Thursday, November 21, 2002

Slow Economic Reform Putting Prosperity at Risk
In case you haven't got it yet, the theme for today's blogging is: reform, reform, reform. Yesterday the ABC reported on "some unusual criticism from a figure of the right against the Howard Government":

Wolfgang Kasper, Professor Emeritus of Economics at the University of New South Wales and senior fellow at the Centre for Independent Studies, said the Howard Government is jeopardising Australia's future prosperity and security by allowing economic reform to slip whilst it concentrates on terrorism and security.

IAN HENDERSON: What sort of reforms should the Government be pressing for right now?

WOLFGANG KASPER: I would say two areas. One is the burden of government. Both the burden of taxation which is creeping up. And secondly the paperwork burden. There are very high compliance costs in some of the things due to heavy regulation and trying to get it absolutely precise.

Secondly we have to reform labour markets. The present industrial relations system is a relic of a heavily regulated past that has, is not tenable in an open liberated economy.

If you had watched monitored the ABC TV's "World at Noon" yesterday, you would have seen Professor Kasper delivering a very similar message.

Howard's Cabinet Ignored Advice on Sugar Tax
In an important story in today's Australian, Duncan Macfarlane writes (sorry, no direct link available):

Federal cabinet disregarded the ``strong opposition'' of its main industry adviser when it decided to impose a tax on sugar to pay for the bail-out of canegrowers, a leaked report reveals.

In advice to cabinet, the Department of Industry panned the sugar tax, saying it would hurt food processors and set ``an undesirable precedent''.

``A levy would penalise consumers and other downstream processing industries for the repeated failure of the sugar industry to undertake reform,'' the department said.

``Such a levy would adversely affect the competitiveness of downstream industries in both domestic and international markets.''

Contrary to the Government's claim that its $150million bail-out would help sugar farmers leave the industry, the department said an earmarked source of funding would actually ``send weaker adjustment signals''.

In spite of the advice, cabinet voted in September to introduce a 3c per kilo tax on sugar that will increase the costs to food processors, including jam and soft drink makers, by 6 per cent.

The new tax will raise about $20million a year for five years.

Labor Senator George Campbell questioned department officials about the advice in a Senate estimates hearing yesterday. They did not deny the advice was theirs but refused to comment any further.

``Revelations in Senate estimates today confirm that the sugar tax is a poorly thought-out policy, implemented against departmental advice,'' Labor treasury spokesman Bob McMullan said.

For once, McMullan is absolutely correct. This is a bogus, inexplicable policy decision.

Macfarlane's article continues:

The food processing industry is pushing to have the tax killed in the Senate and yesterday warned it may take legal action against the Government.

The Australian Food and Grocery Council said the guidelines for the Levies Act stipulate a levy should only be imposed if the industry paying consents through a vote.

The Act was passed to help industries fund their own research and development or other spending to correct ``market failure''.

``The Levies Act was designed to help industries that were levied and that's clearly not what's happening here,'' AFGC executive director Dick Wells said.

In its advice, the department also warned the Government against trying to help the sugar industry by encouraging the production of sugar-based ethanol fuel. ``Experience in Australia and internationally suggests ethanol is only commercially viable as a transport fuel when supported by government assistance,'' it said.

It said it doubted claims from the Queensland-based Sugar Research Institute that new Zeachem technology could overcome ethanol's ``significant cost disadvanatage''.

Farmers will receive a range of subsidies in the Government's sugar package including a year of income support, replanting loans of up to $50,000 at a 50 per cent discount, and golden handshakes of $45,000 to leave the industry.

"Experience in Australia and internationally suggests ethanol is only commercially viable as a transport fuel when supported by government assistance." In other words, ethanol is inefficient and its use destroys living standards by shifting resources from high valued to low valued uses.

My advice to the Howard government: listen to your advisers at the Department of Industry, and rescind all elements of the sugar package. It is an utter, utter disgrace.

Unforgiveable, That's What You Are

Brian Deegan, whose son Joshua was slaughtered by terrorists in Bali on October 12, writes in the Australian today that he has forgiven the murderers. But apparently he cannot bring himself to forgive John Howard:

Why is your Government torturing certain citizens of our country by allowing armed invasions upon their private properties – all in the name of national security?


I was dismayed when one of my son's best friends told me the other day that people told him that it was now four weeks and he should be "getting over it".

To those people, I pose this question: What part of "it" do you expect these kids to get over by now? They have returned from a war zone where people have attempted to murder them by the foulest of means. They have seen their best friends or relatives blown apart and then incinerated. They have been physically injured themselves. I repeat, what part should they be getting over?


But it seems to me to be terribly unfair that it is men of our ages that pick the fights and then expect boys of my son's age to conduct the battle. Time and again countries send into battle children whose sense of adventure overshadows and totally clouds any sense of mortality.


I have forgiven those uneducated people who, with fear in their hearts, have murdered my boy for a paltry $10. But I will never forgive educated people who cause the death of another child as a result of belligerent policy.

Brian: your son's murder was an act of pure evil, and I agree with you that it is something you will probably never "get over"; nor should you. But it is simply immoral for you to forgive these murderers so quickly (many of whom haven't even been caught yet), whilst at the same time blaming John Howard for your loss. If Simon Crean was Prime Minister, and if our foreign policy was different (and it's not clear that even if Crean was PM, our foreign policy would be different), those Indonesian thugs would still have incinerated those civilians - including your son - in Bali. And if you don't believe me, just listen to Osama Bin Laden. Now that we're pulling our SAS troops out of Afghanistan, do you think that Bin Laden will say "all is forgiven"?

The Howard Government Doesn't Understand the Link Between Free Markets and Prosperity

The Centre for Independent Studies' most recent Economic Freedom Watch (to which I contribute) reports that:

The Howard government has demonstrated by arbitrary and discriminatory measures such as the new sugar levy or the non-tariff protection of Australian ethanol production that it cares little about cultivating economic freedom. The burden of taxes has now reached a record 25% of the domestic product. This shows that those who shape our economic policies do not understand the wellestablished, long-term connection between free markets and prosperity.

Australia’s handicaps of insufficiently reformed labour markets and rising burdens of taxation have not been tackled. Unfortunately, the attention of politicians and the public is now diverted to security issues. The long-term consequence will be that an unnecessarily weak economy adds to our insecurity.

Right on! Come on John Howard and you other guys - lift your game. We need more economic reform. Telstra needs to be completely privatised, as a matter of urgency. Taxes and spending are too high. We need more labour market reform. The higher education sector urgently needs reform. And what's with all of these crazy special levies and taxes?

Partly because the ALP is so weak, Howard's popularity has gone through the roof. It's time to take advantage of this and start kicking a few heads on economic policy.

She's Baaaaacckkkkk!

The Australian reports today that Kate Carnell, whose major political achievements have been:
- painting the grass green at Bruce Stadium;
- giving Bruce Stadium a redevelopment which left ACT taxpayers $45 million out of pocket;
- being Chief Minister at the time of the death of a 12-year-old girl at the implosion of Canberra Hospital;
- rolling her car after a charity cricket match at a winery and leaving the scene before police arrived

is attempting a comeback to politics by trying to replace outgoing ACT Liberal senator Margaret Reid:

"I am going to go for the job," she told ABC Radio in Canberra.

"I have agonised because you wonder why you would do that to yourself, but the reason is that I love this city and I love promoting it and I think we really do need to keep Canberra up in front of the faces of federal politicians and Australians as a whole."

Well, Kate let me tell you: you are certainly not alone. Just about everyone in Canberra will now agonise over your decision as well.

Wednesday, November 20, 2002

How the Liberals will Win the Next Federal Election: Persuade the ALP to Hire John Quiggin as an Economic Adviser

In today's Australian Financial Review John Quiggin writes (link requires subscription) that Labor's policy - if it wants to win the next election - should be to increase taxes and expenditure. Funny, that. In a nutshell, I thought that was already the ALP's policy:

Taxing and spending are the two main functions of modern governments...

The only way that Labor can offer domestic policies substantially different from those of the government is to spend more money, and that means raising more revenue. Increased taxation is not the only way to finance higher expenditure...In the end however, more spending means higher taxes.

Labor should be taking this opportunity to point out that an increase in the proportion of national income allocated to health, education and other services funded by government is both inevitable and desirable. The government's difficulty in cutting spending reflects this.

Rather than scorning the government's reliance on levies, Labor should exporit this precedent. A Medicare-style levy at a rate of a per cent or 2 per cent could fund substantial new expenditure on education and the environment, while allowing the ragbag of existing levies to be scrapped. Unlike the spurious idea that the sale of assest can be used to finance current expenditure, thge revenue from a levy would provide Labor with a genuine war-chest for financing election promises, and one that the government would be unable to match.

For the moment it is probably too optimistic to suppose that any political party in Australia would advocate an increase in standard rates of income tax to finance improvements in health, education and the environment. But ultimately, those who will the end must will the means.

John, I hope you are being wildly optimistic! And good luck in sunny Queensland.

Tuesday, November 19, 2002

Islamic Jihad [a.k.a Hezbollah]: A "Resistance Group"
Whilst driving into work a few weeks ago, I was monitoring the local ABC News (note - one never "listens to" or "watches" the ABC; instead, one is forced to monitor the ABC).


According to the non-partisan Council on Foreign Relations, Hezbollah "is a Lebanese group of Shiite militants that has evolved into a major force in Lebanon's society and politics. It opposes the West, seeks to create a Muslim fundamentalist state modeled on Iran, and is a bitter foe of Israel."


Hezbollah and its affiliates have planned or been linked to a lengthy series of terrorist attacks against America, Israel, and other Western target, including:
- a series of kidnappings of Westerners, including several Americans, in the 1980s;
- the suicide truck bombings that killed more than 200 U.S. Marines at their barracks in Beirut, Lebanon, in 1983;
- the 1985 hijacking of TWA flight 847, which featured the famous footage of the plane's pilot leaning out of the cockpit with a gun to his head;
- two major 1990s attacks on Jewish targets in Argentina—the 1992 bombing of the Israeli embassy (killing 29) and the 1994 bombing of a Jewish community center (killing 95).

I wrote to the local ABC to point out to them that Islamic Jihad is, in fact, a terrorist entity. In fact, Australia, the EU and the US all list IJ as such pursuant to UN Resolution 1373, which states:

The Security Council:

1. Decides that all States shall:

(c) Freeze without delay funds and other financial assets or economic resources of persons who commit, or attempt to commit, terrorist acts or participate in or facilitate the commission of terrorist acts; of entities owned or controlled directly or indirectly by such persons; and of persons and entities acting on behalf of, or at the direction of such persons and entities, including funds derived or generated from property owned or controlled directly or indirectly by such persons and associated persons and entities;

Pursuant to this, the Australian Minister for Foreign Affairs has listed IJ as a terrorist entity.

But in its reply to my email, the ABC steadfastedly refuses to acknowledge that IJ is a terrorist entity:

Dear Dr Robson,

Thank you for your email of November 5 concerning a news item on Radio 666 in Canberra. Our apologies for the delay in responding.

Islamic Jihad is certainly a resistance group by any interpretation of the English language.

While Israel, the US and the EU have declared the Islamic Jihad and HAMAS terrorist organisations, the UN has not done so.

UN resolution 1373 which you cite is aimed at curbing finance and other assistance for any group or person carrying out terrorist acts. It was prompted by events of September 11, 2001, without naming any organisation specifically despite Australia’s own submission on the subject.

Resolutions 1267, 1333 and 1390 do in fact list people and organisations officially deemed by the UN to relate terrorism. They do not include Islamic Jihad (or HAMAS).

We hope this clarifies a complex subject.

Yours sincerely

John Tulloh
Head, International Operations
ABC News and Current Affairs

Well, John, it certainly does clarify a lot about you and the ABC. If I understand you correctly, the ABC's position is as follows: even though the Australian Government and other governments around the world have officially listed Islamic Jihad as a terrorist entity (along with several other terrorist organizations), the ABC - by referring to IJ as a “resistance group” - does not, in fact, regard Islamic Jihad as a terrorist entity.

In other words, according to the ABC, when Hezbollah slaughtered 95 civilians at a Jewish community center in 1994, it was engaging in "resistance", not terrorism.

Winston Churchill: War Criminal


Great Moments in Revisionist War History, Part II

The Daily Telegraph reports on a piece in the German tabloid, Bild:

Winston Churchill was effectively a war criminal who sanctioned the extermination of Germany's civilian population through indiscriminate bombing of towns and cities, an article in the country's biggest-circulation newspaper claimed yesterday.

In an unprecedented attack on Allied conduct during the Second World War, the tabloid Bild has called for recognition to be given to the suffering inflicted on the German population during the strategic air campaign of 1940-45.

The newspaper's campaign, provoked by a new German history of the bomber offensive, breaks six decades of virtual silence on the subject, and is being seen as the latest manifestation of a belief among Germans that they too were victims of the war - albeit a war started by their country.

Hmm, all of this sounds a bit familiar. A few months ago I reported on the following story:

TOKYO: A government historian said Thursday that the finding of a Japanese midget submarine sunk just before the 1941 attack on Pearl Harbor was evidence that the United States, not Japan, started the war between the two nations.

"The finding provides evidence that it was the Americans who made the first shot, which means the war had already started even before Japan's air attack on Pearl Harbor," said Takehiko Shibata, a historian at the Defense Agency's research institute. "It's been our understanding of how World War II started. Now we have the proof."

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