Saturday’s good reading and listening for the weekend

What people in other forums are saying about public policy


The pandemic’s progress

Australia – NSW is once again the weak spot

Just as we approached a clear run with no local transmission of coronavirus, New South Wales has come to the party with an outbreak in Sydney’s northern beaches, and another case linked to hotel quarantine.  Even if this outbreak turns out to be contained, it will have a chilling effect on people’s plans around the holiday season, to the detriment of both individuals and businesses.

The graph below is already dated. At least another 10 new cases will be added today, and Queensland, which has successfully been quarantining inbound passengers and flight crews from overseas, will record its first case in 56 days.

To its credit the New South Wales Government has invested heavily in contact tracing, but in terms of preventing outbreaks its attitude has been lackadaisical. It has not mandated the use of masks in crowded situations, has been lax in enforcing social distancing, and has been permissive towards the hospitality industry: although Sydney has a climate ideal for outdoor eating and drinking, the state government has allowed pubs and clubs to continue to operate indoors with recirculating air conditioning systems. Now, in response to this outbreak, it is gently urging residents of the area to stay at home, even though it would be physically easy to isolate the northern beaches with controlled access. The area is  essentially a peninsula with limited road access.

Not all responsibility rests with the New South Wales Government, however. In our three largest states – New South Wales, Victoria and Queensland – testing rates have fallen over the November-December period and a degree of complacency may have developed throughout the land. Our behaviour provides opportunities for the virus to spread, and Christmas, a “superspreading event” as Norman Swan describes it, is just six days away.

Our region – no Asian travel bubble for now

For a time there was talk about a travel bubble among developed Asian countries, Australia and New Zealand, but there have been outbreaks in Korea and Japan. In those countries the rate of new cases is well below the rates prevailing in the USA and Europe, but they are rising quickly.  There is speculation about what has caused the surge in these two hitherto very successful countries: maybe it’s down to complacency, maybe it’s the winter-time effect as is being seen in Europe.

Europe and the USA

As expected, cases have surged in the USA.  A great deal of publicity has been given to America’s consequent surge in deaths; but the UK and Sweden, two European countries that have been less than rigorous in preventing a winter wave, are not far behind. Over the week to 15 December the average daily death rate in the USA was 8.7 per million people, while in the UK it was 7.5 per million and in Sweden it was 8.3 per million.

Similarly there has been a fair bit of media attention to Germany’s rise in case numbers, and its reactions, such as shutting down its famous Weihnachtsmärkte, but by European standards Germany is coping reasonably well with 276 new cases per day per million people. There is a wide range of daily infection rates in Europe, ranging from 61 per million in Ireland, up to 998 per million in Lithuania – a country that was doing reasonably well up to October.

Sources

Sources of generally reliable information and analysis about Covid-19 are on a separate web page. The Economist warns that Europe’s vaccination drive may be hampered by anti-vax paranoia.  It also has its usual informative interactive graphics mapping the spread of the virus in Europe and the USA. Norman Swan’s Coronacast has two sessions about the Sydney outbreaks – “we should be worried”.  Should we be spooked by seeing big numbers arise very quickly, or does that mean contact-tracing and testing are working well?  His Thursday program also has a segment about the effects of vaccination on the virus.


Australia’s fragile economy

The government’s economic and fiscal outlook

On Thursday the Commonwealth released the Mid-year economic and fiscal outlook.

The media have covered its main provisions – updated growth forecasts, smaller than expected budget deficits, and the fiscal windfall of higher iron ore prices. Peter Martin has a short summary of its main points in The Conversation.

One aspect that stands out in its table of economic parameters on Page 3 is its forecast for wages (the wage price index) and inflation (the CPI) to 2023-24. In two of the four years, wage rises are forecast to be below inflation. If we multiply these figures out over the four-year period, we find that in real (inflation adjusted) terms, wages are forecast to be 0.7 per cent lower than they are now. Of course no government can make forecasts with close precision, but it’s reasonable to conclude from these figures that the government expects there to be no wage growth in the medium term, even though the GDP is expected to rise. We see on Page 37 that company tax receipts are likely to rise significantly in the coming year, in spite of new capital write-off provisions – suggesting that profits will rise substantially.

And an aspect that fails to stand out is any mention of possible adverse consequences of climate change in its statement of risks. There are some references to fire risk, but only in the context of indemnity provided to rural fire services. There is no mention of rising sea levels, mega-fires, extreme flooding, damage from more active oceans, damage to the Great Barrier Reef, failed harvests, all of which would have economic and therefore fiscal consequences.

One economic “risk” they mention upfront is “persistently high household saving and weaker-than expected consumption growth”. It’s curious that a government from a conservative tradition would see household saving as a “risk”: is not self-reliance a virtue according to that tradition? But the last thing Liberal Party politicians want to see is financially independent households who can be less reliant on the financial sector and who can exercise power in the labour market.

Wage theft is easy – go for foreigners

Unions NSW has looked at 3000 employment advertisements in foreign languages – Chinese, Korean, Vietnamese, Nepalese, Spanish and Portuguese. Of those notifying a rate of pay, 88 per cent of rates are below the relevant awards. Comparisons with surveys in previous years indicate that such wage theft is becoming more common – Wage theft: the shadow market.

In terms of industries the usual suspects – cleaning, hairdressing, fast food, and hospitality –  are prominent, but top of the list is construction, with 97 percent of advertisements offering pay below the relevant award.

The report also considers the way foreigners are exploited through sham contracting, in conditions that have all the characteristics of wage employment but without benefits of sick leave and protection against unfair dismissal.

Unions NSW have also looked at 1000 advertisements in the horticultural industry, on which they will report separately.

A carbon price is not a tax

When we pay for car registration, or a fee for entry into a national park, even though these are payments to government entities, we recognise them for what they are: they are user fees, not taxes.

But in relation to policies to do with climate change, the Coalition’s refusal to put a price on carbon is justified by the slogan “technology not tax”.  But a price on carbon, even if administered through a taxation mechanism, is not a tax. It is a price, a user charge, designed to do what other prices do, and that is to allocate resources efficiently. In the case of a price on carbon its purpose is to cover the costs to present and future generations (negative externalities) consequent on discharging CO2 and CH4 into the atmosphere.

That is one of the points John Hewson makes in his Canberra Times article Another ridiculous and indefensible move against sense on climate.  He is at a loss to understand how the Liberal Party, ostensibly in favour of free markets, is so reluctant to use a price on carbon as a means to deal with climate change.

One good result from the pandemic – gambling is down

No gambling here — for now

Nicholas Biddle of the ANU has looked at the impact of Covid-19 on gambling in Australia, publishing his results in a paper Gambling during the Covid-19 pandemic.  His research is based on three survey points – April 2019 (when there was no thought of a pandemic), May 2020 (between the first wave and the Victorian wave), and November 2020.

His research finds a decline in gambling between April 2019 and May 2020, with a small rise towards pre-pandemic levels in November 2020. Although he has examined the data by state, age, gender and socioeconomic status, none of these demographic groups show behaviour that is much different from the average.

The greatest declines seem to have been in the most harmless forms of gambling – Mah-jong, raffle tickets, bingo and housie. There was also a significant fall in problem gambling, particularly by the most disadvantaged, and a 47 per cent fall in use of gaming machines.

He surveyed people on attitudes to gambling. There was strong agreement (>75 per cent) with statements “there are too many opportunities for gambling nowadays”, “gambling is dangerous to family life”, and “gambling should be discouraged”. But because the Commonwealth has been stingy in distributing revenue to the states, all state governments apart from Western Australia are dependent on revenue from weakly-regulated gambling. Biddle reminds us that “Australia has one of the highest rates of gambling losses in the world”.

The case for industrial relations reform

Ross Gittins takes us through the government’s proposed industrial relations changes: Mistreating workers isn’t a smart path to prosperity. Unsurprisingly the changes lean in favour of employers – could we expect a Liberal Government to do otherwise? But they are no Workchoices 2.0.  The only obnoxious aspect is the removal of the “better off overall” test for workplace agreements, and that may simply be a bargaining coin for the government to drop.

Gittins points out, however, that in focussing on reform in these established conventional employer-employee situations, public policy is largely ignoring problems associated with precarious employment – the gig economy, false contracting, franchising, labour-hire companies and wage theft. It’s not only a question of social justice: it’s also about the negative economic consequences of an underpaid workforce.

What can the WTO do for Australia’s barley producers?

In the short term, not much really. But it is still worthwhile for Australia to take its dispute with China over barley (and by extension disputes over other commodities) to the WTO, explain Weihuan Zhou of UNSW and Lisa Toohey of the University of Newcastle, writing in The Conversation –  Taking China to the World Trade Organisation plants a seed. It won’t be a quick or easy win.

The WTO’s processes are slow, its appeals mechanism has been undermined by the Trump administration, and its powers are limited, but the process does at least bring parties to the negotiating table.

Daniel Tehan’s transfer to the trade portfolio was made after the article was published: a protracted WTO process may get us through to the next election, when, hopefully, we have a government with a more competent field from which to fill important portfolios.

Reviewing Medicare

There has been a fair bit of media cover of the report of the Medicare Benefits Schedule Review Taskforce.

It is rightly called a review of “Medicare”, because while we often use the term “Medicare” to refer to our publicly-funded health care arrangements, Medicare is actually the program that funds medical services in medical practitioners’ clinics and in private hospitals, plus a few additions, all on the Medical Benefits Schedule (MBS). It does not cover government funding of public hospitals and of pharmaceuticals.

As such it is a non-contentious review within what we could call established policy, aimed at improving the cost-effectiveness of the MBS. It aims to deal with perverse incentives and anomalies in MBS funding, partly arising from changes in technologies (e.g. image-guided procedures, telehealth) and partly due to changes in the task of health care. On the latter it states:

When the MBS was created, the predominant need was for episodic care of acute medical and surgical problems. There has been a huge shift to longitudinal care of multi-morbidities including mental health. Many patients routinely require complex integrated care over time and across multiple providers.

In this context it acknowledges limitations of fee-for-service funding and recommends some incremental changes. It also recognises the increasing incidence of out-of-pocket costs paid by consumers, mainly because variations in out-of-pocket costs distort consumers’ and providers’ decisions, rather than because of equity considerations. It acknowledges that out-of-pocket fees have risen but it has held back from recommending any greater budgetary allocation for Medicare.

The review has taken five years, and many of its recommendations have been taken up along the way. It has been guided by evidence, consultation with stakeholders, and a concern with value for money – all sound public administration. But it is a review only of part of our health care funding, and touches only lightly on areas where the MBS interacts with other programs.  As contributors to Pearls and Irritations have pointed out, it is now a half-century since there has been a comprehensive review of health care financing.  We are still waiting.


Democracy and its threats

The truth gagged

Worldwide 387 journalists are currently detained in connection with their work, 54 are held hostage and 4 are missing. These are the headline figures in the 2020 annual roundup produced by Reporters sans frontières.

Five countries dominate the roundup – China and Vietnam in our region, and Egypt, Saudi Arabia and Syria in the Middle East. China tops the list, with 117 imprisoned journalists, including the Australian Cheng Lei. Britain comes in for special mention for its treatment of Julian Assange. Iran also gets special mention for executing Rouholla Zam, editor of the AmadNews website.

A new way in which journalists have been upsetting authorities has been to report on Covid-19 – presumably by revealing figures that governments would prefer to see suppressed.

RSF has also published the annual Press Freedom Index. Only a handful of European countries (plus Costa Rica and Jamaica) receive a high rating.  Australia is down at position 26, a slip since last year.  Media concentration, police raids on ABC and News Corp journalists, harsh defamation laws, and the Morrison Government’s attempts to obstruct coverage of environmental issues all come in for mention.

The UK sits at position 35, not only for its treatment of Assange but also for its aggressive treatment of journalists covering Britain’s occupation of Northern Ireland and threats against the BBC by prominent Conservative members of parliament.

Trump is defeated but Trumpism is stronger than ever

We might reasonably believe that Biden’s victory will cause the Republican Party to acknowledge its failures and return to its conservative centre-right values, but that’s not the view of Rick Wilson, one of the founders of the Lincoln Movement, interviewed by Deutsche Welle’s Ines Pohl.  (16 minutes)

Wilson says that Trumpism – an authoritarian, nationalist movement, based on obedience to the “dear leader” – has taken over the Republican Party. It is no fringe movement: 70 percent of republican voters, against all evidence, believe the election was stolen. That’s a base of 50 million upset and angry people. While their immediate loyalty may be to Trump himself, they will pledge their allegiance to whoever may take his place: their loyalty is to the values Trump represented, no matter how vague, inconsistent, and incompatible with religious and secular moral codes they may be.

While there are still some traditional Republicans, they are too few to prevail against Trump. The Republicans, now in thrall to Trump and his 73 million supporters, will do everything in their power to destroy the Biden administration, with a view to getting their people into the Senate in the 2022 Congressional elections. These people will show a presentable face – not the ugly face of the proud boys and other fascist groups we see on the streets – but their political philosophy will be on the extreme right, and if they cannot get their way within democratic institutions they will turn to other means.  And they will have support from parts of traditional media (Murdoch) and newer media (Facebook).

Both Pohl and Wilson know the history of the twentieth century. In this 15-minute interview that history is not mentioned explicitly but it is not far below the surface.

Similarly Jonathan Rauch, writing in The Atlantic, analyses what Trump has done to America.  He has taken over and transformed the Republican Party:

Many Republicans still believe in democratic norms such as the rule of law, the centrality of truth, the peaceful transfer of power, and the legitimacy of the opposition party. But Trump is not among those Republicans, and he has won astonishing acquiescence and support from his party as he has set about trashing democratic norms and principles.

America no longer has two political parties: rather it has two competing political philosophies, one of which has no commitment to or acceptance of democratic processes.

(Is one of America’s weaknesses its de-facto two-party system which means that extreme-right forces, rather than forming a new party such as One Nation or Alternativ für Deutschland, can operate only by taking over a previously centre-right party?)

Our 2019 election was far better conducted than America’s presidential election, but that’s a low hurdle

For the last few weeks Australians have been entertained – or horrified – by the US electoral system, with its inherent biases and its many methods of voter suppression in the hands of partisan state governments.

But not all is perfect in Australia, most notably our weak rules on political donations.  We won’t really know until February 1 next year who donated to the 2019 election, for example, and even then we won’t know much about who donated below the disclosure threshold of $13 800.

The Joint Standing Committee on Electoral Matters has released its quaintly-named Report on the conduct of the 2019 federal election and matters related thereto. It makes only minor recommendations on donations – recommendations relating to tax deductibility and siphoning.

Its greatest concerns are around pre-poll voting in the 2019 election – 24 per cent in inner metropolitan regions, and 32 per cent overall. These figures are high: we should remember that apart from the proliferation of UAP advertisements, in 2019 there was no pestilence hindering people from going to vote.  Without much explanation, apart from arguments about convenience to political parties, the committee has recommended that the window for pre-poll voting be shortened from 3 weeks to 2 weeks.

Its most contentious recommendation is that the Commonwealth follow the lead of New South Wales and have optional preferential voting. Labor and the Greens dissented.  (Given the rise of centrist independents, the Liberals’ support for optional preferential voting is surprising.) Labor and the Greens also dissented on a recommendation for voter identification.

The report does not make for easy reading. William Bowe (the Poll Bludger fellow) has a neat summary and commentary on his website.


Economic trends

How neoliberalism is giving way to crony capitalism

In Crooked Timbers John Quiggin has put together what he modestly calls some tentative thoughts about how crony capitalism is taking over from neoliberalism.

In terms of underlying philosophies the two appear to be far apart, but they do share an interest in tax cuts and deregulation. Referring to the way global corporations have learned to live with Trump – as they have learned to live with Putin – Quiggin posits the idea that cronyism and neoliberalism may also be linked through forms of identity politics.

How we get sucked into speculative bubbles

Why do intelligent people allow themselves to go along with manias of euphoric speculation – tulips in the Netherlands, the South Sea Bubble, America’s housing boom from 2003 to 2008, our own present boom in Sydney and Melbourne real estate?

Noel Walker’s Jolly Swagman is running a series of five podcasts with well-respected experts. These are:

Ed Glaeser, the Fred and Eleanor Glimp Professor of Economics at Harvard University who takes take us on a tour of the history of American real estate speculation;

Anne Goldgar, the inaugural Van Hunnick Chair in European History at the University of Southern California, who explodes the myth of the Dutch tulip mania;

Gerd Gigerenzer, director emeritus of the Center for Adaptive Behavior and Cognition at the Max Planck Institute for Human Development who will convince us that heuristics make us smart;

Vernon Smith, a Nobel Prize-winning economist, who will enjoin us to rethink the common understanding of speculative bubbles;

David Hirshleifer, holder of the Merage chair in Business Growth at the University of California, who will put it all together.

Ed Glaeser’s session – A nation of gamblers – has already been podcast.  Glaeser explains the dynamics of land speculation. Low interest rates, in themselves, do not result in speculative bubbles: they are probably a necessary but not sufficient causal factor to start a bubble. When they are combined with a credible explanation of why prices will rise, such as an extrapolation of past trends, a bubble can start to inflate, and eventually burst.

Follow Joe Walker’s website for more of these episodes as he mounts them.


Polls and surveys

Essential – we love Morrison and New Zealand but not China

Essential has another two-weekly report, with another month’s figures on approval ratings and preferred prime minister for Albanese and Morrison. Labor may be encouraged by the December movements, but when plotted they don’t show any break from Australians’ support for Morrison – they look more like sampling noise than trend.

Essential asks people to reflect on 2020, and assess whether it has been a good or bad year for different groups and entities.  Compared with previous years respondents think it’s been poor for “the Australian economy”, “small business”, and “the average Australian”. But it’s been not too bad for “your personal financial situation”, positive for “your workplace”, and for “you and your family overall”.

As a competent polling company, Essential would take care to get a representative sample covering “the average Australian”, which means there is a discrepancy between how the average Australian assesses his or her own situation compared with that of the more abstract “average Australian”.  We generally think we’re OK, but others aren’t. Possible explanations abound – maybe the media’s emphasis on hard luck stories has something to do with it.

The same poll asks people what they think will happen to the economy post Covid-19. People are only a little more optimistic than they were in April but 65 per cent of respondents think the economy will stagnate or fall into a long recession.

On proposed changes to industrial relations laws most people believe that anything proposed by the Coalition tends to favour “employers and businesses” rather than “employees”.  But they tend to be more prepared to view the present raft of proposals as favourable for people in casual work or those looking for work.

Essential has a set of questions asking about our foreign relations:

We think we should get closer to New Zealand, the UK, the EU and the US (in that order), but China is very much out of fashion. It is notable that affection for the UK is strong only among those over 55 – it’s possible that as we age we have more sympathy for the lame and the sick, even those who have inflicted harm on themselves.

We believe we have been the innocent victims in the trade disputes with China (62 per cent), but many of us (38 per cent) think we have provoked the Chinese Government. On whether Morrison should have publicly demanded an apology from China or have handled the dispute through diplomatic channels, there is a fairly even split of opinion, with older people and Coalition supporters being more in favour of Morrison’s public approach. (It’s unfortunate that Essential has presented these questions as binary choices, because the situation is surely more nuanced.)

In what would be welcome news to public health authorities, only 10 per cent of people say they would never get vaccinated against Covid-19. Of the other 90 per cent we’re split between those who would like to get vaccinated straight away and those who would wait.  Tellingly, 19 per cent of those who would vote “other” (i.e. not Coalition, Labor or Greens) say they would never get vaccinated.

ABS on how we have adjusted to Covid-19

In response to Covid-19 we’re doing more shopping online; if we’re using physical shops we’re more comfortable to use small shops rather than a large complex or mall; and over the last four months as the incidence of Covid-19 has fallen our emotional and mental wellbeing has improved.

These are the summarised findings of the ABS Household impacts of Covid-19 survey.

The survey reveals that some of the behaviours we adopted in response to Covid-19 may endure. Telehealth, for example, is probably here to stay.  When questioned on how life would continue after Covid-19 restrictions are lifted, many people said they would choose a slower lifestyle – more time at home, more time with friends and family, more time on domestic activities. People would like to spend less and save more: perhaps this is not just a good intention because the same survey finds that 45 per cent of Coronavirus Supplement recipients have used at least some of it to save or to pay down personal debt, and even 38 per cent of unemployment benefit recipients have used the “Jobseeker” supplement for similar purposes.

In worrying signs for public health, an increasing number of people believe “life has already returned to normal” – a response up from 10 per cent in July to 15 per cent in November, and, confirming what anyone can observe in shopping centres and on public transport, there has been a significant fall in social distancing.  (It would be revealing to run the survey again now after the Sydney outbreak.)

Nothing like a pandemic to make us trust government

After years of mistrusting government, it appears that in this year of pandemic we have become very trusting of our governments – Commonwealth and State.

In an advance notice of its regular Mapping Social Cohesion report, to be released on 4 February, the Scanlon Foundation Research Institute has issued a press release revealing some of the report’s key findings. Over the years up to 2019, only about 27 per cent of Australians trusted the Commonwealth Government “to do the right thing for the Australian people almost always (or) most of the time”, but in polls in July and November this year that proportion had risen to 55 per cent.  The same survey found strong support for lockdowns.

It has found a resurgence in optimism, particularly among younger people.

It appears that The Guardian has had access to some of the findings. Most telling is its time series of trust in the Commonwealth Government which was at its lowest in 2012 and has been rising since 2017.

Surveys on trust need to be treated with caution, partly because there are many possible interpretations of “trust”, and partly because perceptions of trust can be manipulated. We might ask how much mistrust during the time of the Gillard Government was stirred up by the Murdoch media. We might also ask whether the Commonwealth is taking credit for the strong moves by the Victorian and New South Wales Governments in response to the pandemic: we might recall that initially Morrison and most of the Coalition ministers were unenthusiastic about taking strong action, and very much opposed to strategies of elimination.  A less hard-nosed view is that this surge in trust reflects the decision of governments, Commonwealth and state, to pay more attention to experts and less attention to mates, lobbyists and rent-seekers., and that governments – mainly the Commonwealth – attended to their financial needs in a time of stress.


For the end of year

2.5 million years of evolution make it hard for us to enjoy our leisure

Humans have developed a “bizarre need to feel busy, or to feel their time is structured”, writes Derek Thompson in The Atlantic: How Civilization Broke Our Brains.  (Limited free access.)  He reviews the work of anthropologist James Suzman, whose recently-published book Work: a deep history, from the stone age to the age of robots, addresses the origins of that need.  He has studied the way the Ju’honsai people of Namibia and Botswana (“Bushmen”) developed a set of behaviours that discouraged wasteful competition and status-seeking which drive us to overwork.

Suzman’s work is not about romanticising the Ju’honsai culture (which by now has yielded to modernity) and he does not urge us to down tools and drink beer with our mates. Rather it is about how specialisation and the division of labour, which have brought about great advances in the human condition, have inevitably led to a culture that values competition and productivity.  We should be aware of these pressures that may unreasonably make us feel guilty about the pleasure of having no commitments and time to spare.

An ode to flashmobs – and other things we have missed in 2020

Among the many things we have missed this year are flashmobs. Here is one in Nürnberg in 2014 by the Philharmonie Nürnberg and the Hans-Sachs-Chor Nürnber performing Beethoven’s rendition of Schiller’s Ode an die Freude.


That’s all for 2020.  We’ll be back with weekly roundups on Saturday 16 January, unless something extraordinary happens in the meantime – Trump congratulates Biden on his win, the Morrison Government drafts a bill for a proper integrity commission, Labor surges in the polls, Dutton apologises for cruelty to asylum-seekers …


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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