Saturday, January 31, 2009

Turnbull's 'Reds Under The Bed' Scare

Malcolm Turnbull will be checking for commies (communists) under the bed tonight. His return to the 1950's was confirmed with his statement that:
"The Prime Minister has been writing a 7,000 word treatise about political ideology in which he appears to be abandoning his claim to be an economic conservative and instead seems to be channelling Gough Whitlam, high taxes, big government and socialism.
It is amazing at this point Mr Rudd is seeking to go back to the failed days of big government, Gough Whitlam.
Older Australians like myself will shudder at the thought that Kevin Rudd is
channelling the Whitlam era in his latest treatise."

The treatise to which he refers is an article written by Prime Minister Rudd in which he espouses the need for greater world financial and economic regulation to prevent further recurrence of the current global financial crisis, which sees much of the world in recession. Certainly, some of the financial actions of the 1970's Whitlam government were questionable, but to suggest that Prime Minister Rudd is "channelling Whitlam" is just baseless political scare-mongering. Mr Turnbull wants instant tax cuts for Australians - always politically popular, but the World Bank has indicated that more rapid injections of funds are required. Tax cuts are already scheduled, anyway, from 1-July.

Australians might well shudder at the thought of Turnbull seeking political expediency over rational economic thought. Prudent financial regulations are the real reason why Australian banks do not need the same levels of financial assistance as the bailout of US and British banks and mortgage lenders. Those prudential and financial regulations are entirely consistent with conservative economic policies.

A thought for MrTurnbull: neo-liberalism's 'laissez-faire' economics are not economically conservative, and are not financially conservative. They are irresponsible because they quite blatantly allow for financial crises such as we now have.


Robertson's Ministerial Irony

John Robertson, former head of Unions NSW, was appointed to the NSW Legislative Council (Upper House) when Michael Costa retired. Mr Robertson had strenuously opposed the privatisation of NSW electricity, won, and watched as Michael Costa, having lost, retired from politics.

Yesterday (30-Jan-09) Mr Robertson was sworn in as Minister for Corrective Services, Minister for Public Sector Reform and Special Minister of State , after just 2 months in Parliament.

The irony of his appointment was that he will now be responsible for the privatisation of at least some of NSW gaols; and will almost certainly have disputes with some of his union mates in parts of the Public Service over privatisation and job cuts.


Israel, Hamas To Fall Short Of Objective

Originally posted 12-Jan-09 at

Israel’s retaliative assault on Hamas has been going for 17 days, since 27 December 2008. Dr Muawiya Hassanein, the head of Gaza emergency services, says almost 900 people of Gaza have been killed, including more than 270 children. Some of those children died as Israel attacked clearly identified UN schools, whose GPS locations were known to Israeli commanders.

Israel stated its objective was to eliminate/destroy Hamas. This gives the Israeli military a chance to flex its muscle, particularly as its political leaders ignored requests from the UN and France for a peaceful resolution. The destruction of Hamas is a politically popular “ideal” among Israelis, but is unrealistic. Not even the partial genocide by Israel has been able to eliminate Hamas. Here we can branch into internal politics: Israel will have an election on 10 February 2009, brought about by Prime Minster Ehud Olmert as leader of the Kadima Party. His then Foreign Minister, Tzipi Livni, was unable to form a viable coalition government. There is much jockeying by various party leaders to be seen to be tough on Hamas, and the war certainly helps them. Hamas and Fatah are in limbo over how to manage the end of Mahmoud Abbas’s official term as President of the Palestinian National Authority (on 9 January)

There is justifiable international condemnation of the excessive response by Israel, and of the use of civilian areas for rocket launching by Hamas, but this war is about Israeli and Palestinian/Hamas politics, muscle-flexing, and religious & racial hatred by both sides. Israeli politicians will be looking to ‘ease-off’ and secure a tenuous, “victorious” peace before the elections in February. It will nevertheless have failed to achive its stated objective - the destruction of Hamas. For its part, Hamas will also have failed to achieve the destruction of Israel. Both sides have ignored UN resolutions, and approaches from France and Egypt.

The real tragedy surrounding the death of so many civilians and children, and the 3 Israeli civilians, is that no-one will be held accountable. No one!


PS This month (Jan-09) Israel said it would legislate to protect its politicians and military from any consequences of war crimes!

Take GitmoTerrorists - Bush

Originally posted 3-Jan-09 at

George W Bush, establisher of Guantanamo Bay (’Gitmo’) detention centre for suspected terrorists, has now asked Australia, and other countries, to take inmates, possibly terrorists, that he doesn’t know how to manage.

Acting PM Julia Gillard has said that Australia would formally consider requests on “a case by case basis”, but it is “unlikely” to take them. The former statement is diplomatic. The latter statement is designed to allay fears within, and backlash from, both the media and voters. It is unlikely that even former PM John Howard, often portrayed as President Bush’s foreign deputy and yes-man, would have agreed to the request. It is unlikely that the current Labor government would want to take any responsibility for the policies of the former Liberal Government.

The request form George W Bush has been made after the US elections, but before the inauguration of President-elect Barak Obama, who has promised to close Guantanamo Bay. President Bush says that many of the detainees can’t be returned to their homeland because they would be a danger (of treason, sedition or terrorist charges), yet Bush has not indicated that the US is prepared to take any of the people he detained. Today’s ‘The Australian’ (,25197,24867414-601,00.html)newspaper) reports:

“Major General John Altenburg, formerly an appointing authority to the US military Commissions - the body that oversees the prosecution of terror suspects at Guantanamo Bay - told The Weekend Australian that a significant number (30 or more) of former detainees had subsequently undertaken terrorist acts or had been recaptured on the battlefield. … it’s a fair comment to say, ‘we don’t want these people. Now we’ve got the burden of watching them and we don’t know whether they’re dangerous or not’ "

Yes, the US doesn’t want the detainees, doesn’t know how they’re going to monitor them, and Bush asks other countries to take them for him. His request seems to be driven by the usual tenet governing most US foreign policy - ‘what’s in our self-interest, and the self-interests of us politicians?’ It’s a tenet that might not be that unusual in international relations.

The problem for Australia, and other countries whose then leaders strongly supported Bush, and Guantanamo Bay, is that because of the support given by our then leaders, our countries also have some responsibility. Just what that is, and how we fulfil it, is a discussion we need to have.


Merry XMAS 2008

Originally posted 24-Dec-2008 at

Truepolitik wishes all people a Merry Christmas, and hopes that all people will work for a better world in 2009.

Truepolitik will return early in the new year.


Haneef Cleared, Andrews Thinks He Was

Originally posted 23-Dec-2008 at

An inquiry established by Kevin Rudd, and conducted by retired NSW judge John Clarke QC, has found no evidence to link Dr Mohamed Haneef to the attempted terrorist attacks in London and Glasgow which led to his arrest in July 2007. He is reported to be satisfied with the finding, and considering a claim for compensation.

Kevin Andrews, now a Federal Opposition MP, but then Immigration Minister in John Howard’s government, was cleared of making an “improper” decision. Nevertheless, John Clarke’s report says he was “mystified” about the basis of Mr Andrews’ decision. In his response, Mr Andrews said he acted in “the national interest”, and it was about “national security”. Consider the following:
  • the inquiry found no sound basis for Mr Andrews’ decision to cancel Dr Haneef’s (working) visa, and to deport him.

  • the phrases “national interest” and “national security” are NOT magic. They do not, and ought not, allow Ministers to use the phrases to make unfounded, or at the very least questionable, decisions. Their use by Mr Andrews is simply “spin” to justify his actions with the public, while avoiding any valid arguments to justify them.
Even if, as Mr Andrews claims, “The Australian people expected me to act”, that is not a justification for so doing! You would not want a doctor to use a particular treatment, just because ‘the patient expected me to do that’. That would not be evidence-based medicine. What Mr Andrews did was not evidence-based decision-making either.

Ministerial decisions need to be made on the basis of logic, reason, and verifiable evidence. Political advisers and media advisers (”spin doctors”) are too often a hindrance to that.


Friday, January 30, 2009

Turnbull To 'l'-Liberal For The Right

Originally posted 7-Dec-2008 at

Peter Costello has warmed a seat on the backbench since John Howard lost the Federal election in Dec 2007. He declined the position as Leader of the Parliamentary Liberal Party, & Leader of the Opposition. He had hoped to be offered a plum job outside politics, but the current international financial & economic crisis has closed many doors. Their motives could be: Costello to unseat Malcolm Turnbull; or some people are eying-off Costello’s very safe seat of Higgins.

Now the Melbourne Liberal “Establishment” want him to declare whether he will contest the next election. So to, do Wilson Tuckey and Tony Abbott, both of whom would like to unseat present Liberal, & Opposition, Leader, Malcolm Turnbull. Indeed, Wilson Tuckey is now suggesting that party-room votes on policy be secret votes. There is hypocrisy behind this. Firstly, he never dared suggest that under John Howard; secondly Howard used him occasionally to ensure Liberals openly voted as they should; thirdly, Tuckey knows that party-room votes should be open - from an organisational perspective.

Turnbull’s image among the likes of “ironbar” Tuckey and “mad monk” Abbott, and the Melbourne “establishment” are: he’s not “Establishment rich”, he’s neauveau riche; and he is seen as too ’small-l’ liberal. This ‘liberalism’ fits with (party founder, Sir Robert) Menzies’ views, but is an anathema to the extreme right of the Liberal Party, including Costello. Costello has previously admitted he would have made WorkChoices legislation more extreme. Julie Bishop, Tony Abbott, & Wilson Tuckey agree. Turnbull dropped the policy after the rout at the Federal election. Others do not want ‘liberalism’, or even economic reasonableness, to become or remain party policy. The far Right wants Turnbull to go.

They want the Liberal Party to return to the reactionary, pro-rich, White-Australia, anti-worker party it was under John Howard.


A Right Coalition Mess

Originally posted 7-Dec-2008 at

This week was the last week of Federal Parliament for 2008. There was legislation to be passed, including legislation on infrastructure spending.

That is where the Liberal & National coalition parties in Opposition came a cropper. The Coalition had proposed amendments to the bill, ostensibly to increase accountability. However, late on Thursday 4-Dec, they came to the pragmatic conclusion that if the bill did not pass, then there would be significant detrimental effects on the economy; and, worse, that the government could rightly blame them for jeopardising the economy, and thousands of jobs. The Senate will not sit again until 3-February. Practical politics said they had to approve the bill, or risk both an economic and a public backlash.

Liberal, & Coalition, leader Malcolm Turnbull, set the policy - the bill would be supported. Rather than support the bill, as they’d been told, 2 Liberals voted against it, 5 voted as per party policy, and the rest (25 of them) abstained, by waiting just outside the Senate doors, which were open. The National Party senators voted against the bill, and against Coalition policy. Such a principled stand on amendments to increase Government accountability was something never seen from Coalition Senators while they were part of John Howard’s government!

At a press conference, Opposition Infrastructure spokesman, Andrew Robb, tried to blame the Government for the Coalition’s disarray, telling ABC reporter Sabra Lane “They wanted to shift the blame for their dithering and mismanagement onto the Coalition“. Doublespeak! The Government proposed the legislation; it wanted it passed; the Opposition delayed it by proposing amendments, and Andrew Robb thinks the Opposition’s disarray is all the government’s fault!

The fact is, the Opposition, and Liberal Party senators, in particular, chose to abandon whatever principles they thought they had, and opted for political expediency. While-ever the Liberal & National Parties blame everyone else, including “the government”, for their own internal ructions and rebellions, they will have no chance of being a viable opposition, let alone an alternative government.


Thursday, January 29, 2009

Private Schools Just A Political Pawn

Originally posted 4-Dec-2008 at (without the images)

Yesterday, (3-Dec-08) Federal Education Minister, Julia Gillard, called on the Opposition to pass legislation in the Senate regarding funding for private schools in 2009. As with so much legislation now, from both the former Howard Government, and the current Rudd Government, the legislation is not free-standing. Embedded in much of Howard’s legislation, and now Rudd’s, is the sub-agenda. In this case, the funding is tied to delivery of a “new” national curriculum. The Liberal/National Opposition doesn’t like it, saying it lacks flexibility.

Yet in October 2006, then (Liberal) Education Minister Julie Bishop said: “We need to take school curriculum out of the hands of the ideologues in the state and territory education bureaucracies and give it to a national board of studies”. Again, in February 2007, Ms Bishop used an ACER report to ague for a national curriculum. In 2008, in Opposition as Shadow Treasurer, she opposes it.

Following publicly-reported statements from the head of the Independent Schools Council of Australia, Bill Daniels, and the National Catholic Education Commission’s chief, Bill Griffiths, the Opposition back-flipped, and allowed the Schools Assistance Bill to be passed.

It’s sad, really, that schools have become a political pawn for both sides: Labor to push through requirements for a national curriculum; and for the Opposition to use to try to score cheap political points, even abandoning their previous position to do so.


An Education Revolution

Originally posted 30-Nov-2008 at

It’s been a busy time. I’ve been busy - so busy I haven’t had time to post recently. NSW Premier Nathan Rees has been busy slashing - there has been a min-budget for NSW; and Kevin Rudd has been busy - overseas and at home. He even missed a fundraising dinner to celebrate his first year in office, because of the terrorism in Mumbai, India. Yesterday came the feelgood press spin - sorry, “press release” - about the $15b for states over 4 years from the COAG meeting. NSW gets $5 billion, over 4 years, in particular for health and education. It includes Kevin Rudd’s promised “education revolution” for computer availability for students in Yrs 9-12.

NSW Premier Nathan Rees announced that the Department (of Education & Training) IT section had developed a 3/4 size laptop model for computers. It could be similar in concept to Asus Eee-PC’s. They are tough and light, and more than adequate for “office” application and Internet use by students. School students, though, will not like them - they will no good for the games they stereotypically like, and their specifications are not “cool”. Nathan Rees has promised wireless access for all public schools; and that students will be allowed to keep their laptops at the end of Yr 12 - for laptops such as I have described, it is likely that the recovery, preparation & sale would cost more than the likely return from sale.

An education revolution? Spin, more likely.


NSW Government Woes Continue

Originally posted 15-Nov-2008 at

Back in February, I wrote that NSW Labor was set to supernova. ( Their problems included: asset sales; corruption (at Wollongong, and potentially within the government); lack of investment in infrastructure; health, especially hospitals.

The only thing that has changed, with Nathan Rees as new Premier, is that the problems have grown. Premier Rees has had to sack several new Ministers, including Matt Brown and Tony Stewart for inappropriate behaviour. Tuesday’s mini-budget has divided Sydney north & south / Liberal & Labor seats, public transport gets another kick in the teeth, created voter and media backlash, and Nathan Rees’s own Labor politicians are bordering on revolt. Rees intends to sell NSW Lotteries, an income generating asset, and revelations of the political machinations of parachuting Reba Meagher into the seat of Cabramatta, within hours of then member John Newman’s assassination in 1994. All these reflect a party that is dysfunctional, driven by self-interest, controlled by Treasury officials reluctant to release 10-years’ worth of surplus, and with internal government and party fractures.

There appears no way for NSW Labor to win the next election in 2011.

Tuesday, January 27, 2009

Obama's Challenges

Originally posted 8-Nov-2008 at

The world is recovering from Barack Obama’s historic win as US President-elect. As the first black man elected to govern from the White House, and first Democratic President (to be) since Bill Clinton he carries the hopes and dreams of many of his citizens, and, indeed, of many in the world.
Euphoria is an emotion that lasts such a short time - and it’s hard landing when it wears off. Obama had sufficient wisdom to tell people this when he reminded them that the US still has a President, George W Bush, and will do, until his inauguration on 20 January 2009. He has also moved to hose down expectations of rapid change - has asked to be judged on his first 1000 days, not the usual 100 days.

His challenges include:
  • the US economy, which has suffered the after effects of George Bush’s “laissez-faire” economic policies that verged on economic nihilism: there is no right or wrong, “the market” will fix itself. Of course, when the self-inflicted financial crisis hit, Wall St socialism became the philosophy of choice. President Bush was forced, basically, to pump public money into institutions which had based their financial decisions on “greed is good”, while abandoning financial prudence in their lending practices. As he did so, almost every Congress member and Senator due for election wanted money for their electorate, and the initial 3-page bill became more than 500 pages. Domestic financial and prudential reform will be a slow, difficult process, as will economic recovery.

  • George W Bush’s wars, especially those in Iraq and, to a lesser extent, Afghanistan, are unpopular. They are seen as unwinnable by many ordinary Americans, and their death toll on US service people are unacceptable to them. Bush’s advice that Iraq could become the USA’s next “Vietnam” - advice he ignored - is a popular perception. Determining if, when and how to withdraw will be a significant hurdle for Obama, and his military advisers.

  • global warming is still an international issue, even though it’s been pushed off the news headlines.

  • domestic health changes, including a universal health scheme were among his election policies. Many were ashamed when the world was shown images of aid organisations providing free medical and dental services in tents to US citizens in “middle America”; basic health services that ought to have been available to them.

  • the political revolving door- political appointments and the relationship with (wealthy) lobbyists is something he will have to tackle earliest. If he doesn’t take measures before and immediately upon his inauguration, the gravy train will roll on, and on, and on.
Despite the expectations born of euphoria, Barack Obama’s performance will not be radical change, but will likely be measured, and slower than many expect. That’s as it should be.

Bali Bombers And The Death Penalty

Originally posted 1-Nov-2008 at

Much of Australia, & other parts of the world, awaits the impending execution of the Bali bombers. Amrozi, Mukhlas and Imam Samudra remain unrepentant for the 202 innocent people they killed by bomb in 2002. 88 of those were Australian.

Australia has maintined its fundamental opposition to the death penalty, and its policy of non-interference where Australians are not involved. Many Australians, particularly friends, family, community support the death penalty imposed on these three men.

The following arguments are used to justify a death penalty:
  • deterrence: the concept that having such a severe penalty will make criminals think twice before acting.

  • retribution: society’s version of “an eye for an eye”.
It is entirely possible that neither of these is justifiable. I suspect that few criminals consider the likely consequences of their actions. Retribution, or punishment, might satisfy society’s, and individuals’ need fo revenge. Revenge is a very human emotion, often driven by anger. But is an argument driven by heated emotion a valid reason to impose a death penalty?

Nevertheless, with certainty of guilt and extreme effects on society, punishment by death could still be acceptable to some. Others will include the need for “civilized” humanity & the sanctity of human life to argue against the death penalty. I believe that, in cases like this, it is reasonable to argue “death as a penalty”. See also:

So, what’s your position - death penalty or no?

Monday, January 26, 2009

NSW Nats Delusional

Originally posted 24-Oct-2008 at

The NSW National Party is spinning its head over the recent by-election for the NSW seat of Port Macquarie. The Nationals’ Leslie Williams increased her vote by 14%, after the Independent, (& former National Party member) Rob Oakeshott quit, to run for Federal Parliament. Such a swing is common when personally popular Independents resign or retire from their seat. Christine Ferguson, from the NSW branch complained in a letter to the Sydney Morning Herald (Letters 24/10/08) that the Nats didn’t lose the seat, because they didn’t hold it. True. But they expected to win, and they didn’t win; so they lost. Don’t you love political word games!

Further exacerbating the Nationals’ glum mood was the fact that Liberal Alby Shultz, (Liberal member for the Federal seat of Hume) supported Peter Besseling as an Independent. He won; the Nats lost. Shultz also believes the Nats should be merged with the Liberal Party. Remember the Borg from Star Trek?
(Photo: “Resistance is Futile”: that’s how some in the Liberal Party view the proposed “merger”. NSW Nats Parliamentary leader Andrew Stoner had a hissy fit about Shultz, and wanted to “take him out the back and shoot him”. Stoner later tried to brush off the comment as a joke. Nats MLC Duncan Gay waded in with “he’s no longer a member of the Coalition” - Shultz will ignore it as the ranting, personal comment that it is.

In all, the National Party members are showing just how delusional and ineffective they are in NSW.


NSW Labor Savaged in By-Elections

Originally posted 3-Oct-2008 at

The NSW Labor Government has been savaged by voters in four by-elections yesterday. Ryde, formerly held by John Watkins, is now held by the Liberal Party. Ryde and Cabramatta recorded swings of about 22%; and ex-Premier Morris Iemma’s seat of Lakemba recorded a swing of about 13% against Labor. The ALP did not contest the seat of Port Macquarie, but it has been taken by a new Independent, much to the disappointment of the National Party.

While the Labor Party has been sent a clear message about its unpopularity, Federally, the ALP, and Kevin Rudd, remain popular. the challenge for the NSW Labor Government, led by new Premier Nathan Rees, is to reverse the decline in infrastructure, promote public transport, restore adequate funding for NSW hospitals and schools, while managing a budget which will have declining income in the current economic climate.

The only sources of funds for him will be: the Federal Government’s promised early infrastructure funds, increased State taxes, and borrowing. All are likely to feature in November’s mini-budget. Nathan Rees just hopes that voters will be happy that the “message” has been sent in 2008, and not repeat it in the state election in 2011. So will Prime Minister Kevin Rudd.


NSW Needs More Than Federal Funding For Nurses

Originally posted 3-Oct-2008 at

On 29-Sept-08, Prime Minister Rudd held a doorstop press conference at John Hunter Hospital, Newcastle (NSW). In it, he announced funding for an additional 1100 nurse training positions at Australian universities. That’s less than half of the 2600 applicants turned away in 2006. In NSW, Enrolled Nurse training will be changed under the recently-agreed award. EN’s are trained through TAFE and on-the-job training. Effectively NSW will train fewer nurses (EN’s), and some of that will be picked up by the announced federal funding of RN places. “For the future of our hospital system, we’ve got to make sure that we are training enough qualified nurses“, Mr Rudd said.

But there are other points to consider:
  • Training is one thing, but there is no extra funding for more full-time positions in hospitals. Mr Rudd would argue that that is a State matter, and it is, but it is also part of the problem. Unless the States have, or find, more money to fund employment positions, training more nurses will result in more part-time positions shared by more nurses who will work fewer hours.
  • The shortage is not just that there are no nurses, but in retaining existing nurses, and encouraging the return of those who have left. The poor image of some of NSW’s major hospitals is an impediment, and will only be corrected by significant investment in new infrastructure; new, or updated equipment; and staffing. Here, we are paying for sins of the past 13 years of Labor Governments in NSW. The current Government’s budget position is, at best, tenuous.
  • There is still a set of divided responsibilities between Federal & State governments. Health care might need a plan for a controlled Federal takeover of all health funding, with States delivering the services.
The accelerated $20 billion Federal funding for infrastructure, agreed to at the Perth COAG meeting, will help. States need to commit to recurrent funding for staff & equipment, too, and that’s a problem!


Farmer Wants ... A New Seat

Originally posted 28-Sep-2008 at

Pat Farmer is looking to quit Federal Parliament just 11 months after being re-elected by just 11 votes after preferences. He would be the fourth ex-Howard (Lib-Nat) Minister to resign after losing government in November 2007. He was recruited by John Howard for the Federal seat of Macarthur, centred on Campbelltown, near Sydney. There was considerable voter disenchantment with his decision to stop living in the electorate and move to the affluent North Shore of Sydney.

He is quoted in NSW Sunday papers as believing that he can’t do anything for his constituents by sitting on Opposition. He says he needs new challenges: that just happens to include looking at standing for the Liberal Party at the next NSW election – an election the Libs are expecting to be able to win. Oh – that would put Farmer back as member of a government. (image from

The concept that Parliamentarians can only serve their constituents as member of a government, and especially from the front bench, like Farmer, is an anathema to democracy: it implies that only government members can do things – possibly including “special” government funding or promises at or near election time (‘electoral bribes’ in most people’s minds)

His proposed resignation, and the other three, is a good argument for politicians and political parties having to repay public money from the Electoral Commission when they resign after losing government. Sadly, no government in Australia would introduce such ethical legislation: self-interest will prevent it, to their shame. If politicians are not prepared to serve as backbenchers, and in Opposition, they should not stand for election.


Rudd Canes Rees Over Economy

Originally posted 12-Oct-2008 at

Prime Minister Kevin Rudd has given a verbal slap to his Labor colleague, NSW Premier Nathan Rees. Mr Rudd has committed to pumping more than $10 Billion into the economy, including cash handouts to some just before Christmas. He knows it’s a short-term band-aid, but that it will mostly be spent over Christmas, helping to sustain at least the retail sector.

Nathan Rees, as Premier of NSW, is planning to significantly cut State expenditure in a mini-budget expected next week. Mr Rudd, is reported in the Sun-Herald to have said:

“On the state of NSW, I will say it in loud and clear terms: the Government
of NSW has to radically lift its game. … It is necessary not just for the people
of NSW but for the national economy.”

A significant reduction in NSW Government spending will only exacerbate the NSW economy, and therefore the national economy. What Mr Rudd didn’t say, and I will, is that:
  • NSW has had 12 successive budget surpluses, totalling more than $4 Billion. The money has been closeted in NSW Treasury.
  • While some of the surpluses were used to slightly reduce NSW net debt, it is entirely appropriate for NSW to draw down some of those surpluses, or even to borrow, to support the NSW budget over the next 2 fiscal years.
Such use will doubtless upset some Treasury officials - those who are economic rationalists who believe the money belongs to Treasury. It doesn’t, it belongs to the people of NSW, and the NSW Government ought to use it appropriately during economic slowdowns such as this.

NSW has also asked the Federal Government for $Billions to help fund infrastructure programs. Assuming it receives some extra Federal grants, Nathan Rees has an opportunity to use some of Treasury’s reserves, and Federal Government money, to benefit the people of NSW.

That would beat any glossy press release, or press conference full of image and no substance. It would also be a nice change.


Rudd Trumps Turnbull On Deposits

Originally posted 12-Oct-2008 at

Prime Minister Kevin Rudd today announced that the Australian Government is guaranteeing all deposits in Australian banks, credit unions and building societies for 3 years. Reports value this guarantee at about A$700 Billion. The guarantee is irrespective of the size of individual deposits.

Financially, this guarantee will help ensure that financial institutions continue to have a significant deposit base, desirable from a prudential perspective; that they can continue to meet the prudential regulations, and can lend to each other with more confidence. This inter-bank lending is important for fiancial institutions - it enables them to continue to lend to customers - and will help to maintain the economy.

The politics of this are:
  • Other governments, including the USA, Britain, European countries, and Iceland have already made similar guarantees. It ensures that Australian deposits will remain in Australia.
  • Last week, Opposition Leader Malcolm Turnbull was spruiking “his” idea of guarantees on bank deposits up to A$100,000. From a a free-market investment banker, it was pure political populism. Kevin Rudd’s proposal means that he has not only trumped the Opposition by including credit unions and building societies; but also ensures that he cannot be out-trumped on the $-amount. Late this afternoon, Mr Turnbull said that “Mr Rudd and I are very much of the one mind on these measures“. This is just a “me, too” statement: he knows Kevin Rudd out-flanked him on this issue, and doesn’t want to be left behind.
  • Prime Minister Rudd is also seen to be taking decisive action to protect Australians’ savings.

All in all, this deposit guarantee is a good move for financial institutions, with a side serving of political advantage for Kevin Rudd.


Banks, CEO's And Politicians

Originally posted 7-Oct-2008 at

Today (7-Oct) the RBA lowered the Australian cash rate by 1%. Late today, the 4 main banks indicated they would lower interest rates by 0.8%. The main focus of the media, and politicians, has been on mortgage interest rates. It remains to be sen whether the banks lower personal loan rates, and especially credit card interest rates. The Australian Stock exchange finished higher, rising rapidly after the announcement.

Meanwhile the Prime Minister Kevin Rudd and Treasurer Wayne Swan have been rather defensive of how much of the rate cut should/could be passed on by the banks, but still roll out the spin about “working families” and “good for business” - they could be Howard clones! The Oppsition, led by Malcolm Turnbull and Shadow Treasurer Julie Bishop can indulge in populist press releases calling for the “full interest rate cut” to be passed on to consumers. They don’t have to be responsible, and seem willing to abandon economic responsibility for a quick, populist, tabloid headline. Labor also did as much when in Opposition.

Australia’s “big-four” banks - CBA, NAB, Westpac & ANZ - are 4 of the 18 worldwide banks that have a AA credit rating. They have good market capitalisation & deposits, and so are well-placed to weather the global financial crisis. But they are not immune, and yet Malcolm Turnbull has called on the banks’ CEO’s to justify why they won’t pass on the full rate cut. As a former investment banker, he knows that is an unreasonable request, and that the banks and the Government can be painted as the “bad boys” when they don’t. Financial journalists, of course, have better understanding and report that banks have had to pay 0.75% more for money in the last 3-4 weeks - banks don’t want to lend to each other, or can’t because of they are overseas banks in parlous circumstances. They have previously been lending to Australian consumers at full rates money that they borrowed from overseas at minimal rates.

Don’t feel too much sympathy, though. They recorded record profits this year, except for the ANZ, which recorded a loss after writing down subprime securities, and they increased rates by 0.5% or more than the rises from the Reserve Bank. Thy will still make a significant profit, and their CEO’s will still put out their hands for a substantial bonus!


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