Turning NEGative to Positive

The reactions to the National Energy Guarantee (NEG) have been wild and predictable. Criticism from both sides would have you believe that this balance of condemnation indicates a good compromise. Not so! Being half right and half wrong is not a winner. Especially in today's milieu. Positive comments by many in the commentariat may make Turnbull feel good in the short term, but the ultimate question is - "is it good for the people?" While in the first instance the electorate take their cues from the media and their hangers' on, ultimately it is the hip-pocket. Unfortunately, in all probability the hip-pocket barometer predicts this policy failing, as the NEG by itself will not provide any immediate increase in supply, the only way that prices will come down.

It seems Mr Turnbull has missed a golden opportunity to force a clear wedge between the LNP and Labour/Greens. By trying to please everyone he has washed away the potential policy differentiator that could have reversed the slide in his governments poll numbers. This is lamentable.

But the game is not yet done!
The ALP are in a quandary. Should they take opportunity to abandon their ridiculous 50% renewables target, and agree to the NEG, softening the blow by claiming it is some sort of 'carbon tax'? Or should they, as the Green-Left would have it, persist with their 50% target insisting it is not only achievable but is the only responsible course of action in a heating planet?

In today's vernacular the Gov's reaction should be "whatever". Let the ALP/Greens vacillate.
If they don't accept the NEG the Gov. can argue they have tried to provide a sensible middle-of-the-road policy targeting both 'despatchable' power and meeting emissions targets, while the ALP is driven by an ideological emissions policy responsible for world-leading electricity prices and intermittent supply. How would that play out in electorates that are likely to have power shedding or even blackouts this summer! Even if the ALP accept the NEG to try to wrong-foot Turnbull and escape their own terrible renewables position, the government has options. Indeed very good options. In either case the NEG has brought a sensible foundation into the energy debate. If you want continuous supply and to meet the emissions targets you need to have constraints/incentives to cover both components of this equation. It allows the government to put targets aside for the time being and to up the ante by launching a campaign to drive down electricity prices. It can do this by focusing on  increasing supply.


There are many ways the government can approach this, but here are a few; -

• The government could directly enter the gas market through a newly established Gas Bank. The Gas Bank would purchase gas reserves from the market when prices are low and sell them when spot prices are high. This would work to smooth price spikes and put downward pressure on prices. It would have the indirect effect of energy suppliers also purchasing reserves to ensure their prices are optimal. All in all raising competition in an otherwise stalled market.

• The government could build several gas fired power generation plants. This again would re-introduce a differentiator between ALP who would naturally reject such a proposition. Such a rejection would be ideal for the next election. With Labor you are stuck with high and increasing prices while the LNP we would ensure prices would go down.

• Use a nationwide media campaign to name-and-shame those state governments that have banned gas exploration. The ads should highlight the consequences of such bans on supply and prices. In short, put the blame where it belongs on short sighted thinking by state governments. The Victorian ALP government should be singled out for its ridiculous ban on conventional gas. The same pressure should also be applied to NSW gov. where projects are being held up.  The masters of blame-shifting, the State governments, would be forced to justify their roles in limiting supply. It is easy to blame the Feds for everything but a bit more difficult when indisputable facts are flashing on TV screens. No doubt the ALP would attack the gov about wasteful advertising, but once again the LNP would be seen to be working to decrease electricity prices while the ALP was trying to prevent such measures.

• As a separate media campaign the government should try to shed some light on the use of fracking to generate gas. Despite widespread evidence to the contrary there seems to be a widespread belief, only in Australia mind you, that fracking is dangerous to the environment. The same environmentalists who use scientific consensus as a rationale for their climate change policies are unwilling to accept scientific consensus on the safety of fracking.  The government could go some way to redress these beliefs by simply presenting just the facts. Yes the ABC our public broadcaster should do this, but alas I hold out no hope for objectivity and balance there.

• Finally, the government should try to redress the problem that farmers do not own the rights to minerals under their land. This makes farmers natural enemies of miners. How else could the environmentalists have sold the idea that fracking is dangerous to your farm land. In the US where land owners' rights extend underground there is widespread fracking without significant ecological problems. This last strategy would entail changes to laws that may be difficult to get through the senate. But just imagine the support from farmers for such a move. It may be sufficient to pressure the intransigent senate into acquiescence.

No doubt any of the above would cause instant and loud opposition from the ALP/Greens. That is expected and welcome. It serves to differentiate the ALP/Greens' policies from the LNP. It demonstrates that the LNP is on the voters' side in trying to lower electricity costs while the ALP/Greens are preventing this from happening. Nor does it matter if some of the policies require legislative action that does not pass the senate. Those proposals can become issues for the next election.

Now that NEG has been released it is tempting for the government to sit back and let it percolate. However since NEG does not really address soaring electricity prices, sitting back is not an option. It is now time for action.There are many winning strategies available if Turnbull has the will and the cojones.

Alas history says no, but one lives in hope.

Let the chickens come home to roost!

A rock and a hard place, so the saying goes. It is hard to see a more appropriate aphorism for the position the gov finds itself in the energy debate now raging.  To some extent it is problem of its own making, but completely so. Once a report is commissioned it is incumbent on the government to review and decide which parts it will accept.

It made a mistake by accepting 49 of the 50 recommendations. Leaving the CET out on its own meant it was going to receive increasing pressure to address it.

Yet the pressure is on. All the vested interests smell blood,. The pro renewables commentariat expect that government will be loathe to kibosh the key recommendation of their own report. So even if they compromise and put some coal-including limit on the target they will have won. So they are pushing for a quick decision

My advice to the government is to let the chickens come home to roost. If they can stand the pressure the coming summer with blackouts and  load-shedding will help to form a more objective assessment of the balance between intermittent renewables and base-load necessity. The real energy debate has really only just started, with many anti-RET only now putting their arguments. While the RET advocates are quick to blame the right wing of the LNP, the Nationals, the climate deniers, painting all opposers to renewables as troglodytes, this is not really biting. The electorate is painfully aware of high and rising energy prices and is fearful of load-shedding. Over time these factors will further move public opinion against tokenistic emissions targets. The government has time on its side.

I am sure Frydenberg is scrambling to find a solution that waters down the RET, or CET or whatever name you choose to give it, to what is acceptable to Turnbull. I guess there's the rub. On the one hand Tunbull must still have nightmares about his last energy policy fiasco that saw him sacked, but at the same time pride prevents him from acquiescing to Abbot-esque policies. As for this renaming option, with apologies to the great bard, a CET by any other name would still smell.

My advice to the government is to take their time. There is no reason for a quick decision on the CET. Let the debate continue to fester, let power shortages, black-outs, generate some realism into the energy debate. Energy policy could win the next election

Put Energy Security first !

Once again the Turnbull government is in a mess largely of its own making. It needs to decide on how it will react to the Finkel report ( Blueprint for the future:Independent Review into the Future Security of the National Electricity Market), a report it commissioned. It can either accept the key recommendation to establish  CET (Clean energy target) of some 42.5% (much greater than the current 24% RET) and accept the already high an dlikely increasing energy costs as well as the instability in supply or it can reject the key recommendations reneging on its emission reduction commitments and renewable energy targets and in effect rejecting the recommendations of its own report. With passions high in both sides there is no doubt there are electoral consequences to this decision. 

However I can see no way of avoiding conflict and with vocal proponents of each side it is likely to be loud. 

Avoiding Finkel's poisoned chalice

So lets just put the political issues to one side and consider the energy equation. The three critical factors are ; 

• Energy security - electrical energy must be available whenever and in whatever quantity required on a continuous basis for both industry and for households.
• Energy costs- must be as low as possible to ensure the quality of life of individuals and households and to make industry productive
• Emissions - Energy generation should as much as possible ensure emissions of GHG are minimal.

Finkel's report is grossly inadequate. By focusing on Emissions targets and how existing global commitments may be met, the report sacrifices the other two critical factors.

Finkel does recognize energy security as a key issue and sensibly proposes that suppliers of intermittent renewable energy be required to provide base-load power as a backup. However by limiting the backup power required to a mere 90 minutes his proposal does not provide anywhere near adequate cover. In effect he papers over this very real limitation of the most popular renewables, solar and wind. 90 minutes is totally inadequate should a South Australia style event recur.

Real energy security requires continuous supply. Anything less is not acceptable to Australia, or indeed any country worth its salt in the 21st century.

Hence all suppliers of energy should be required to meet a Base-load Equivalence Test, BET.

BET requires every energy supplier to provide continuous supply. For example for solar, in a region where daily sunshine can provide the equivalent of 6 hours of supply (averaged over normal climatic conditions) the supplier would have to source an additional 18 hours of base-load power per day. Only by adding this base-load power could the energy supply for intermittent energy sources be regarded as 'equivalent'  to continuous supply alternatives.

Suppliers of intermittent energy such as solar or wind could meet the BET by battery or pumped hydro, or by sourcing base-load power from other suppliers. Where such supply was externally sourced it would have to be backed by formally agreed long term supply contracts. No doubt this would add to the cost of intermittent renewables, but without BET any energy supply management process, such as Finkel's CET or the older RET, is flawed.

Frydenberg's get out of jail card...

Given the potential political consequences it is no wonder that the government has been vacillating on their response to Finkel.

By putting Energy security first there is a sensible path through this dilemma   

Step 1: Clearly state that of the 3 conflicting needs identified by Finkel, Energy security is the first priority.

Step 2: In order to ensure all energy supply alternatives are comparable when it comes to energy security, all new supply will have to meet the Base-load Equivalence Test to provide 100 percent continuous energy. Solar and wind will have to either purchase base-load power from other suppliers or add their own battery, pumped hydro or other base-load power solutions hydro.

Step 3: Reject CET, retain the RET, accept the possibility that the current emissions reductions and renewable energy targets may not be met, but argue that Australia cannot afford to jeopardize energy security.

While the above three address the immediate problem, they do not re-build the shortage of base-load power following closures of coal fired generators over the past decade. Nor is it likely, given the current political environment, that commercial operators will build new base-load power generators. So the government needs to step in with Step 4.

Step 4: Commit federal funds to building new base-load power stations to compensate for closures over the past decade. The government would supply this energy at commercial rates and in competition with other suppliers, and be willing to sell the asset once it was proven to be competitive. Given current electricity prices and the re-balancing of demand due for base-load power due to the need to meet BET, in all probability these power stations will be able to be sold off at a profit.

Look to the electorate

Any proposal that is willing to sacrifice Australia's commitments to GHG reduction or indeed the RET is likely to receive widespread condemnation by the Chatterati. However Australian Industry and households will accept it as a fair compromise. This is especially so given that Australia's contribution to global warming is minimal and any effort we could make is dwarfed by the increasing emissions by China and India.

Malcolm must get back to basics

Some time before the last election I posted some gratuitous advice to Malcolm Turnbull (Malcolm must cut through). Advice on how he could cut through and score against his vulnerable yet emboldened opposition. Alas, it did not happen.

Looking back we can see that his tenure has been a steady decline in personal and party popularity, increasing back bench unrest and LNP supporters heading for the door. Many heretofore ardent advocates of the Turnbull 'brand' are wavering, while others have written him off. It is a dismal picture.

With a full two years to the next election I believe it is premature to write off the LNP, even with Malcolm Turnbull as its leader.

Without doubt however some things must change. In its current form it is drifting towards annihilation. Labor's return to office with its current policies would be a disaster for Australia, with increasing debt, lower living standards and further social disruption.

So what can Turnbull and his supporters do about it? How could they address this decline?

Back to basics

It should not be necessary, but given recent ambiguity/wavering on some policy issues, I believe all MPs would do well to familiarize themselves with the LNP's core principles as stated on their website.

"We Believe:
In the inalienable rights and freedoms of all peoples; and we work towards a lean government that minimises interference in our daily lives; and maximises individual and private sector initiative

In government that nurtures and encourages its citizens through incentive, rather than putting limits on people through the punishing disincentives of burdensome taxes and the stifling structures of Labor's corporate state and bureaucratic red tape.

In those most basic freedoms of parliamentary democracy - the freedom of thought, worship, speech and association. 

In a just and humane society in which the importance of the family and the role of law and justice is maintained. 

In equal opportunity for all Australians; and the encouragement and facilitation of wealth so that all may enjoy the highest possible standards of living, health, education and social justice. 

That, wherever possible, government should not compete with an efficient private sector; and that businesses and individuals - not government - are the true creators of wealth and employment. 

In preserving Australia's natural beauty and the environment for future generations. 

That our nation has a constructive role to play in maintaining world peace and democracy through alliance with other free nations. 

In short, we simply believe in individual freedom and free enterprise"

From Liberal Party website 

These are fine principles and should be ingrained in the soul of each LNP MP. They can be help to guide them out of many a political quagmire.

Of course the most effective messaging is when there is a contrast. So the principles should be stated and compared to those of the opposition.For example; -

• The LNP stand for equality of opportunity for all. The ALP are forever raising taxes and re-distributing the hard earned income of even battlers to their government funded causes.
• The LNP believe in equality of opportunity but accept that individual effort should be rewarded. The ALP is always "taxing the 'rich' and thereby removing the incentive that is required to generate wealth in the economy as a whole.
• The LNP believes in free enterprise, that it is the private sector un-shackled from government interference that creates wealth. The ALP is always looking to government enterprises and government involvement. 

In the end there are two core messages that need to be ingrained in the electorate; - 

1. The LNP is the party of freedom for the individual to realise their potential 

2. The LNP are better economic managers because they believe in small government and look to private sector to generate wealth.

Most importantly there needs to be consistency; All policies must be aligned with these core messages, so the parliamentary party, LNP supporters and the electorate as a whole understand what the LNP stands for.

Unfortunately this has not been the case in recent times, with the LNP's tendency to squib harder issues. Look at 18 C for a blatant example.

If all policies were clearly and unambigously consistent with the LNP's principles, the flow of supporters away from the party would be stemmed and who knows, many may return to the fold.

Ley her off

Given only 18 months has elapsed since the Choppergate affair saw the dismissal of the speaker of the house, it is simply mind-boggling that expense rorts should surface so soon. Yet here they are centre stage, taking media focus and infuriating the electorate. I covered the last affair in some detail including some suggestions for improving the system (see Conflict of Interest and Footnotes on expense rorts ), so let me just restate a few of the conclusions.

It is hard to think of a case where politicians interests are less aligned with the people they represent than with our pollies' expense claims. Be it a family holiday to Uluru for the wife and kids for $12000 at taxpayer expense, or hiring a chopper for $5000 to get to fund raiser, one would think they lived on a different planet, totally out of touch with their constituency.

In the most recent case Ley's 16 trips to the Gold Coast, where her husband happens to have some business interest, simply doesn't pass the sniff test. Then by way of explanation claiming that a purchase of an $800,000 unit was 'unplanned'  Give me a break.

"a total failure of our political class, in the face of a clear conflict of interest, to set proper standards of behaviour"

It does not matter one iota that when caught the MP is contrite and makes some reparation payment. It does not matter that there is a bit of a penalty when a mis-claim has been identified. The public, the people these MPs are meant to represent are outraged. We don't accept such egregious conduct as a simple 'error of judgment' from those we elect to represent us.

There is a lack of scrutiny, a lack of clarity, and the lack of visibility of these expenses. No corporate entity would accept an open-ended expense system. Commercial operations clearly define the scope of claims, the means of travel allowed, and set and review budgets. Indeed where expenditure by a company has been seen to benefit an individual it is a 'Fringe benefit' which is taxable. Putting a system in place is not difficult. I have suggested a possible scheme and include below the key requirements. For further details see Conflict of Interest.

Expense claims must be Reasonable and Accountable
'Reasonable' simply means a claim must be consistent with accepted norms within commercial and non-commercial enterprises. This is just the 'sniff' test. Many travel claims, by our MPs certainly fail this 'sniff' test. If an MP has some doubt about what is reasonable, they should submit an application for pre-approval (see below).

Accountability requires all claims to be managed formally by an independent body and for the public interest they should be visible. If the MP's work on behalf of their constituents then they should 'report ' to their constituency. What better way to shine a light on the excesses than to publish all claims on a website.

Set the bar high

In view of the justified public outrage it is time our leaders established a business-like set of of rules for the eligibility and accountability of all expense claims. Moreover all such claims should be posted on a web site to provide visibility to the public. The punishment for non-compliance should be high and should comprise repayment plus a significant penalty, say double the original claim. Ministers should face immediate dismissal form the ministry for any proven non-compliance.

...but provide an amnesty

Unfortunately Ley's case is no doubt just the tip of the iceberg and many other ministerial transgressions can be identified were all MPs' claims closely scrutinized. So to prevent a wholesale dismissal of the cabinet, despite what the public may want, Turnbull should provide an amnesty for any offences that occurred before the  implementation of the new rules.

Given the politics this should not save Ley, she happens to have been caught out and should be sacked from the ministry. However effective from the date of the announcement any offence should see immediate dismissal. The ministry certainly has had fair warning.

It is time the government started to rebuild long lost trust in our politicians. Implementing a tough expense claim systems is a good place to start.

EOY reflections

looking back on the year just passed it is easy to get stuck in the short term crises on which the country spent much time. On greyhound racing, post election reflections, senate reform and One Nation selections, on 18C and Mediscare lies, domestic violence, and the use of 'guys'. Many of these held the us hostage for but a few days or weeks, then lapse into the background.

However one of the main themes throughout the year has once again been war and terrorism and the flood of asylum seekers be they refugees, or economic migrants into Europe. Multiple terror attacks in France and Belgium, a storm of sexual assaults in Germany, the closing of borders in Hungary, Greece, Italy in response to the mass migration have exposed the failure of the world to address the unraveling of law and order in the Middle Esat and North Africa.

It is a challenging time.

The Europe of old is being transformed and may never be the same again. Merkel, by her open-door policy has perhaps sealed its fate. Anit-immigrant sentiment is fertilizing the rise of nationalism and right of centre parties are back in favour. We know what that led to in the past. Perhaps not this time. But it highlights a moral dilemma for all leaders of Western democracies; "who is to receive priority, the citizens of the country they lead or the immigrants at the door?" What value do you give to preserving the culture and customs of the country you lead? Does its preservation deserve priority over suffering humanity? Opening the doors to large numbers of culturally different migrants will inevitably change the country and may well disadvantage its current citizens, but can you morally close your doors to those in need? In facing this dilemma Europe's leaders do not speak with one voice. It is straining the union and may well tear it apart.

Certainly it had a major impact on the Brexit decision, the first of the two major political cataclysms of the year. Despite all the predictions, despite the one-sided advocacy for the Bremain vote by the commentariat, despite most polls, the British voters did the unthinkable, they voted to leave the EU. It was and remains a surprise. The post-fact rationalizations are many and varied, but irrelevant. The picture is clear. A majority of voters decided that their future was better served without the EU. This clear rejection of the EU cannot be blamed on just a single issue, like immigration, although it no doubt had a part, but it is a judgement on the value and consequences of EU membership over decades. Having experienced the intrusion of EU into their daily lives Britons have decided they prefer to go it alone. The consequences are yet to be seen.

That brings me to the second political cataclysm of the year, the election of Trump. An arduous 18 month election carnival has resulted in one of the greatest upsets of all time, the election of a millionaire businessman with no political experience, and serious personality shortcomings to the most powerful position in the world. He has not yet taken his seat, yet his election has already changed everything. The air is filled with right wing elation and those who had been silent in the face of Obama's socialist agenda are out peddling their wares. The share-market too has shrugged off all negatives to ascend to heights never expected, especially after a Trump victory.

The appointment of the various cogs-of-state by the president-elect have received scrutiny and the predicable acclaim and critique from the supporting and opposing parties. Yet, the critiques by the democrats have not been as fervent as expected. Little surprise since the defeat in both houses means there is little they can really do about it. But also they are still busy trying to overturn the election of this 'unacceptable' president-elect. Mm do I recall the democrats complaining pre-emptively that democracy would be thwarted by a losing Trump? Clearly a case of pots calling the kettles black.

The ripples from the Brexti/Trump anti-establishment, anti-media, anti-norm are still spreading throughout the world and no doubt more counter-establishment upheavals will follow. In Aus too the Right is in the ascendant with a new bounce in their outspoken voices. I feel it too. While I have reservations, a lot of reservations about the unsavory and egotistical Trump, I have welcomed the home truths his election has confirmed; -

• The media is advocating rather than reporting, dictating rather than reflecting,
• the commentariat is one sided and fallible, 
• ALL people want to be represented in public discourse, ignore their needs nd they will turn on you. 

In short a direct "up-yours" to the establishment norms. It is a collective negation of order, sentiments usually reserved for the youthful. Yet of course it makes things less predictable, less orderly. Que Sera.

In Aus the political year started with such optimism and yet closes with such pessimism. The Turnbull government was riding high in the polls at the start of the year with plenty going for it, newly found poll success, a popular prime minister engaged in tax reform and an expansive economic agenda based on innovation.

Barely 12 months later, after an election that saw it lose its large majority, it faces a hostile senate with a larger number of unpredictable, populist senators and with no chance of passing its more important budgetary measures without debilitating amendments.

It highlights the serious problem with a multi-cameral system. How can the elected party govern when the senate can thwart all legislation. Yes I know this is a well worn argument and that despite this governments have managed in the past. Yes, but it is worse today, not only because of the number of cross-benchers, but due to the news cycle that elevates this motley crew into heroes, and especially so if they manage to exact some concession in an piece of high profile legislation, irrespective whether the concession is beneficial or not. Mr Hinch's intervention in the ABCC legislation is a prime and most disappointing example.

It is doubtful that such a senate will allow the deep cost cuts required for any reasonable balancing of our books. Yet Trumps' injection of confidence has raised the markets and this will help Aus's growth. Against all odds it may be Trump who saves us.

It has been a very full year with sufficient drama to fill many a reality show. Despite all our challenges, the sun is shining, and the Xmas slowdown beckons. I look forward to a break.

Thank you readers for the positive feedback and indeed all the feedback over the year. I hope I have kindled some debate out there.

I wish you a Merry Christmas and a healthy and peaceful 2017.

The Good, the Bad and the Ugly

Although I named this post "The Good the Bad and the Ugly", there is little good in the final outcome of this election, no matter what it turns out to be.

The Good

The most significant single 'Good' is the Pyrrhic victory for those who objected to the ousting of Tony Abbott last September. The electorate has punished the Malcolm Turnbull government where it hurts most, at the 'only poll that counts'. No doubt many of the so called 'Del-cons' have had a role in this. It may not have been the only factor in the swing against the LNP but it was significant as it was indeed an own goal. 

The lesson is clear. No matter which party you are, if the bed-wetter MPs turn against the elected PM in their first term, the party will be punished at the next election. Moreover such a move will divide the party and damage electoral support potentially for multiple terms. No doubt the LNP and in particular those who turned against Abbott are now trying to rationalise their own stupidity.

The Bad

Unfortunately in this category there are too many to mention, but here are some; - 

• The Senate potpouri will make it difficult for either major party to govern. Minority and independent senators avoid unpopular measures, and since the serious job of budget repair requires such measures, budget repair is likely to be postponed. At the same time in order to woo these crossbenchers government decisions will be skewed towards their pet projects. All unsatisfactory outcomes.
• With a hung parliament, as seems most likely, all the above problems will simply multiply. More chaos, more wooing of crossbenchers, more misdirected decisions.
• The voters have lost trust in the major parties and have moved from the centre to the right (Pauline Hanson) and the Left (NXT).( I know Xenophon says he is mainstream and centrist, but that's what they all say. Judge them not by their words but by their deeds. Historically he has voted with the Green Left. ) This makes for a divided electorate that will not favour the very hard and unpopular decisions rebalance the ship of state.
• The LNP is now a more divided party. Turnbull may not realise it yet, but his wings will be clipped and he will have to accept serious changes. If he doesn't he may be ousted. That would only lead to more instability. Many Turnbull supporters have lost confidence in their leader and most likely this will have inevitable consequences.
• The ALP is emboldened. It now feels its policies are winners. These are policies of the Left rather than the centre . Policies to spend more on Education and Health and allow deficits and debt to grow. Whether it gains government in a hung parliament or not, these policies will be more ingrained in the ALP psyche.
• The ALP has not been punished for its reckless spending beyond its terms in government. Our structural deficit is the result of the Rudd/Gillard/Rudd governments' legislating rising spending commitments beyond its terms in government, and without any commensurate rises in incomes.
• ALP has not been punished for shamelessly sabotaging the LNP's attempts at budget repair by denying passage of measures that it has subsequently used in its own election commitments. Will it now pass this legislation?
• The Unions are emboldened. The TURC royal commission uncovered significant and on-going union corruption including extortion, thuggery, and sweetheart deals with Employers that disadvantaged their own members. Neither the ACTU nor the ALP have made any moves to even acknowledge the problem let alone take action against any Union leaders or even change some of their own givernance. The CFMEU  the subject of the most egregious corrupt practices remains a fully endorsed memebr of the SACTU and the ALP to its shame still accepts donations from the tainted union.
• and so on..

The Ugly

Elections are generally an 'ugly' time to view a nation's character. This campaign has been no exception, highlighted by some of the most blatant lies and misrepresentations I have come across.

Starting with ads citing half-baked truths and extending to an entire campaign based on an outright fabrication.

The Unions' ads citing cuts in education and health spending fall into the former category. Education and Health spending are both increasing year on year. Similarly the LNP attacking Labor on border control given their stated policy is the same, was only justifiable when many ALP MPs openly contradicted their own parties policies.

But it is the Medi-scare campaign arguing that the "Coalition will privatise Medicare" that was the most ugly aspect of this election. It was a fabrication and at no stage did the ALP believe that the LNP had any intention to privatise Medicare. The push back by the LNP was slow and weak. Who knows what a more forthright rebuttal may have achieved. Nevertheless the Mediscare campaign did a lot of damage and certainly swung many wavering voters to the ALP. It will no doubt take pride of place in political attack campaigns for its success. Call me a purist but I think such tactics are not worthy of any party that wants to govern our country. 

What next

Instead of Turnbull's dream scenario of a re-elected Coalition delivering stable government, the electorate has produced a nightmare of instability and uncertainty. A divided LNP that may or may not form government, a resurgent ALP with policies to cripple the country, a feral senate with multiple crossbenchers with diverse personal/party goals and an electorate in denial, blissfully sailing the Atlantic on the RMS Titanic - pass the champagne please!

Malcolm must cut through

Lets face it, at this stage the trend for the LNP is down. Turnbull's popularity has peaked and he is facing the serious prospect of losing this 'un-lose-able' election. Shorten is nipping at his heels, the Delcons are biting at him and even his closest supporters express their frustrations. While the media point at marginals saving the day, the trend is clearly not Turnbull's friend.

An aside to the Delcons

While I am very sympathetic with the Delcons, I fear, yes fear, for our country should the ALP/Greens get back into power so soon after their crushing defeat of 2013.

Such a win would bring back the very policies that transformed an economy that was the envy of the world to what is now just one economic shock away from a basket-case.

The carbon tax would be back, the boats would be back, profligate spending would be back, taxes would rise and productivity would continue to dwindle. Federal Government debt would grow at a greater rate, leaving us vulnerable to external shocks, and in the end despite the ALP's rhetoric supporting the working man, wages and job opportunities would suffer. 

The LNP under Turnbull is no panacea. But just consider the alternative! If you really, really want to save Australia then it is time, perhaps not to unite, but at least tone down the rhetoric. Currently you are playing into Labour's hand. Even if Turnbull wins this election he will come out of it very much chastened, and, post election, there will be time to right the port-side list of the party.

Cutting through - refine the message

As for Turnbull, most commentators suggest Turnbull needs to cut through by focusing on the core issues and on those parts of the electorate that are open to persuasion. 

The single key issue for Australia today is the economy, so the LNP's central message should be to "Live within our means" 

I would gradually ditch the "Jobs and growth" mantra. It is too general, does not address the very real budget problem our country confronts. Moreover it is weak because it lacks a call to action.

"Live within our means" aligns with the electorate's acceptance that the LNP are better economic managers.

Yeh, I know they have made mistakes. Yet despite that, they are still better economic managers. Just look at the record.  Notwithstanding ALP/Greens' thwarting Abbot's attempts at proper budget repair, the trajectory of rising debt left by the ALP has been shifted significantly downwards. Debt is rising slower than under Labour. Certainly that is not enough, but much better than under Labour.

Moreover they can point out the measures, the Schoolkids bonus and pension limits, that the ALP promised for years to re-instate, only to break their promises when facing close scrutiny of their Budget 'black hole". Incidentally highlighting the sheer hypocrisy of the ALP.

The LNP are the better economic managers should be the subliminal message underlying all the economic arguments. It is a winner. 

Cutting through - hone the delivery

Turnbull needs to control his verbosity and tendency to drift off topic. He should get back to some simple slogans. Yes, that can be annoying, especially if there is nothing more. But it should be repeated as part of a more complete dialogue. Stick to the simple message when your audience is not that engaged, and roll out the more complete message if it is an appropriate forum.

Cutting through - don't be afraid to attack

Finally Turnbull should get out the attack dogs and do more direct attacking himself.

Remind those with a short memory what it was like under labour!

• Warn the wavering about Shorten defending lawless Unions, re-running a Carbon tax, ALP's tax-n-spend addiction, 
• Remind those forgetting about the various hare-brained schemes/policies dreamt up by the ALP and their tendency to waste tax-payers' money. Mention pink bats, banning of live-cattle exports or the ideafest bringing together the 1000 best brains in Australia.

• Alert the electorate that the LNP has again cleaned up the mess that Labour created on border control. Given the large split in the ALP on asylum seekers no doubt they will water down current  measures and inevitably the ALP will re-start the boats. Shorten may scream long and loud that this won't happen, but hadn't we heard that from Labor before? Rudd had also said he would protect borders only to weaken protections leading to 50,000 asylum seekers and 2000 drowned at sea. You cannot trust Labour on border protection!

I guess you can see the picture.

In any case I can think of no better cut through attack message than that posted by @jude_francis on twitter the other day

The truth laid bare in but a few short sentences. That is cut through.

Inconvenient truth on Fairness

In what has become an unplanned serial I have explored some 'inconvenient truths' behind central policy differences between the ALP and the LNP. Previous posts have covered Education and Superannuation. In this post I want to look at Fairness. While Fairness is not really a policy, it has certainly been a principal war-cry of the ALP and the Greens. It was used very successfully against the first Hockey Budget of 2014 and indeed by the senate cross-benchers to justify their stance against government legislation. So it is not surprising that it has been brought into action in this election battle.

What is the Fairness argument?

The Fairness argument is rarely stated clearly. It is usually purveyed by implication or innuendo and takes many forms.

Some of the ways include;-

• The distribution of wealth in Australia is inequitable,
• a small proportion of very wealthy individuals control a disproportionately large share of the country's wealth. 
• The very wealthy get a disproportionate share of services yet they do not pay their fair share of taxes.
• Negative gearing is used by the wealthy to avoid paying their fair share of tax 
• You can always increase taxes on the rich they can afford it.
• The best private schools have plenty of money so should not receive any government funding

The argument is often dressed in softer terms of  "'equity", "fairness" or "justice", but in essence it appeals to the most base element of human nature, envy.  It appeals both to low income earners and welfare recipients who feel they are victims of an unfair system and also to some extent to the struggling middle income group who see real wealth as unattainable. This is a sizable proportion of the community. As a political tool it serves its purpose well. However there are some inconvenient truths.

Inconvenient truth 1; Incentive drives prosperity for everyone

The idea of raising taxes on the rich to bring "social equity" is not new. It has been tried in small and large measure in many countries over the years. At its extreme the communist doctrine "From each according to his ability to each according to his needs "  embodies the redistribution of wealth from rich to poor to create an "ideal" society. While communism actively supported the poor and weak and resulted in a somewhat more uniform standard of living, it did so by punishing the successful, the aspiring, the gifted, the hard workers. The consequences in all countries where it was instituted, in full or in part, was a stultifying lack of incentive to strive, resulting in lower production and leading to universal poverty. Everyone loses. Recall the sheer poverty of the Soviet Union and its iron curtain vassals at its collapse, or the impact of the 'Cultural Revolution' in China with millions dead through starvation.

Any tax that places a disproportionate burden on 'the rich' reduces incentives for all workers and ends up diminishing the wealth of the society as a whole. On the other hand societies that reward hard work inspire the whole workforce and generate prosperity for all. Consider the miracle economy of Singapore for example.

Inconvenient truth 2: Money has no borders

Today with the globalization of commerce money has no borders. Corporations and individuals can readily re-locate to lower tax countries. High taxes on Australian companies and individuals will simply lead to emigration. Indeed with higher personal income tax rates and higher company tax rates than the average around the globe, this has already been happening. For example a high income earner in a global business can readily relocate to Singapore with a maximum personal income tax rate of 20%. Similarly corporations can pick many competing low tax regions for branch or even their head offices.(BHP, James Hardie, etc.)

The bottom line is that Australian personal and corporate tax rates must compete in the global market and failure to compete will accelerate the emigration of the best most productive individuals and companies and diminish the prosperity of all.

Inconvenient truth 3: The politics of envy generates social unrest
Finally the real downside of the "Fairness", or really "class warfare", argument is the impact it has on society as a whole. The more frequent, widespread, and shrill the calls for social equity, the greater the general dissatisfaction of everyone in a society. By constantly repeating class warfare arguments our politicians engender distrust and resentment against each other. This can, if not managed, lead to social unrest. This is a by-product of the "fairness" argument that is too often ignored by our pollies and the media.

So what does this mean for our election campaign?

Evidently the Fairness argument can be aimed at virtually any policy that the LNP proposes. If it proposes to remove the 'temporary' Deficit levy paid by high income earners then it is pandering to the rich. It does not matter that if the LNP had not removed the temporary levy it would have been breaking its own and the ALP's commitments to the electorate.

If the LNP proposes to reduce Company taxes over a decade, then the ALP declares it is pandering to business interests notwithstanding that reductions in corporate taxes lead to greater employment, high wages and growth in the economy.

Even with the proposed Super changes that have caused widespread resentment among many LNP supporters, the ALP says "its not enough, the rich can pay more".

So the ALP/Greens have plenty to go on about. Australia has many successful, rich people who live in expensive homes and drive expensive cars. They serve as obvious targets to stoke the envy in all of us.

At the same time it must be said the LNP has failed to address these arguments head on. This is not entirely surprising. With half the electorate already paying no net tax, there are many voters with a vested interest in the current state of affairs. They may see any lowering of taxes for "the rich" as a potential extra cost to themselves. Consider the recent QandA 'hero' who by his question concisely embodied this attitude.

"Why are 'the rich' getting a tax cut and I don't get anything"

Forgetting of course that he has not been paying any tax and has been the recipient of welfare that was paid for, at least in part, by those 'rich' he envies. Australia's problem is that this 'entitlement' mentality is becoming increasingly pervasive.

Countering the 'Fairness' argument

Convincing the electorate that by reducing taxes on companies and high income earners will generate incentives that will work to produce growth and "raise all boats", is not an easy task. But there are some non-confrontational approaches to sell the message. Consider these 2 ; -

1. Set an INCLUSIVE vision to which we can ALL aspire

Our PM, Mr T, has tried to sell a vision for Australia with 'Innovation' as the key to 'jobs and growth' in an 'agile' economy.
The problem with this vision is that most older and less educated voters will not feel they are part of this vision. For many it is a warning of potential redundancy in a new, modern world in which they have no part.

The LNP, or Mr T, should carefully phrase his statements to include all Australians. When he talks about aspiration it has to apply to everyone.

Perhaps something like; 

"Australia is a lucky country, with plentiful natural resources and an inclusive culture that takes care of the needy and provides equal opportunity to all to achieve their maximum potential. We want to build on past success in developing not only our resources and agriculture but to develop new industries that employ all our people.  We will aspire to do this through incentives for investment in education, research and development and new industries. At the same time no one will be left behind.  We will strive to provide equal opportunity to everyone to access social services, education healthcare and employment. We will ensure our welfare safety net provides for the needy. While we approach the future with enthusiasm we will not abandon the industries that provide work for the much of our workforce. We will move gradually to create an Australia in which every Australian can participate productively."

Perhaps a bit wordy but then again it may suit Mr T to a T.

2. Repudiate EVERY claim by the ALP/Greens about 'unfairness'

Do not allow any claim of "unfairness" without repudiation. Left without a response gives the impression that the claims are justified and sets long-term perceptions.

There are always good arguments to counter claims of 'unfairness'; -

• Company taxes are lower in countries that have high growth economies. This leads to more jobs. We want to grow our economy to make everyone prosper
• Negative gearing is used extensively by low and middle income earners and contrary to ALP arguments they get a higher proportionate tax saving than high income earners. 
• Lowering the tax rate for middle and high income earners can be addressed with two points; -
• bracket creep has been eliminating the progressive nature of tax, the tax cut is therefore required to ensure the progressive nature is maintained
• Super measures in the budget provide benefits to lower income earners and make significant imposts on high income earners
• and so on

It is important to avoid the technicalities of these arguments, indeed the economists can handle that. The point is be willing to face the claims head-on, present the other side of the argument and not to leave any claims unchallenged.

Time to face Fairness head on

The election is still many weeks away yet the Fairness argument is being actively used as a weapon of choice.

If the LNP fails to speak up and quietly acquiesces to this false narrative, no matter which party wins the election, incentive will continue to be squeezed out of the system and over time our prosperity will dwindle.

Spark and Grind

Following yesterday's Knowledge Nation 2016 summit many in the commentariat are highlighting the need for more graduates with the 'right' skills. As noted at the conference, successful innovation requires the confluence of many factors, a supply of suitably educated capable graduates is just one.  Moreover Australia's lack of success in commercialization, we rank last of the 33 OECD countries in commercialization of research, is not due to lack of bright ideas. The failure is not due to lack of supply of educated graduates.

We have the Spark

Australians are an innovative lot, and whether our inventors were graduates or just lateral thinking others, they have produced more than our share of inventions. We obviously have the spark of creativity.

...but lack the Grind

To paraphrase Mr Edison, Innovation is "1% inspiration and 99% perspiration". We lack the 'grind' required to turn our ideas into reality.

Many reasons have been cited for our failure, but I would group them into just three; -

1. The benign culture of our Universities 

Our Universities clamour for funding from the public purse but do too little to generate funds themselves. Academics are driven by pure research as their success as academics is more dependent on papers than patents. This has developed a sense of academic purity which eschews base commercial motives and distracting industrial dalliances.

2. Lack of risk capital

The commercial success of the best ideas requires significant investment over many years before returns are generated. Moreover such investment carries high risk so investors must mitigate this risk across many projects. With few successful locally commercialized innovations we have not developed the requisite venture capital market in Australia.

3. An all too mobile workforce

For the most capable inventors and for the best ideas the world beckons. Attractive facilities, high salaries and the opportunity to work with the best researchers in the world draw our innovators to greener pastures overseas.

Small significant steps

How do we counter these shortcomings? The glib answer is gradually. Each of the factors above has a positive feedback.  After each successful locally commercialized Australian innovation venture capital will be easier to raise and many capable graduates will be employed. Success will breed success.

Given we are so far below par incentives to redress our failure are very much overdue. But it is not easy to turn this around, and it will not happen with slogans or summits. Nor can you simply throw money at it, as it will end up like most government sponsored projects as a wasteful and even counterproductive exercise. Some improvement until the money runs out then a return to where you started.

Nevertheless I believe there are some simple practical steps that the government could take to gradually build an innovative culture that will continue to grow over time.

My ideas on this are still developing but I suggest the following as a start;-

• Provide a loan facility to inventors to fund patenting of new ideas and for proof of concept experiments. Similar to the HECS scheme the loan should be repayable together with a commercial return if /when the idea achieves commercialization
• Link some University funding to innovation activities. Say 20% of the funding of a University could be tied to activities which directly support the development of a future product. 
• Universities should retain some ownership of any invention/product developed by their staff and/or using their premises
• Provide risk capital for small start-up companies with standard commercial returns . The $1B already cited by the Turnbull government seems an overkill, and is likely to generate larger projects with higher risks. I envisage project grants with maximum $10m but mostly smaller. 

These act to remove the obstacles faced by innovators and provide funding, on commercial terms, until a sufficiently active local venture capital market meets this need.

Tax Reform Farce

I am bemused at where we have arrived in the Tax Reform debate. Launched just a few months ago by a freshly minted PM with some fanfare it had widespread support from the business community, economists and a then fawning media. See these welcoming headlines; -

AFR 1 Oct,2015 - "Turnbull's summit greenlights super tax reform"-

SMH 15 Sep 2015 - "Malcolm Turnbull touted as a more likely tax reformer than Tony Abbott"

The Australian 1Oct 2015 - "Tax reform the key to Malcolm Turnbull’s vision" 

Today, that idyllic dream seems so far away. The headlines again tell the story.

SMH Feb 8,2015 - "Malcolm Turnbull lands on a snake on tax reform"

SMH Feb 5,2015 - "Peter Hartcher: Tax reform proves to be a test of Malcolm Turnbull’s courage"

The Australian Feb 11,2015 - "From tax reform to reshuffle, Turnbull needs to get cracking"

AFR Feb 11,2016 - "Malcolm Turnbull's dark and stormy night of tax reform reality"

How did we get here?

It started with; we are moving forward, casting light, gaining insights, having the conversation with the people.

Then proceeded to; we are not ruling anything in or out, everything is on the table, we are open to all discussions.

As criticism rolled in, it turned to; we won't touch the life savings of the workers, we don't want to increase the overall tax take. And most recently, we can't see any justification in an increase in the GST.

Is this not a trifle confusing?

Lack of leadership exposed

Our leaders have led us a merry chase.

It reminds me awfully of Rudd's 2020 Summit, that mindless ideafest calling for the 1000 "best and brightest minds" in Australia to "map out a strategy for Australia's long-term future". With such high expectations , it was primed for failure. It has disappeared into that not insignificant pit of grandiose ideas concocted by our Kevin 07.
Turnbull too had set the bar high for his Tax Reform agenda and now it too faces a similar fate.

With a hostile senate, negotiating the tricky path to reform was never going to be easy. But let's face it Turnbull had a lot going for him. A partisan media euphoric at the ousting of  Tony Abbott rolled out the red carpet and focused on the opposition. The collapse of the mining boom highlighted the need for real reform, especially since it had been sadly lacking for many years. So the professional classes, the media and the electorate were ready and waiting for their new leader, with such excellent business credentials, to lead them to the Tax Reform promised land.

Alas, in but three short months we have had our confidence shaken and our once great expectations are nothing but a wind in the willows.

Leadership, true leadership requires ideas, an understanding of the available options, conviction a firm belief in the correct path and guts, the courage to make unpopular decisions and see them through. Unfortunately all three seem to be sadly lacking in our PM.

What next?

It is not yet too late to resurrect this mess. Who knows the Tax Reform team, Turnbull, Morrison and Cormann, may stop sitting on the sidelines, decide on a course of action and start convincing the electorate of its merits. I live in hope.

If not, the consequences of Tax Reform failure are not inconsiderable. We would face an extended period without real reform, a growing national debt and further deterioration of living standards.

While the reform agenda can still be resurrected the Turnbull prime ministership has taken a direct hit. The whole sorry saga has exposed Turnbull's frightening lack of political skill. This does not bode well for our future.

Aye, there's the rub.

Over the past 18 months the Trade Union Royal Commission (TURC)  played out on our media like a slow motion Shakespearean tragedy. With all the accouterments of these plays; human vices writ loud and large; greed, duplicity, double dealing, leading to falls from grace and of course piles of bodies. We have yet to see the final body count as we are but midway through the play, but they are already piling up.

In recent days the drama has again come front and center as, rumors have it that, the Turnbull government in order to woo cross-bench support for mooted new legislation, is considering giving these accidental powerhouses of decision making access to the confidential volume(s) of Commissioner Dyson's final report.

Now Labor wants to get into the act and has asked for similar access. Ay there's the rub.

What type of information would be confidential?

No doubt Dyson Heydon (DH) had good reasons to make one volume of his 6 volume final report confidential. What would be good reasons? Admittedly I am only speculating, but I can see at least three, and there may be many more.

1. It names sources.
It could contain the names of sources who have provided information to the TURC. Some of this may have been only been made in exchange for a guarantee of anonymity.  The sources may have been exposed to corrupt Unions in their dealings and may remain in positions that would leave them vulnerable if they were identified.

Sources may be ; -

• serving members of a Union in senior roles who could lose their position or even worse. Unions have been known to resort to plain old thuggery.
• employer's who fear retribution from their Unions through industrial action or worse.
• past or even currently serving MPs, who could face retribution in various forms including loss of pre-selection. 
• current or past legal representatives of Unions who are passing on client confidential information. The consequences again can be serious.
• ex Union officials who are appointees to government and semi government authorities. eg Fair Work Australia just to consider an example. I seem to recall a certain Fair Work judge who did give evidence to the TURC. Who knows what else could be under the covers.

In short, sources could come from any sphere that has insider knowledge of Union corruption. Many if not most of these sources have very good reasons to protect their anonymity. Exposure of their names would put them at grave risk of various forms of retribution.

2. Evidence in progress
There may be evidence of Union corrupt dealings not yet in the public domain that DH would like to share with law enforcement authorities, to allow them to act on the evidence before its general release. Such evidence may be vital to ensure success in persecuting offenders but its uncontrolled release by alerting offenders as to its existence may make prosecution more difficult.

3. Cases not covered
No doubt as DH sifted through the vast volumes of material over the 18 month duration of the enquiry he had to select which cases to cover. In this selection he would have come across many instances of potential corruption that needed further exploration. The confidential volume may contain details of potential corruption that required further investigation. Exposure of these could allow the perpetrators to 'cover up' and make prosecution impossible.

Would you trust the keys to your house to a potential burglar?

Now we can return to the question whether to give or not to give the confidential volume to the ALP?

The ALP is wedded to the Union movement. More than Half federal Labor MPs have union origins, and affiliated unions take a leading role in setting ALP policies at the national conference. Quite simply it is sometimes hard to tell the difference between an ALP MP and a Union official. They seem to talk as two faces with one creature.  None typifies this close relationship between ALP and the Unions more than the brothers O'Connor. Brother Brendan is the ALP's Opposition Employment spokesman. Brother Michael is the National Secretary of the CFMEU, which happens to be the Union with the dubious honour of having the largest number of corruption charges identified by the TURC.

Given this close relationship should the government release the confidential report to the ALP? In all good conscience could the ALP be trusted not to leak, accidentally or otherwise, any of the potentially damaging information to its brother the Union movement?

Would the proverbial 'fair minded lay observer' think it reasonable to give the confidential volume on Union corruption to the Labor party? I think not.

ALP must jettison Union ties

I guess this is the pointy end of the problem for the ALP. Its close relationship with the Union movement has made it difficult for it to be seen as an independent judge of Union corruption.

The ALP's dealing with the TURC has been totally irrational. Rather than enthusiastically siding with the workers as opposed to corrupt Union officials, and supporting the TURC, it has done the opposite. It has simply echoed the Unions' repeated calls to stop the TURC  or to discredit the commissioner. Its apparent hysteria and repeated denial of corruption despite overwhelming well documented evidence, seems to be counterproductive. It seems to be 'running a protection racket' for corrupt Union officials against their members.  This strategy is not serving the ALP nor the country. Australia needs two strong, independent, political parties. When Unionism represents under 15% of the workforce how can the ALP justify 50% of its MPs having Union backgrounds.

Isn't it time for the ALP to jettison those close Union ties and really become the party of the workers.

The fairness test

It has been a busy week on planet Earth. Russia bombing ISIS and losing planes, chairs being arranged for the upcoming Paris Climate Change extravaganza, new 'draconian' security laws being introduced in the UK, Prime Minister Trudeau with 50% women "because it is 2015" and the steady background drone of migrants crossing borders in Greece, Serbia, Hungary, Austria and Germany.

Despite these distractions on the world stage, Australia has managed to cover topics of greater import; recovering quickly from a bad day at the World Cup with a good day at the Melbourne cup. Against 100:1 odds Prince of Penzance guided to victory by Michelle Payne, a young, pretty (dare I say that), outspoken, female jockey from a large family raised by a single Dad. It was indeed a fairy tale dream for the battler, and could not have been scripted better. The media hit the jackpot and have been milking it since the day.

But I digress. Back at the political coal face our freshly minted PM, Malcolm the optimistic, has launched the tax reform campaign with the much repeated mantra that any tax reform will be fair! (see 'Fairness is absolutely critical': Malcolm Turnbull says tax reform will be more than GST). I guess such an open and early declaration is sensible given the howls of criticism levelled at the previous leader's policies. But of course this won't stop anyone with a vested interest.

You and I, dear reader, are not subject to such earthly vices and can take a more objective look at this question. So despite all the other topics beckoning for some attention, I will focus on this one. What is Fair? By clearly nailing his colours to the fairness mast how high a threshold has our Mr T put on this tax reform? Is it even possible to create a fair set of changes? Indeed what is the Fairness Test?

Lets be clear the tax system is not fair today

At the outset we must recognise that we don't start with a level playing field. The current tax system is not 'fair' in any sense.

Consider Income Tax. The lowest earners pay no tax and receive substantial welfare payments. At the same time the top 10% of income earners pay 50% of the taxes. The following graph shows this distribution.





Table: Who is Paying Income Tax (from Fact Check)


Similarly for Company Tax, many large multi-nationals pay less tax than local companies because they manage to re-locate their profits to lower tax regions. Is this fair?

How about Payroll tax? Again states governments charge different payroll taxes in different states. What is fair about the cost of employing a person being different in one state than another?

Same with GST, it is applied to ice cream but not plain cream, to tampons but not condoms and so on. Is that fair?
Indeed with whatever definition of fairness you may care to dream up, there is nothing fair about the current range of taxes levied on individuals and businesses.

Our tax system seems to be a random concoction of rules resulting from the capitulation of governments to screeching interest groups over the decades. It sort of reminds me of the 1000 monkeys on 1000 typewriters ..

So lets be clear the current tax 'system' is not fair today.

The objective is to make the changes 'fair'

Lets take a charitable interpretation of Mr T's pronouncement, heaven knows there will be many others who wont. Lets take it that the government does not want to redress the inherent unfairness in the current system, but will ensure any changes to the system will be fair. So we need to look at the changes alone and not the sea of problems onto which they are to be applied.

Of course Mr T has not explained this and I have already heard many a call from the vested interests asking for re-dress of existing tax grievances.

What are the 'fairness' criteria?

Even with this more limited definition of fairness introducing change is not easy. Inevitably any changes to taxation rules will have both winners and losers. Any losers will immediately scream "Unfair!", as has been the case so often in the past. This can only be avoided if the 'losers' for one set of changes become winners on another. In other words there are no 'net' losers. This is no easy task when many vested interests see tax changes as a zero sum game, believing that they cannot 'gain' unless someone else 'loses'. Consider the claims by naysayers that the GST is regressive. Despite the already acknowledged low income earner compensation package that would come with any increase in GST, there are already calls for additional imposts on higher income earners through changes in Superannuation.

So this first imperative to ensure that there are no 'net' losers will not be an easy task.

But leaving interest groups 'no worse off' is not enough. Mr T and Scomo have already committed not to add to the overall tax burden. This is far less than the "we have a spending problem” mantra of earlier days. I guess our grandchildren, a demographic whose voice is weak, would be indeed worse off if the tax burden were to increase with borrowed money. Reducing or at least not increasing the overall tax burden is the second imperative.

If it were just these two criteria we could simply leave things as they are. Within our limited definition of fairness it would be 'fair'. No one would be worse off and indeed the tax burden would not have increased. But that would get us nowhere.

So we have the final fairness criterion. There  must be some benefit from implementing changes and the benefits should be greater than any compliance costs. Gains can come in many forms. They could be cost savings through increased efficiencies. eg a higher GST take requires no ongoing increase in compliance costs yet if it were to replace Payroll tax, it would eliminate compliance overheads for businesses as well as State Governments. Other reforms may modify incentives leading to more efficient use of resources, greater investment and growth in the economy. A reduction in company tax can reduce costs for consumers, increase business profits and thereby encourage greater investment. These potential benefits can be far greater than the costs of implementing them and can easily justify such reforms.

The fairness Test

So Mr T and Scomo, your challenge is to come up with a set of changes to our tax system that satisfy the Fairness Test represented by the following 3 requirements.

The Fairness Test

• All losses by any interest group are offset by gains by that same interest group 
• There is no increase in the overall tax take 
• Changes are beneficial to the country through efficiency and growth and exceed any compliance costs.

Mmmm. Good Luck!

Au contraire there is a strong moral argument to keep mining coal

Once again this week in the lead up to the Paris Climate change conference next month Climate Change advocates have released a letter signed by 61 notables including Bernie Fraser and Tim Flannery declaring ;-

"We, the undersigned, urge you to put coal exports on the agenda at the 2015 Paris COP21 climate summit and to help the world's governments negotiate a global moratorium on new coal mines and coal mine expansions, as called for by President Anote Tong of the Republic of Kiribati, and Pacific Island nations," - SMH  Pressure mounts on Malcolm Turnbull over coal

Underlying this latest missive is the argument raised by Josh Frydenberg defending coal mining on moral grounds, and the everpresent push by the Greens, and others, to stop coal mining in Australia.

There are compelling arguments to the contrary

Consider these; - 

• If Australia were to stop exports of high quality thermal coal, no country would stop using coal, they would simply replace Australia's output by imports from other countries. So the total emissions would not change and there would be no reduction in global warming. As Turnbull noted ;- 

“If Australia were to stop all of its coal exports it would … not reduce global emissions one iota,” The Australian - Malcolm Turnbull repels anti-mines push with coal hard fact 

• Coal is today a vital part of the worlds energy mix and will remain so for decades. 

 "The latest Report from the International Energy Agency (IEA) forecasts that by 2040, coal will surpass oil to become the most consumed fuel in the region, and grow at 4.6 per cent per annum over the same period." 

Minerals Council of Australia -Coal will remain key part of energy mix

• Coal is helping to raise the living standards of the poorest people of the world. Restricting the access to coal would prevent these people increasing their standard of living. 

"Nearly half the world's population has limited or no access to electricity. According to the International Energy Agency (IEA), 18 per cent of the world's population have no access to electricity at all and 38 per cent are dependent on wood, crop residues and animal waste as their main cooking and heating fuels." 

The Drum - Coal the answer to energy poverty

Climate change is hotting up, excuse the pun. All manner of interest group are sprouting half-baked solutions. The elimination of coal is just one of them. Low lying Pacific Islands face an existential threat with predicted rises in sea levels. So their agitation for urgent action is understandable. However their call would be better directed to demanding compensation for the damage their countries suffer due to the actions of the large emitters (See my earlier post Seeking a fair GHG reduction target - Part 4: Propositions for consensus which cover a suggested CC Compensation Fund). 

Nonsensical claims to put a moratorium on a resource which is vital to the world's poor is not only impractical, such calls damage the credibility if those making them.

The King is dead, long live the King!

"The King is dead"! A declaration not quite appropriate for the successful coup that saw our PM Tony Abbott replaced by Malcolm Turnbull just a few short weeks ago. In days of yore, the death of a monarch saw power transferred instantaneously to his or her heir with the declaration "The King is dead, long live the King". While this is literally true only for monarchs, the imperative to have no gap in leadership is just as true for all forms of government. So it was that a party room ballot saw Abbot replaced by Turnbull; one leader gone, another anointed immediately in his place.

The various aspects of the demise of TA and indeed my view of it have been covered not only by my multiple posts on the subject, ( see  More Media Musings , Media are part of the problem, Some media accepting some blame ) but also by virtually every single political commentator.

So why revisit this?

Yes "the King is dead", but is it time to declare the "Long live the King"?

It was an unseemly end

Like many Right-leaning voters I have been an Abbott supporter. He was a strong, capable and successful opposition leader who guided the LNP from the wilderness of opposition to win the 2013 election.

Despite this success we cannot dispute that he has failed as a Prime Minister. Successful Prime Ministers last more than one term, let alone 2/3 of a term with their own party dispatching them, and to the general acclaim of much of the electorate.  No doubt he has been responsible for many significant successes which will benefit Australia for decades to come, but a fair assessment must conclude he has failed as a Prime minister.

Failed for a number of reasons; some within his control and some not.

He made some serious errors of judgement such as; -

• failure to adjust to the reality of a hostile senate which required real-negotiation and compromise to ensure the government could govern,
• failure to replace poor performers; Hockey should have gone after his failed first budget, Bronwyn Bishop should never have been appointed as speaker, but even afterwards she should have been jettisoned much earlier,
• failures of reading and aligning with his own supporters; who could fathom his re-introduction of knights and dames, or his sticking to Peta Credlin in the face of direct and indirect feedback from his front and backbench.

Others were not within his control; -

• a hostile media that would attack and ridicule him personally and find fault with any of his policies while ignoring his successes. Think, 'winks' and 'flags' for example.
• internal dissent from nervous back-benchers and ministers in the face of poor polls,
• an undercover adversary vying for his job, working with a team of supporters undermining from within, back-grounding journalists and leaking cabinet discussion, all actively encouraged by a partisan media.

So it came to pass...

The coup when it came was quick and brutal.

Despite the rhetoric of many LNP MPs and of course Abbott when attacking the Labour party for their disposal of multiple leaders in their first term, the unthinkable had happened. The LNP had done what it claimed it would never do. The undercover-adversary, the person who had most to gain, and had been most active in undermining Abbot was elected the leader by 10 votes.

A bruised party remains

But all that is now history. Turnbull has taken the throne to the resounding acclaim of his own supporters, the general acclaim of the media, the cautious acclaim of the Labour party, and the somewhat measured acceptance by LNP supporters.

Abbott supporters are bruised and shaken. Dismayed that their party could not have engineered a transfer of leadership without the secret, underhand deals, the white-anting, the conspiracy. In short, in a more respectable way. I guess that is more my view, as some LNP supporters who happened to support Turnbull feel it doesn't matter how it was done as long as we now have a savior. Mmm. Often it is those who like the outcome who ignore the ethics of the means.

Many are waiting to see

I am one of those who are waiting to see how this pans out. I have been unashamedly concerned both about the means by which the change was orchestrated and of the man who has been chosen to lead.

Without doubt Turnbull is a slick and smooth operator. With an affable smile and a relaxed communication style, he has the intellect and ability to explain complex policy positions. He presents as an inclusive professional leader who at least seems to represent everybody. In short he presents as a great 'package', he looks the part of a modern Prime Minister.

However, I also recall that the last time he was leader of the LNP, he lost the support of his party's colleagues. He tried to move them into policy directions without acknowledging their positions. When he could not convince by argument alone he became assertive and aggressive and tried to bully opponents to conform to his views. His policy positions were not supported by his own party which among other things led to his replacement.

The man looks the same as last time, but with the experience of his unsuccessful term as opposition leader and the passing of 5 years has the leopard changed its spots?

The early signs are not bad

Despite the manner in which he gained his position, it is hard to see where PM Turnbull has made other than minor errors. No doubt the fawning media has helped. Given their hard work in getting him selected the media is providing an extended honeymoon period to ensure their protege succeeds Long overdue they have turned their attention to the ALP whose leader is coming up short; short of policies, short of the communication skills required in a leader and perhaps by the testimonies in the TURC also short of ethical standards.

These have no doubt helped Turnbull which by all accounts is still his honeymoon period, but it has not been all without some tests;-

• he has faced the press and explain the reasons for the change in leaders. This was a major problem for Julia Gillard and tainted her Prime Ministership. Turnbull has successfully avoided the gossipy internal questions by simply not engaging them and the press has, for the time being at least,  moved onto other pastures. 
• he has addressed the Climate Change issue, where the electorate knows his personal views are out of step with the policies of his government. Yet he defended the government's policies with aplomb, indeed far better than he did when he was only a minister (hrrrumph!)
• he has managed the passing of the stalled ChFTA by negotiating a deal with the ALP conceding some compromises getting agreement and passing this important legislation
• on terrorism he has initiated a new path, with closer engagement with the Muslim Leadership. This is still early days but we have seen some in the community taking a public stance against the terrorists. This was not a faultless performance however. His earlier announcements were very wishy-washy, but he came back quite well in clarifying the country's position.  (I think not well enough really - but I will leave that commentary to another time)
• On same sex marriage, he has waved away the trap by Warren Entsch to etch away at the current government policy and managed to keep re-state the existing policy of his government for a plebiscite after the next election with legislation to follow thereafter.

Most importantly he has resisted distinguishing his policies/government from that of Abbott. On the contrary he has defended them far more effectively than he had when he was 'just' a minister in the Abbott government... that's a sobering reflection and a reminder of how he attained his position.

Still Turnbull argues he is a changed man having learned much from his loss of leadership in 2010, and that now he is a more inclusive leader.

I guess we will all see, these are still early days. 

Some visions of the future

The leader has changed. The media are holding off. Even the ABC is seemingly more balanced with pieces on heretofore taboo subjects such as terrorism, corrupt Unions and ALP leadership. The polls have improved. Turnbull's personal popularity is sky high especially when compared to Shorten, who remains very unpopular. Even more importantly the two party preferred has the LNP ahead for the first time in almost 2 years. Without doubt the political mood has changed.

Turnbull has taken to the airwaves with confidence. His vision for economic growth through innovation has been widely reported He is slowly, purposefully, engaging all interest groups, opening up dialogue and inviting involvement. This has the potential to initiate a new era in Australia's advancement.

In his recent article (The Australian, Oct 24, 15 Malcolm Turnbull’s positivity can transform Australian politics ) Paul Kelly suggests Turnbull's four rules of new politics; -

• Be flexible and willing to change any policy that has failed.
• Avoid setting policy straight-jackets which limit your future decisions. Do not fall into the traps set by journalists with their rule-in, rule out questions. 
• Do not confuse the ends with the means. Focus on the ends and adjust the means when necessary.
• Accept the limitations of what governments can do. Government acts as a catalyst for enabling and motivating the nations resources to achieve common goals.

We are yet to see how this pans out, but it is an inviting future, and if achieved, well worthy of the declaration; "Long Live the King!".