AWB and Cole Enquiry Aftermath

Much has already been written and analysed in the days following the release of Commissioner Cole's Enquiry into AWB Kickbacks.

The media has been full of Government and Opposition press releases and staged TV & radio announcements.

Some salient points to consider:

• Commissioner Cole described AWB as having a culture of deceipt and concealment.
• There were no criminal findings against politicians, nor of anyone within DFAT. Indeed, there were no criminal findings against anyone! Mr Cole has, though, recommended a task force to investigate possible criminal behaviours by 12 people, 11 of them from AWB.
• The Government claims to be relieved there were no findings against any Ministers - but that was not within Mr Cole's terms of reference. He DID find that DFAT had no policy or procedures to deal with allegations of AWB breaching UN sanctions. That is, a department, for which a Minister is responsible and accountable, had serious failings of competency.

There might well be a slow, quiet cleaning-out in Mr Downer's department (DFAT) over the next 12 months.

There is much angst from some politicians over the future of AWB and the export monopoly ("single-desk") licence it holds. Some suggest that the single-desk should go, others want it to remain in AWB's hands, while a few wnat it transferred, possibly to government hands. Certainly the following will be considered:

• the political ramifications of upsetting the close relationship between parts of the National Party and AWB
• the shareholder ramifications, including for families of some politicians, of removing the single-desk from AWB, or its power of veto over other companies exporting wheat
• the global environment of wheat trading, where the US and many other countries provide prohibitive subsidies

I think the single-desk should stay, given the global commercial practices in wheat trading and other countries' farm subsidies. AWB has shown itself to be not "fit and proper" to trade internationally, and a change of personnel, per se, does not change an institutionalised culture such as that described by Commisioner Cole. Until such time as AWB's board is replaced, and a legal and ethical business culture established and fostered over some years, it should be in government hands.

The Analyst

Time for P-Plate Driver Rule Change?

26 Nov 2006

Since August 2006 ther have been more than 14 young people killed in car accidents involving P-Plate drivers. The accidental death of anyone is tragic. The effect of a death involving a young driver &/or passengers in a car accident on communities, friends is devestating: the effect on parents and family, unimaginable.

This week, the father of one child killed on the north coast will meet with NSW Roads Minister, Eric Roozendaal, to press for changes.

Should there be changes? If so, what changes? Are legislative changes enough?

Some possibilities for Provisional licence holders suggested in the media include:

• restrictions on the number of passengers they can carry.
• restrictions on night driving (eg curfews)
• increasing the amount of experience (ie driving hours) before a person can gain a P-Licence.
  

Legal restrictions already include:

• a maximum speed limit of 90 km/hr for P1 licence holders
• zero blood alcohol level when driving

Certainly at P1-level, drivers do not have a great deal of experience. Despite any restrictions it is incredibly easy for any driver to drive any car too fast for the conditions, especially on unfamiliar roads. As licences, and cars, are gained, there is increasing peer pressure for "a drive". Passengers, especially those without licences, could be more inclined to suggest inappropriate behaviours, because they have even fewer skills and understanding of the real processes involved in driving. ie concentration, observation, anticipation, driving to conditions, as well as the coordination of accelerator/brake/clutch.

I believe that some restrictions on the number of passengers (eg not more than 2) could be appropriate. Also appropriate might be suggestions for parents of young drivers, so that they are not left to "fend for themselves" once they have a licence/car; and compulsory group sessions for learner-drivers on the effects and consequences of serious accidents and how to avoid them.

Whatever we, as a society, decide must NOT be based on a "political response" only. Our response must help to create and reinforce parental and community expectations about responsible, careful driving. ... For all our sakes.

The Analyst

Nuclear Power for Australia?

The Federal Government has released Dr Ziggy Switkowski's report on the feasibility of Nuclear power generation for Australia.

Some of the recommendations of the report include:

• the possibility of up to 25 nuclear power plants by 2050.
• their cost-effectiveness would rely on increased taxation on carbon-based fuels (mostly coal)
• the Federal Government would "have to" provide some money to (private) companies to build them
• Overseas workers would be needed, because we don't have the skills (at the moment)
• They could be situated near existing (coal) power stations
• The rate at which Australai contributes to global worming could fall, but there would still be significant increases in greenhouse gases.

Mining companies (esp those that mine Uranium) welcomed the report. I'm not sure about the coal mining companies, such as BHP-Billiton.

The report did not address the problems of nuclear waste disposal, a topic that has been contentious in the past.

Mr Howard is supporting the proposal to build nuclear power stations in Australia, and today, the Federal Energy Minister, Mr Ian Macfarlane, has said electricity prices will need to rise by as much as 30% !

The report looked at the economics of installing nuclear power stations. It dealt only superficially with the effects on greenhouse gas emissions, and still concluded that there would be a significant rise in greenhouse gas emissions, even if Australia installed 25 nuclear power stations. It did not properly consider the issues of mining, transport, enrichment, safety, environmental issues, reliability, waste transport and storage, reprocessing (to make plutonium) or security.

The report to the Prime Minister provided Mr Howard with the report he wanted to hear. We voters should be sceptical of any use of the report to justify nuclear power based on economics. Any environmental arguments put forward by Mr Howard or others are of dubious value.


The Analyst

Political Leaders - NSW & Federal

This week has seen events that could well question the leadership of Federal Labor Leader, Kim Beasley; and NSW Liberal Leader Peter Debnam.

National:

Kim Beazley has consistently rated poorly in polls asking who would be the preferred Prime Minister. Even if the polls are not accurate to 1% point, they indicate that the Australian voters prefer John Howard as Prime Minister. This weekend (18-19 Nov 2006), there has been speculation in the media about whether Kevin Rudd or Julia Gillard would make a better leader, and be more acceptable to voters as a preferred Prime Minister.

Of the two, I think voters would find Kevin Rudd more acceptable, on the basis that voters want a more "conservative" person as PM, and he presents himself that way. Because Julia Gillard is supported by the "Left" faction, she is unlikely, at this stage, to win the support of the NSW ("right") party machine. Or voters! They are more likely to support Kevin Rudd. Neither, of course, have the first-hand Ministerial experience that Kim Beasley has, but that seems to be of less importance than the "image". That is not an ideal basiss for voting in a democracy, but I believe it's how many people determine who gets their vote.

I believe that Labor cannot win a Federal election with Kim Beasley polling only 30-40% as "preferred Prime Minister". Labor needs someone else.


NSW

Peter Debnam though he was having a cracker of a week with his Parliamentary attack on (Labor) Attorney-General Bob Debus. That is, until the press revealed the likely sources of his information were (Federal) Senator Bill Heffernan and a Royal Commission witness. Unfortunately for Debman, the witness seems to be a convicted criminal with a history of vexacious allegations. In 2002, Bill Heffernan was one who used fake documents and Parliamentary privilege to falsely accuse Justice Michael Kirby of using COmmonwealth cars for inappropriate purposes. John howard forced Senator Heffernan to resign as Minister and to apologise to Justice Kirby.

That Mr Debnam relied on Senator Heffernan (given his previous history in false accusations) and, reportedly, a vexacious convicted criminal for political advice is downright stupid. This will be one test of his leadership.

He seems to have failed another test: having publicly stated that he was happy with sitting members, it emerges that a third sitting Liberal member has lost preseection. Whether or not the so-called "Religious Right" had a hand in this is less important than the fact that the Liberal Party seems to not follow its leaders stated wishes regarding candidates.

NSW voters take fright at the Liberal Party's lurch further to the right. There is a conservative (Labor) government in NSW. I'm not sure the voters want a more extreme right-wing government where the Liberal Party does not support its leader, or one that simply indulges in inappropriate muck-raking.

Peter Debnam might be not long in the job as Opposition Leader, especially if he loses the election.

The Analyst

Howard's Federalism Legal

"I am concerned at moves to increase the powers of the Federal Government, at the expense of the States." I wrote that in July 2006, when I established this blog. It still sits under the heading "About Me", at left.

On 14-Nov-2006, the Australian High Court dismissed an application by the States, Unions and other various parties, to have the Federal Government's WorkChoices legislation deemed unconstitutional, because it infringed upon State rights and responsibilities under Australia's Constitution. The legislation is seen as divisive, favouring employers and designed to drive wages down.

Justices Kirby and Callinan dissented. Justice Kirby said that the decision could allow the Federal Government to control any "corporatised body". The Sydney Morning Herald (http://www.smh.com.au/news/national/the-day-true-power-went-to-canberra/2006/11/14/1163266550283.html) stated that this could include schools (esp Private Schools), hospitals, Aged Care, higher education (eg TAFE and universities). All of these are the responsibilities of the States.

Prime Minister John Howard reacted by saying that "It's not the intention of the Government to interpret this decision as some kind of carte blanche for some massive expansion of Commonwealth power."

But it is. Look at John Howard's record on some matters:

• we now have the GST Mr Howard said we would "never, ever" have
• we have Mr Howard exerting undue influence in school education. For example, he has threatened to withhold money unless States include A - F grades on all school reports; he and his ministers have tried to influence the history that is taught in schools; he has withheld money from TAFE and universities unless they implemented, or at least offered, AWA's (ie forcing his Workchoices legislation onto bodies that did not come under direct control of the legislation)
• Workchoices brought wage fixing under the direct wing of the Ministry of Employment and Workplace Relations. ie it removed it from the independent judiciary to a government department, subject to Ministerial influence and control. The government now makes the law, and enforces it!
• He is currently increasing the Federal Government's role and influence in water, another State responsibility.
• Some of his ministers have expressed a desire to have more control over hospitals and State health budgets; and indigineous affairs, another State responsibility under the Constitution.

Ths is not to say that some areas would be better if properly managed by a Federal Government. But to have the power to simply enact legislation and remove State rights and responsibilities should concern every single Australian.

Governments and Prime Ministers will come and go, but that power will remain until protected by Constitutional reform.

Mr Howard is developing a track record of misleading, or at least not telling the voters, his intentions. We voters hould be very cautious about his statements.

The Analyst

Reserve Bank Inflation Forecast

Nov 2006

The Reserve Bank of Australia's (RBA) has indicated that inflation will stay at the top of its target range for some time.

WHAT IS 'INFLATION'?

• inflation is the increase in supply of money.
  
• Money is "created" by borrowing and spending. Borrowing can be by companies, by governments and by individuals. Currently, companies and individuals are creating the most debt money. Governments are borrowing little.
  
• Inflation also occurs because of some external factors. eg the increase in petrol prices; the soon-to-occur increase in farm product prices due to the effects of drought and short supplies. (think what happened to banana prices after the cyclone in Nth Qld)
  
• Economies run on supply and demand. If demand is high and supplies are short, then prices increase. This is the capitalist principle so beloved by the Federal Government.
  

However, the RBA has also signalled that interest rates could rise again early in 2007.

WHY?

It comes down to economics. Now it's a long time since I studied any economics, but I do remember the following:

• The Reserve Bank, independently of Government, sets Monetary Policy: that is interest rates. Interest rates can be used to control inflation by restricting the growth in money supply. ie as interest rates rise, we borrow less.
• Traditionally, Australia has had strong demand in property/housing and retail spending. This is now compounded by a rapid increase in business activity, especially in mining and minerals sectors.
• Monetary Policy (interest rates) is a blunt instrument against inflation, because they target everyone across Australia. But not "everyone" "everywhere" needs higher interest rates: the rural and farming sector, beset by drought and bank overdraughts do not need them to curtail spending; nor do small businesses. City property investors (at least those looking for a quick buck by borrowing); and inveterate retail spenders on overseas goods, DO.
• Successive "tax cuts" have produced more spending than the value of the tax cuts. That is, we created more money and inflation than the tax cut.
• The Federal Government sets Fiscal Policy: this is how the Federal Budget is designed to help adjust the supply and demand side of the economy. It can do this by adjusting the levels of Government borrowings, spending and by adjusting the amount of money in the economy through tax policy.
  

Recent tax (fiscal) policy has been to dump billions of dollars into the economy, knowing that personal spenders would increase the amount of money in the economy by more than the tax cuts. No wonder we are bordering on an inflation problem. No wonder the last 8 movements in interest rates have been interest rate rises.

Interest Rates must change when fiscal policy is deficient or unable to cope with the current economic climate.

Perhaps the Federal Government's economic management has not been quite as good as they would have us believe!

The Analyst

NSW Labor Government Crisis

The news that NSW Labor Minister for Aboriginal Affairs, Milton Orkopoulos, has been charged with child sex and drug offences has led to his dismissal from the Ministry and the NSW Labor Party. Fair enough - no party wants to be tainted with such a brush.

Mr Orkopoulos is entitled to a presumption of innocence until after his court case, due to start in January.

However, he is the second Minister that has been sacked (Carl Scully was the other) and a third has had four speeding fines in his Ministerial car.

It seems that documents tendered to Newcastle Court this week suggest that a member of Mr Orkopoulos' staff reported allegations to a (Parliamentary) Labor Party member more that 12 months ago. If true, Mr Iemma has promised to sack the person involved. I suggest that is not enough: such a person should also be reported to the police. A charge of complicity in the child sex and drug matters, or conspiracy to pervert the course of justice, would be appropriate.

The number of NSW Labor Ministers behaving badly, Mr Orkopoulos's charge and court appearance in January are bad enough. With the State Election due in March, allegations that someone else knew, and did nothing, could be the "smoking gun" that brings down the NSW Labor Government in March 2007.

The Analyst

Water Summit Held

7-Nov (Melbourne Cup Day)

The water summit involving NSW, SA, Queensland and the Prime Minister was held this morning.

My previous Posting was at: http://truepolitik.blogspot.com/2006/11/water-summit-
november-2006.html

The results are:

• "permanent water trading" will be allowed from 1 January 2007 (brought forward from 1 July 2007). But will this help?? Minimally, if some farmers decide not to exercise their water rights this year. Will it help in the long term??
  
  
• SA Premier Rann announced that SA will build a wier at Wellington to supply Adelaide if (when?) water runs out. Wiers hold minimal amounts of water, perhaps a week on water restrictions.
  
  
• Drought relief for small businesses in drought-affected areas. This is a welcome move, since regional centres have business affected by farmers lack of spending money: for necessities, for farm equipment, for farm chemicals, for seed and feed.
  
  
• An inquiry led by the Dept of the Prime Minister and Cabinet, and CSIRO. A report is due within 12 months.

The Summit has produced a morning's woth of talk, the promise of relief for some small businesses and the promise of a report. At least the politicians grasp the magnitude of the problem, after listening to scientsts report that this could be a 1-in-1000-year drought.

The net effects? Very little. The drought relief for small businesses is socially worthwhile. Water trading will do little in times when there is little water, and would be largely unnecessary in times of plenty. There was no proposal to release water from the Snowy Hydroelectric Scheme: like the Murray-Darling System, it has little water (less than 20%). In fact it has the least amount of water since its completion in 1973!

An inquiry will produce a scientific document, possibly corrupted to suit government policies. (remember that there has been prior controversy about Government influence on elements parts of CSIRO operations) By controlling the inquiry from his Department, The Prime Minister could just have taken control for water from the States. The Constitution gave the States the responsibility.

The Analyst

Water Summit - November 2006

John Howard and his adviser on water, Malcolm Turnbull have called a "crisis" meeting with 3 states, NSW, South Asutralia and Victoria. The meeting is to discuss " ...actions to provide the best possible outcome for water users at this difficult time" and that the meeting would look at options for water delivery to towns during the current sever drought.

QUESTION: Why was not Queensland not invited? Its townspeople and farmers are also affected. Could it be that the headwaters of the Darling River are in SE Queensland and that those headwaters have previously had large amounts of water retained by the owners of cotton farms. Cubbie Station owners drew most of the floodwaters from another farm (Kelso), allowing it to operate with water not needing a licence, but which certainly affected flows into the Darling River system. The owners also made political donations to the Queensland National Party, including Senator Joyce. Mssrs Howard and Turnbull would not want water discussions involving Queensland!

Malcolm Turnbull stated that the meeting would consider solutions for all water users - town and horticultural. Horticultural crops, including grapes and olives need fairly constant supplies of water; and other crops such as cotton and rice need large amounts of water. I do not know how cotton farming is viable in traditionally dry-land areas such as Bourke. The last time Bourke had sufficient water for cotton farming was when it was flooded in 1990.

As part of the summit, I hope that our leaders also discuss the medium and longer-term viability of particular crops and land-use within the greater Murray-Darling Basin! I suspect they won't, because that would be politically unpopular. Popularity, not good policy, is driving politicians of both sides, and that is a shame for our democracy.

The Analyst

PostScript
Sunday afternoon's TV Media were asking about why Queensland had not been invited.
By Monday morning, Mr Howard had invited them, saying it had been an oversight not to invite them.

Federal Budget 2007

November 2006

The Federal Budget will be delivered in May 2007, an election year.

The following are my predictions about some of its politically-motivated inclusions:

• re-announcement about changes to tax on superannuation. these were announced in May 2006, but won't become effective till July 2007. They will be announced again.
• More money for skills training, to address the chronic skills shortage. It is unlikely that TAFE will benefit by any significant amount, despite its obvious role.
• More money for education
• More tax relief for individuals: standard election-year practice, but they might not be implemented until 2008. We will also be reminded of all past tax cuts.
• Easing of harsh welfare policies: this might not be in the budget, but otherwise announced
• more money for the military services: recruitment and equipment
• more money for , and greater involvement in, water issues. (a State responsibility)
• more money for health, although not much of it will be for public hospitals and other areas of State responsibilities.
• The Treasurer has already foreshadowed that the mining and energy boom is starting to sag, and this will adversely affect economic growth, tax revenue, export earnings (& balance of payments). Expected growth will be announced at the top end of estimated ranges, so it looks good.
• Money to combat gloabl warming: - more funding to energy companies under the banner of global warning
  

The sale of Medibank Private will either occur early in 2007 (February - April) or the sale will be quietly dropped. John Howard will hope it is forgotten by Opposition parties.

See also my posting about the election: http://truepolitik.blogspot.com/2006/10/federal-2007-election-
preparation-nov.html

The Analyst