Howard's Bananas

This week, Prime Minister John Howard was quoted in the press as saying ...

"It's [the Reserve Bank] got to look at the underlying inflation rate, it's got to realise in relation to the bananas … that will flow through and disappear."
http://www.theage.com.au/news/national/look-beyond-bananas-pm/2006/07/27/1153816320725.html
Mr Howard's motivations here are twofold:

1. he wants to influence the Reserve Bank's decision-making at its monthly meeting on Tuesday 1 August. The Reserve Bank is (supposed to be) independent of the Federal Government, and sets the interest rates according to economic indicators, forecasts and target rates of underlying inflation.
   
   It is inappropriate for Mr Howard, Treasurer Peter Costello, or any other government minister to attempt to interfere with the independence of the Reserve Bank.
   
   
2. Yet Mr Howard has a vested interest (pun-intended) is so doing. He does not want interest rates to rise, because he fears the electorate will hold him responsible. By using bananas as a scapegoat, Mr Howard is trying to deflect attention from other causes. Among this is the significant rise in petrol prices. Rising petrol prices have both simple and compound effects. The simple effect is that the weekly cost of living has increased as people spend more to maintain their current fuel useage. The compound effect is that the rising cost of fuel affects the delivery costs and prices for every good sold in Australia.

Simply removing the cost of bananas will not have any significant effect on the CPI and it is deceptive of Mr Howard to try to trivialise the cuases of the CPI figure, and to blame on "bananas".

The Analyst

Interest Rates, the Reserve Bank & Governemnt

Prime Minister John Howard claims that the most recent CPI increase (inflation at 4%) is outside the government's control, and that the Reserve Bank should look at NOT raising interst rates next Tuesday.

There are two problems here:

1) Mr Howard claims that low CPI & interest rates are to his credit, but that higher CPI figures are not the fault of his government.

Certainly governments cannot control the weather patterns (gloabl warming is a separate social issue for the world) or high prices of crude oil, which are governed by the insatiable demand by heavily industrialised nations and rapidly developing nations. However, Mr howard is a proponent of going to war inthe the Middle East. The wars in Afghanistan and Iraq, the support of the US and other nations, including Australia, for Israel's relentless attacks on Lebanon all contribute to instability in the Middle East and market nervousness about future oil supplies. This is not an argument about whether the military actions in the Middle East are justified; just that the military actions DO create market nervousness and DO contribute to higher oil prices.

To the extent that Mr Howard supports the war in the Middle East, he has certainly contributed to the poor CPI figure.

He has further claimed in the past that previous Labor governments caused high interest rates, but he tells us and his nervous backbenchers that it's not his fault. He really can't have it both ways.

2) The Reserve Bank is an independent body. It is inappropriate for the Prime Minister, or any other member of Government, to tell the Reserve Bank how they should manage Australian interest rates.

The Analyst

Recycled Sewage? Not Likely

As the town of Toowoomba, in Queensland, will very shortly vote on a proposal to install a method to recycle the water from its sewage treatment plant. The city of Goulburn in NSW is considering a similar scheme.

Like many political arguments, there is a level of scare-mongering, deception and ignorance; and perhaps some people are bing disingenuous. Some of NSW more prominent State politicians have been at teh forefront. One said words to the effect that "Sydney people will never accept recycled sewage." They might not accept sewage, but Sydney residents drink recycled water that comes from parts of the Blue Mountains, and from cities and towns in the Southern Highlands. These places collect their sewage, treat it, and release potable water into the rivers that feed Sydney's water supply.

It is true that some proposals will mean that water is removed from sewage, filtered, treated and returned to the water supply. From the water supply, water is again filtered and treated so that it is potable (fit for drinking).

This is not the same as saying that "recycled sewage" will be put back into the water supply; nor would consumers be drinking "recycled sewage". They are clearly untrue statements, but they are used as arguments by some people against the concept of water recycling. One hopes they never travel overseas, especially to England and Europe, where water recycling is much more common.

In a continent as dry as Australia, experiencing the perennial water shortages as we do, it is inconceivable that people use emotive, invalid arguments to not accept properly treated, recycled water.

The Analyst

Beazley's Uranium Stance

Federal Opposition Leader Kim Beazley publicly announced that the ALP should scrap its policy of 'no new uranium mines'. i.e. leave it at 3 mines only.

Mr Beazley has, in some respects nailed his leadership to the mast.
Uranium mining and export has traditionally caused considerable public and private debate among members of the ALP. There are some, like Anthony Albanese, who will publicly decry any change in policy.

Whether the policy change is good, warranted, or otherwise may become less relevant than whether the ALP can maintain discipline and conduct sensible argument. Factional divisions andassociated politics could spell the end of any policy change.

If that happens, the ALP will have rebuffed Kim Beazley's stance on the policy and his leadership credibility will suffer a significant blow: one from which he might not recover.

Mr Beazley has, indeed, nailed his ALP leadership colours to the mast.

The Analyst

James Hardie Asbestos Compensation Fund

The Federal Government has allowed James Hardie a tax deduction for payments into the James Hardie Asbestos Compensation Fund.

I am not a lawyer, let alone a tax laywer. However, the payment of compensation seems to me to be something other than an ordinary tax-deductable business expense. The Federal Government has not, and is resisting calls for, tax-deductability on earnings of the Compensatin Fund.

My understanding is that the fund was not established as a charity, partly to ensure that James Hardie met its legal contributory obligations under the negotiated settlement. In any case, it is NOT a charitable fund and any tax on the fund's earnings does not excuse James Hardie from fulfillings its legal laibility to compensate victims of asbestos in its products.

I believe the Federal Government is right in denying tax-free status on the fund's income and this does not diminish James Hardie's obligation to its victims. IT clearly has such an obligation and not granting the fund tax-free status does not deny the victims access to to, or reduce James Hardie's obligations to, compensation. IF James Hardie claims it is unable to meet its legal commitments, then an application should be made to wind-up the company and distribute the proceeeds of its sale. It should not be trying to reduce its financial commitments to the victims by claiming both business tax deductions AND tax-free income from the fund.

The Analyst

Australia as an Energy Superpower

This week, the Prime Minister, Mr Howard, stated that he wanted Australia to become an energy superpower, by exporting more coal, petroleum and uranium.

On the surface this might seem a good thing. But we voters also need to consider that there is an election next year and that the Prime Minister will have his own agenda for floating this idea at this time.

Some facts:

1. Australia's Currrent Account Deficit (the amt of our money we send overseas after allowing for exports and imports) is growing RAPIDLY.
2. Despite a strong world, and Australian, economy the A$ simply does not increase in value.
3. the Australian economy derives less than 10% of its production from manufacturing, almost teh lowest figure amongst developed nations. New Zealand's manufacturing sector contributes more, as a %, to the NZ economy than does Australian manufacturing.
4. Australia's net energy and resource exports are booming, especially driven by the demand from a fast-growing Chinese economy. Yet our deficit still grows, partly from increases in dividents and profits from overseas companies, and significantly from consumer-driven demand for imported goods. (partly reflected in the huge growth of personal credit debt)
   

Mr Howard's suggestion that Australia should become an "energy Superpower" could be because:

1. the Australian government is concerned about the size of the (Current Account) deficit, but is unable to control it. Significantly reducing consumer demand would have a serious effect on the economy, possibly pushing it into recession.
2. this could be seen to enhance his voter perception as an economic "manager".
   
3. Mr Howard has re-started public debate about further use of uranium, including its use in Australia. Public perception of financial benefits could sway public opinion on the matter.
   

In fact, the suggestion might help to cover some shortcomings in the Federal Government's economic management.

Question: why would we export more petroleum, when we are a net importer?

The Analyst

NSW State Plan

NSW Premier, Morris Iemma, is calling Department CEOs to his office to develop a 10-year plan, and has employed exteranal consultants to help.

Have successive State Planning Ministers and Premiers been taking salaries and perks under false pretences?

Many voters would have thought that the NSW Government would already have plans for the State of NSW!

It looks like he Premier, his Ministers and backbenchers need opportunities for: press releases, photo opportunities and time to "press the flesh" with "good news".

What's that - oh!!! there's an ELECTION next March. Of course.

The Analyst

Longer Work Hours and IR

Today's newspapers (21-July-06) report findings by the Australian Bureau of Statistics.

A report called "Australian Social Trends, 2006", was released by the Bureau of Statistics. It reports that fathers in full-time jobs with children under 15 are working an average of 42 to 43 hours a week. One-third are working more than 50 hours a week, while 16 per cent put in 60 hours or more. Further 50% of fathers work overtime (paid or unpaid), IT was 46%in 1993.

Further reports indicate that the Australian Chamber of Commerce and Industry has discussed witht the Federal Government the following:

• removal of the 38-hr working week
• ability to "cash-out" all annual leave in Australian Workplace Agreements.
• reduce annual leave

The Federal Government has previously criticied the former Labor Government (10 Yrs ago) for being too close to the Unions. If it is unreasonable for a Federal Government to be "in bed with the unions", it is also unreasonable for it to be "in bed with employers"!

At the same time that The Federal Government and Employer groups seek to lower wages, an organization like Macquarie Bank spent $143 million just on senior executive salaries last year. Those salaries grew faster that the rate of profit increases, and MUCH faster than inflation.

Australian politics can be a game of hypocracy.

The Analyst

Opposition Leader Tells Police Who to Arrest

The NSW Leader of the Opposition, Peter Debnam is reported in today's press (20-July-06) as saying that on [the day after the NSW election in 2007] he would, if elected, direct NSW police to arrest 200 "Middle Eastern thugs" whose car registrations are known.

Mr Debnam seem blissfully unaware of the concept of "Separation of Powers", as was a former conservative Premier of Queensland. The Separation of Powers concept is really very simple: there are 3 arms of the State: Legislative (politicians), Executive and Judicial (police, courts & legal system). Each of these is independent and not subject to interference by the others. While this concept appears to not be included in the NSW Constitution, it has operated in practice and is a cornerstone of strong, liberal democracies around the world.

The Separation of Powers ensures that power is NOT centralised and subject to corrution by a very few politicians or government.

This rather extreme concept of political activity in the arrest and trial of citizens has been mostly seen in totalitarian states, of both extreme left and right, not in the Commonwealth of Australia.

Much has recently been written about the "religious right" in NSW politics, and the Liberal Party, in particular.

Is this type of extremist statement by Peter Debnam a reflection of the rise to power of the new right within the NSW Libearl Party? I think voters should be very wary.

The Analyst

Bonanza for Top Teachers

There is a proposal to pay a "bonus" to top teachers in Australia. Current Australian politics dictates that the Federal Government believes the bonus should be paid based on (annual) results of students in standardised tests.

There are serious flaws with this train of thought:

1. it assumes that all students in different schools, in different states in a given year are equally able to achieve
2. it assumes that different students, in different years, from different backgrounds, with different motivations and in different environments are all able to achieve the same results
3. it assumes that the ONLY determining factor in student achievement is the quality of teaching.

While the standard of teaching does undoubtedly affect the quality of learning, it is clearly NOT true that the teacher is the only determinant of student results.

If extra pay were allocated to teachers who meet some standard qualities assessed and determined independently of the school, that would be a more reasonable basis for a "bonus".

Question: does the Federal Government have another agenda? upset teacher unity? create two classes of education for voters' children? ?

The Federal Government and its Education Minister, Julie Bishop, do not understand the nature of teazching and learning. The public should resist the simplistic arguments presented by the Federal Government.

The Analyst

Israel/Lebanon/Palestine

Last week John Howard was reported as saying that "Israel has a right to defend itself."

This is undoubtedly true, but the comment is important because of what what it did not contain. It did not say that Israel was justified in its offensive against Lebanon or Palestine.

The politics of this confilct include:

• Israel has a "new" Prime Minister, elected earlier in 2006. He wants to be seen by Israel as a "strong" leader who will not give in to Muslims.
• Palestine has a new government, the militant, anti-Israel party, Hamas. It wants to be seen as not softening now it has gained electoral legitimacy.
• George Bush, among others, has been anti-Hamas and has little or no real policy for working with Hamas to achieve peacful outcomes for Palestinian and Israeli people.
• Hezbollah, backed by both Lebanese and Syrian governments, is anti-Israel.

That is, the politics are of racism, religious bigotry and hate.

These are not politics that will lead to peace for anyone. They are politics for the benefit of the political and military leaders, not the people. Until they change, they condemn their own men, women and children to live a life of inhumanity caused by politicians and military leaders, done in the name of hate.

The Analyst

John Howard's 12 yr-old "Deal"

This story was broken by Glenn Milne of "The Australian" newspaper, a journal of Rupert Murdoch, a US citizen.

News Ltd papers, including 'The Australian' have periodically run articles or editorials suggesting that Prime Minister John Howard could/should retire, and has referred to Peter Costello as 'Liberal leader-in-waiting'. November/December 2006 has been mentioned a likely or possible time for such an announcement.

Voters should ask themselves several questions:

1. What's in it for Rupert Murdoch, media baron?
2. Why did Ian McLaughlin, former Minister and supporter of John Howard, suddenly decide, after nearly 12 years, that a leadership deal by John Howard should be made public?
3. Would Peter Costello be a "better" leader for News Ltd? for Australia?
   

John Howard has placed his leadership in the hands of "The Party" - politik-speak for "I've got the numbers, and you don't." John Howard might well be the best politician the Liberal Party has, but ...?

The Analyst

Federal/State Politics: COAG Agreement

What’s in it for the States?

More money for:

• mental health; diabetes; funding for more doctors & nurses.
• A perceived ability to negotiate a “better deal” for their state from the Commonwealth

For NSW:

• more money for programs that can be announced soon; and again before the election next March.
• A chance to announce that a new COAG Committee will look at adjustments where states (think NSW & VIC) are spending disproportionate amounts of money compared to other states on a few selected areas. NSW & Victoria have long complained of overly heavy subsidies by them to other states.

What’s in it for the Federal Government & John Howard?

• More sidelining of Peter Costello – Howard is seen as being better able to “work with” the States. Costello has previously stated that his view of Federalism should concentrate more power with the Federal Government.
• Reducing the ability of the Federal Labor opposition to capture votes by promising to “improve” Federal-State relationships. (an election is due in the next 16 months). Never mind that the current health funding model still encourages “cost-shifting” of health expenditure between both the Federal and State governments.

The Bottom Line

It's a chance for politicians to put as much "spin" (gloss over underlying problems) to suit their own political agendas leading to the next elections at State & Federal levels. We voters need much more detail than the nice words said in front of the TV & newspaper cameras.

The Analyst

Mission

Our Mission is to

1. analyse selected events covering:
• Australian National politics
• NSW Politics
  
  The reason for doing this is because too many voters and media outlets accept politicians' statements at face value, along with the sometimes token analysis by tabloid media. Indeed, in recent times, commercial television "current affairs" in Australia has become nothing more than tabloid TV.
  
  
2. publish other selected thoughts about Australian current affairs.
   

The Analyst