table alongside, showing vote percentages and swings, is derived from the ABC election website.

The Liberal Party’s campaign was a scaled-down version of the Frydenberg-Morrison policy of handing money back to voters (freezing municipal rates, rebates on car registration), rather than any significant improvement in government services – a fistful of (uncosted) dollars. It didn’t sell.

New Zealand election – who said social democrats can’t win office?

The mainstream media has covered New Zealand’s election results reasonably well. If you can bear five minutes of right wing drivel you could have a look at the take Sky News gave the election: New Zealand is now on track to become an impoverished socialist republic and a puppet of China.  (For the record, Australia is much more economically dependent on China than New Zealand is.)

It will be some time before there is in-depth analysis of the election results. The Conversation has an article gathering the immediate views of five New Zealand political scientists: credit must go to the country’s successful Covid-19 response.

Besides Labour’s success, some small parties did well.  But the main message from these political scientists is that Labour in New Zealand looks like the “natural party of government”. (Why does our Labour Party, at the federal level, look like the natural party of opposition?)

A separate analysis, also in The Conversation, is from Richard Shaw of Massey University — Labour’s single-party majority is not a failure of MMP, it is a sign NZ’s electoral system is working. “MMP” stands for mixed member proportional representation, a form of election that combines aspects of single-seat voting and party-list proportional representation.  In common with other forms of proportional representation it ensures that the number of seats a party wins is roughly proportional to its share of the vote, rather than the “winner-take-all” representation that occurs under “Westminster” systems. Besides New Zealand, MMP is in use in Scotland and Germany.

It is unusual for MMP to deliver any party a majority of seats, but on this occasion, such has been Labour’s support (49 per cent of the vote) that it has won a small parliamentary majority – probably 63 seats in the 120-seat chamber. Shaw points out that although Labour has a parliamentary majority, it is unlikely to use it to govern alone. Ardern and others in the party embrace the cooperative spirit underpinning the MMP system.

Bolivia throws out a right-wing evangelical president

Kevin Young, writing in The Guardian, reports on the Bolivian election, in which Luis Arce of  Movimiento al Socialismo, easily won the presidential election, and is on track to enjoy majorities in both houses of congress, ousting the brutal government of the evangelical Jeanine Áñez. It appears that voters were fed up with the “theocratic and neoliberal ideology” of the Áñez government.

Only 9 sleeps until the US election

As at Friday morning, the Fivethirtyeight poll gave Biden an 87 per cent probability of winning the election, based on scenarios in state electoral college votes – down from their 88 per cent estimate a few days earlier.

The Fivethirtyeight site ranks states in order of their support for Trump or Biden.  They give Florida, Pennsylvania and some other swing states to Biden. North Carolina is right on the edge, however. The ABC’s 730 Report has a special segment on North Carolina. (7 minutes)

Those with a sentimental attachment to eloquent political speeches, to public rallies (and to drive-in theatres) can spend 35 minutes watching Obama’s speech in Philadelphia.


 Polls

Essential – at last a published poll on voting intentions

Ever since the embarrassments of the Trump and Morrison victories, most pollsters have been cautious about publishing polls on voting intention.  Essential, however, is back in the game with this week’s Essential Report.

If a federal election were held “tomorrow” (between October and 14 and 17) the results would be:

Coalition 39 per cent (41 per cent in last year’s election);

Labor 35 per cent (33 per cent last year);

Greens 9 per cent (10 per cent last year);

Others 9 per cent (16 per cent last year);

Undecided 8 per cent.

This all leads to a TPP of 48:45 for the Coalition. Essential has been polling since August, and this result seems to be fairly steady. It is also generally in line with Newspoll.

Distributing that 8 per cent of undecided voters among the parties proportional to their primary vote suggests that the Coalition is back up to about their level at last year’s election, while Labor has gained.

They also have their monthly questions on approval/disapproval and preferred prime minister. There’s not much movement, as shown in the two graphs below.

It seems to be the time for incumbents. All state premiers surveyed get at least 51 per cent approval. Victoria’s Daniel Andrews, in spite of screw-ups, torrents of abuse from the Coalition, the Murdoch media, and so-called spokespeople for small business, enjoys 54 per cent approval, ahead of South Australia’s Steven Marshall (51 per cent), who has kept his state squeaky clean of Covid-19. And nothing seems to be able to dislodge New South Wales’ Gladys, sitting on 67 per cent approval.

People were asked who would be the better party (Labor or the Coalition) to manage various aspects of the economy. On creating jobs and helping people get back into employment the parties were neck-and-neck.  On supporting those in financial need and on improving the financial situation of women, Labor was ahead. But on “reducing national debt” Labor was a long way behind, and on the general question “managing the economy” Labor trailed at 31 per cent to the Coalition’s 44 per cent. It appears that the Coalition has succeeded in defining “the economy” in very narrow terms, which have little to do with people’s lived experiences.

Similarly, on a set of questions about the federal budget, people gave the government high marks. People were more favourably disposed to the budget than to what they thought would be in the budget before it was presented.

People generally believed that the budget would be good for small business and big business, but not so good for people on low incomes or older Australians. On the statement “This budget puts the interests of businesses ahead of the interests of employees” 42 per cent agreed.  Yet people still gave the budget high marks. It’s as if, after years of conditioning, they have internalised the notion that what’s good for business is good for the economy, and what’s good for “the economy” (whatever that means), is good for Australia.

There were a number of questions on the NBN, including one on privatising it – “Would you approve or disapprove of privatising the NBN when it is completed in 2020?”.  The response was a net disapproval (44 per cent to 29 per cent). Only 39 per cent of Coalition voters were in favour of privatisation. Younger people, however, were much more favourably disposed to privatisation than older people.


The final presidential debate

Did Trump learn from the first debate?

Although he came no closer to truth or factual correctness, most people agree that Trump was better-behaved in the second (and final) head-to-head debate. See how he learned from his performance in the first debate.


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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