O’Farrell Finds ‘Black Hole”

(This post has been updated on 30-March))

New NSW Premier, Barry O'Farrell, has released the typical new government "we found a black hole in the budget" media release.
It was not unexpected - almost every new government does it, whether Coalition or Labor.
Mr O'Farrell released a media statement headlining a "$4.5 Billion black hole".
But where did the $4.5 Billion ‘black hole’ come from? The answer lies in events since the last estimates were released.

• the last estimates were released on 15-Dec-2010 and are shown below. the ‘latest estimate’ is reportedly what was given to Mr O’Farrell. The full document is at http://www.treasury.nsw.gov.au/?a=19225 

Budget Results	2010-11 $m	2011-12 $m	2012-113 $m	2013-14 $m
1/2 Yearly Review (Dec-2010)	167	176	432	129
Latest estimate		204	-405	-1,200
Change from 1/2 Yearly Review		28	-837	-1,329

 

Even with the updated figures the estimates give a TOTAL deficit for the period 2012-14 is estimated at $2.15 Billion, not the $4.5 billion quoted by Mr O’Farrell, which includes a new treasury guesstimate, the basis of which is  unknown. Budgets for 2011-12 – 2014-15 will be controlled by Mr O’Farrell and his Treasurer, expected to be Mike Baird.

• The estimates only go to 2013-14, BUT … there’s always a ‘but’ … Mr O’Farrell has included a guestimate for 2014-15, not included in the forward estimates by Treasury. The ABC reported

… Claire Curtin from Standard and Poor's says there is no threat to the state's credit rating at this stage.

"A significant proportion of the $4.5 billion number is both outside our outlook horizon and the forward estimates period," Ms Curtin said. …

http://www.abc.net.au/news/stories/2011/03/29/3176184.htm

• The new budget report will account for the ‘worst-case’ – it’s what Treasury does for incoming governments.
• It also accounts for the result of Labor’s sale of publicly-owned electricity assets, the extra expenditure involved, including developing a coal mine for a private company, and the subsequent loss of income from them. Former Labor Treasurer, Eric Roozendaal, is responsible for that.

All up – I do not doubt there is a hole in the budget, but I am not sure it’s a big as BOF said.

Perhaps, in the spirit of new ‘accountability’ promised by Mr O’Farrell, he might release the basis of his budget deficit in 2014-15, approximately 42.4 Billion, by his reckoning. Everyone’s allowed one dream per day – I guess I just had mine.

John

Liberals to Rule NSW

Yesterday's election saw the Liberal-National Parties win government in NSW. The Labor Party (ALP) has governed for 16 years. Barry O'Farrell will be the new Premier of NSW. Outgoing Labor Premier, Kristina Keneally, conceded defeat and congratulated Mr O'Farrell last night.

The result has been largely a foregone conclusion. Even before the election campaigning started, polling showed that voters had deserted the ALP. The following table shows 2-Party-Preferred voting intentions of NSW people surveyed from Dec-Jan to March this year.

Month	ALP	Coalition
Dec - Jan	39%	61%
Jan-Feb	38%	62%
March	37%	63%

The figures I saw last night indicated an approximate distribution of 36% ALP and 64% Coalition
Newspoll (http://www.newspoll.com.au/) states that:

These surveys were conducted on the telephone by trained interviewers among voters throughout New South Wales. Telephone numbers and the person within the household were selected at random. The data has been weighted to reflect the population distribution of New South Wales. The latest survey is based on 1,000 interviews among voters. The maximum margin of sampling error is plus or minus 3.1 percentage points

That means that, despite a small difference in actual numbers, the polls have essentially showed no statistical change between January and polling day. This means that the election result was not influenced by either leader, nor by their party advertising. Any claims by the Coalition that its campaign advertising about a carbon tax influencing the result will be, at best, ‘spin’. Spin really refers to political false advertising.

The Coalition, as of this morning, expects to have 66 of 93 seats. Of those 66 seats, 17 are held by the National Party; 49 by the Liberal Party. The Liberal Party could govern in their own right. It remains to be seen how much ‘weight’ they will throw around in the joint party room on Monday morning!

Kristina Keneally has indicated she will not stand for the leadership of the ALP in Opposition, saying she believed the new leader should be unencumbered with decisions of the past. Policy and decisions have been made by a few, with their political interests being the driving force. With as few as 19 or 20 Members of the Legislative Assembly, and no new members, the ranks of potential leaders are thin. They include:

• John Robertson, who moved from the Legislative Council (LC) to the Legislative Assembly (LA). He has been the most widely mentioned in the media. He has “baggage”. As representative of Unions NSW, he vigorously, and vociferously, opposed the sale of NSW electricity assets. He was ‘given’ a seat in the LC by the ALP party machine, then promoted to Minister for Transport. Suddenly, his opposition to the sale of our (people-owned) electricity asset wasn’t a problem, and he kept quiet during the sale. As Minister for Transport, he oversaw what many voters believed were myriad problems: ferries, trains, busses.  At best, he will be a party-machine installed stop-gap, who could kick heads. He will not kick heads in the party machine, although that is what is required! after all, they will largely be responsible for the politicking that might well install him as leader. John Robertson has baggage, will likely remain unpopular with voters, and will not win an election.
• Carmel Tebbutt, former Deputy Premier and Minister for Health. She carries less baggage than John Robertson, but hospitals are still a problem area for voters, and she might not have the backroom influence or power that John Robertson is likely to have. This, incidentally, was one of the perceptions about Kristina Keneally. Being personable, hard-working , logical and caring doesn’t count in the current NSW Labor machine, even if those qualities are recognised by voters.  Being from the left faction, Carmel Tebbutt will not be popular with the right-wing party machine.
• Nathan Rees: – ‘been there, done that’, and was not popular with voters, nor with the right-wing of the ALP.

The Coalition will expect to rule NSW for at least 8 years (2 x 4-year fixed terms). It will likely take that long for the NSW ALP to purge the party machine, give more say to rank and file members, and rebuild policies based on the interests of the people of NSW, rather than the interests of some party power-brokers.

John
PS expect the budget in late May 2011 to 'slash and burn', especially the Public Service, a traditional target for incoming governments, with only token trinkets for some newly won seats in western / south-western Sydney and, perhaps, one or two big-ticket schemes to be announced, but not funded, and with no delivery in 2011-12.

Incoming NSW Government Tasks

Sometime next Saturday, 26-March, many expect there will be a new NSW Government, one led by Barry O’Farrell of the Liberal Party. the National Party will his Coalition partners in government. As a voter, I have a list of things that will need his urgent attention. These tasks will help prevent members of his government behaving in ways about which he, the media, and many voters have been critical.  I believe that whoever wins government, Barry O’Farrell, or Labor’s Kristina Keneally must:


Kristina Keneally







Barry O'Farrell


1. Remove Ministerial discretion in planning matters. Current legislation gives the Planning Minister the opportunity for personal discretion, and provides an atmosphere, and fosters a culture where, decisions that would otherwise be deemed unethical or corrupt are allowed; even encouraged, by relationships with other politicians, lobbyists, and developers. Witness, for example, the spate of approvals given by Tony Kelly in the day before the government went into caretaker mode. Most of those decisions concerned the development at Barangaroo, to the benefit of Lend Lease. One of those allows Lend Lease to develop a car park without having to remove toxic chemicals from the ground. Legal? Aapparently. Ethical? ?
2. Ensure ethical standards. All other sections of the “public service” are bound by ethical standards and Codes of Conduct, but apparently, politicians are not. The current Parliamentary Standing Committee on Ethics is toothless. It can do nothing to reprimand, nor take any action against, any MP who acts unethically.  Indeed, there appears to be no Code of Conduct which explicitly outlines expected and prohibited behaviours of Parliamentarians. That means, provided a NSW Parliamentarian does nothing illegal, they cannot be found to be corrupt, regardless of how unethical their conduct might be perceived.
3. Restore political neutrality to the Public Service Senior Executive Service. The current SES has a number of people, including Directors-General, whose appointments are perceived as tainted by political connections. Not all, but some of them. It is likely their contracts will be either terminated, or not renewed. The incoming Premier must act ethically,and disallow the practice that has politicised the public service, solely to give Ministers a highly-paid “Yes, Minister” underling. Any political appointments hinder free, but honest advice, and degrade our democracy.
4. Restore the esteem of our social infrastructure. Public Schools, Public Hospitals, Public transport, TAFE, Community Services all need to be promoted, and seen to be valued by Government. Only then will the public’s esteem grow.
5. Restore Standards of Question Time Behaviour. People call our Parliament “the Bear Pit”. Many don’t respect Parliament, nor the politicians that give it the bad name. Enough said.
6. Retain Public Assets in Public hands.  Public School land is not, for example, an asset to be sold to developers, or to private schools. It would be sensible, and appropriate, for example, to include a caveat excluding public school land sold to private entities being used for educational purposes.  (see also Points 1, 2 and 4 above)

If all the above sounds fine, but terribly idealistic, even naive, then think about this:
“If you don’t aim to hit the bullseye, you’ve got no chance”

Let’s annoy and harangue our politicians and leaders till they do what the ought to do.

John

NSW Ethics Shmethics

The last Liberal-National government in NSW was led by Nick Greiner. In 1992 the Independent Commission Against Corruption (ICAC), which he established, found him to have acted corruptly. This was later overturned in the courts, because what he did in offering Terry Metherell a senior Public Service position was not illegal, and there were no ethical standards for politicians.

“Ian Temby found Premier Nick Greiner had acted corruptly. Greiner had offered a place to Terry Metherell with the purpose of removing him from Parliament to the advantage of the governing party. Eventually, the courts found in Greiner's favour. The court's reasoning was that Greiner had not acted illegally. The sole basis for a finding of corruption was, therefore, if he had breached a code of behaviour by which he was bound. The courts found that, although public servants and other officials were bound by well established codes of behaviour, politicians were subject to none of them. In effect, unless they break the law, politicians can’t be corrupt in NSW because they have no ethics.” (Chis Hurley, 2004) http://www.infotech.monash.edu.au/research/groups/rcrg/publications/0406rmethicsch.pdf

The irony was that Nick Greiner had campaigned partly on the alleged corruption of the previous, Labor, NSW Government, led by Neville Wran.

 

NSW voters, individually and collectively, have a good sense of what is right and wrong. Many see the last-minute changes to regulations by Planning Minster Tony Kelly, to the benefit of Lend Lease, as being unethical, even if not unlawful. So, too, the allegations of document shredding by Labor Ministers and staff will be seen by many as corrupt. It has been reported that current Labor Premier, Kristina Kenneally, has ordered the destruction of “thousands” of potentially damaging sensitive documents, and that she “expect(s) all public servants, be they in the bureaucracy or government advisers, to be following that direction” 

 http://www.news.com.au/breaking-news/greens-concerned-at-labor-shredding-documents-before-nsw-election/story-e6frfku0-1226020642333#ixzz1GezirtsZ

 

There is a NSW Parliamentary Ethics Committee. The NSW Parliament website says:

“This Committee has the function of carrying out educative work in relation to ethical standards applying to Members of the Legislative Assembly as well as providing advice on the standards. The Committee can also consider matters of privilege referred by the House.”

However, the Committee can not take any action against any member, even if the member is deemed to have acted unethically! It is toothless.

 

Many people believe political ethics have taken a beating under the current Labor Government. But will an incoming Liberal-National government change the rules if those rules mean its own members & Ministers must adhere to a set of standards not previously achieved in NSW? Remember, too, that elements within the Liberal Party are opposed to ethics classes in NSW public schools.

 

Will anything change? Ethics, Shmethics, if you ask me.

 

John

Carbon Costs

Let’s be clear: All our political parties, The Greens, Labor, Liberal and National Parties believe climate change is occurring. This is despite Tony Abbott’s well-publicised comment about the science  being “crap”, and despite some nay-sayers. Most of the nay-sayers are from the Liberal & National Parties. It is a politically convenient position, allowing big-polluting supporters to continue to pollute.

What IS different is the politics. The Liberal & National Parties have abandoned the policy of an Emissions Trading Scheme (ETS) their former leader & PM, John Howard. Labor, having promised action on climate change under Kevin Rudd, and now Julia Gillard, have been unable to resolve the details of ETS to satisfy the Greens and Independent MP’s & Senators. The result is a proposed interim carbon tax, to be replaced by an ETS in 3-5 years. So, how do the policies compare?
The Greens (main points)

• binding national emissions targets for 2012, 2020 & 2050, with a 40% reduction on 1990 levels by 2020
• detailed strategy to reduce emissions from energy, transport,  industry, waste & land management
• future energy needs to be met by sustainable, renewable energy sources
• an equitable transition to a low carbon economy through a range of market-based and regulatory mechanisms reflecting the real costs of greenhouse gas emissions
• address the social impacts of the transition to a low carbon economy
• establish a national system of energy efficiency targets

See: http://greens.org.au/policies/climate-change-and-energy/climate-change-and-energy

Labor Party (current policy)

• 5%-15%  reduction on 2000 carbon dioxide emissions by 2020
• carbon tax (details to be advised), with a transition to an ETS in 3-5 years.
• “businesses with the highest levels of pollution will have a very strong incentive to reduce their pollution.”
• “The Government will then use every cent raised to:
• Assist families with household bills
• Help businesses make the transition to a clean energy economy
• Tackle climate change”

See: http://www.alp.org.au/agenda/environment/carbon-price-mechanism/

The Coalition (Liberal / National Parties)

• 5% reduction on 2000 carbon dioxide emissions by 2020
• “direct action” involving:
• an Emissions Reduction Fund (funded by taxpayers)
• “incentives” for businesses
• penalties for businesses that pollute beyond “business as usual levels”. Penalties to be set “in consultation with industry”.
• plant trees, but not on useful land for farms
• solar & biofuels

See: http://www.liberal.org.au/~/media/Files/Policies%20and%20Media/Environment/The%20Coalitions%20Direct%20Action%20Plan%20Policy.ashx

Comments:

1. policies from Labor and Liberal-National Parties have been subject to change to suit particular political climates at the time.
2. the economics of a carbon price are complex.
1. Electricity use might be more economically “elastic” than previously thought. See http://www.theage.com.au/opinion/society-and-culture/conspicuous-conservation-means-less-is-much-more-cool-20110118-19v75.html People in Sydney have REDUCED their “average electricity consumption in Sydney fell by 6 per cent between 2005-06 and 2009-10”, while the price increased by 50%
2. Petrol, though, seems to be rather “inelastic”. That is, people will continue to buy, almost regardless of the price. But they can exert significant political resistance. remember, John Howard reduced the tax on petrol after it first hit the $1/litre mark because of the political backlash from motorists. He couldn’t, and wouldn’t, continue to reduce it, though,and petrol is well over $1/lire now.
3. Taxes, including a carbon tax or ETS, are designed to force a change in people’s behaviour. Think of the effect of increasing interest rates on household spending – the effect is similar if people pay more tax.
3. Consumers will pay one way or another: a carbon tax / ETS means they will pay pay as they use, and change behaviour accordingly; an Emissions Reduction Fund means they will pay through other taxes, and will not associate the (mostly income) tax with carbon pollution.

Summary

	The Greens	Labor	Liberal / National
Quality / Idealness	9 / 10	6 / 10	5 / 10
Practicality	5 / 10	5 / 10	6 / 10
Effectiveness	8 / 10	6 /10	4 /10
Cost to Energy Consumers	Very High	High – via “cost”	High – via tax

Whatever the politicians do, I believe we should all strive to reduce our carbon emissions. We should do so because it is a good thing to do, because it will reduce the rate of increase in our costs, and because it will improve our environment.

See also: http://www.thepoliticalsword.com/post/2011/03/07/Tony-Abbott%E2%80%99s-Great-Big-New-Tax.aspx 
John