Tuesday, September 29, 2015

Morrison's start was woeful, but there's time

Scott Morrison's first outings as Treasurer were woeful.

On the night of the spill, Malcolm Turnbull promised something different: "a style of leadership that respects the people's intelligence, that explains these complex issues and then sets out the course of action we believe we should take, and makes a case for it".

Turnbull promised "advocacy, not slogans".

Morrison gave us, "work, save, invest".

And then this slogan: "We have a spending problem, not a revenue problem."

It isn't even the truth. Australia does indeed have a revenue problem, as Morrison's predecessor was happy to acknowledge. From the turn of this century right through to the global financial crisis, the Australian government's income never dipped below 25 per cent of gross domestic product. Then it collapsed and hasn't fully recovered. We do indeed have a revenue problem, as well as a spending problem. Spending is 25.9 per cent of GDP, revenue is 24 per cent.

Pressed by journalist Leigh Sales about the need to tackle both, Morrison replied that the budget forward estimates had revenue climbing back to a touch over 25 per cent of GDP by 2018-19, which meant things would be fine.

Except that it won't. The budget forecasts have revenue barely climbing at all, reaching just 24.2 per cent of GDP in 2016-17. After that, the budget projections have it climbing to a tad over 25 per cent. But projections aren't forecasts. The difference is enormously important, and a treasurer who could really explain complex issues would have pointed it out.

Forecasts are the Treasury's best guesses, taking everything into account. Each budget it produces forecasts for the following two financial years, and for the years beyond that, when it's too difficult to make forecasts, it produces "projections"...

The projections come with a health warning. Here's how the Treasury spelt it out in the budget from which Morrison quoted: "These projections are not forecasts, but rather are based on a set of medium-term assumptions."

The assumptions are odd, and they produce odd results, at times quite different to those of any reasonable forecast. They assume "spare capacity in the economy is absorbed over five years". That's a fancy way of saying they assume the unemployment rate will slide to 5 per cent.

That's right. They assume a slide in unemployment (which would indeed boost government revenue).

To get the fall in unemployment, the Treasury projections produce a very fast economic growth rate of 3.5 per cent a year ("above trend") for five consecutive years.

Naturally, it boosts projected revenue. But it has no basis in reality. There's no particular reason to think it will happen. It's the automatic output of a blindly mechanical model. It's wishful thinking.

Right now, Australia's economy is growing at an annual pace of just 2 per cent. For as long as that happens, we are indeed going to have a revenue problem, and also a spending problem.

And for as long as commodity prices fall. The Reserve Bank's index of commodity prices has been sliding for the past four years. It's now only half what it was, and it is continuing to edge down. The news from China offers little hope. Commodity prices drive taxation revenue. Our government is both collecting too little for the amount it is spending and spending too much for the amount it is collecting. A treasurer able to address complex issues would talk about both. But Morrison has already shut down discussion.

"I'm not in that camp," he says, when asked about the need to tackle revenue.

Closing off an option will limit our trust in the new Treasurer and make us feel he is not really prepared to govern in our interests.

It will also make it more difficult for him to manage the budget, should the downturn in revenue continue.

It's less than Turnbull had led us to hope for, but it's not too late.

The best thing for Morrison to say for the next few weeks is not that much, as he reads into the job. Then he should start a really open conversation about the budget and tax where all options are on the table (although some more preferred than others), including the option of raising more tax.

The most popular premier in the land will be pleased to help. Morrison's NSW colleague Mike Baird believes we will have to raise more in order to properly fund hospitals. Victoria's Labor Treasurer, Tim Pallas, believes the same thing. So does South Australia Premier Jay Weatherill​.

Their views shouldn't be instantly dismissed. They're going to be down $80 billion over the next 10 years because of a decision by Joe Hockey to cut their funding formula to tart up his first budget. They're the real victims of the slowdown in revenue. And they're the ones who are going to have to provide the services we need. We are entitled to an open and honest conversation about how much we are prepared to pay for our services, as well as how much spending on them should be cut.

Morrison has the ability to transcend his past by opening up an intelligent conversation. It's what Turnbull led us to expect. Or he can revert to form and hide behind slogans. It's what we've become used to.

In The Age and Sydney Morning Herald

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Friday, September 25, 2015

Tony Abbott's pension. The myth that won't die

Some stories are too good to die, like the one about Tony Abbott's prime ministerial pension. Apparently he would have been able to get one if he had been in office for just three more days.

It is said that the pension is only available to prime ministers who have been in the job for two years. Abbott became prime minister on September 18, 2013. He was replaced just short of two years, earlier this month on September 15. If only he had held out another three days he could have retired on serious money, or so the story goes.

His treasurer is said to have done much better. Joe Hockey was sworn in on 18 September, 2013 and left office on September 21 - a period of just over two years.

It's so delicious it ought to be true, which might be why the ABC recycled it several times on the night of the spill and one of the News Corporation papers reported it as a fact the next day. And it could be why I am still getting emails berating me for overlooking it when I totaled Abbott's entitlements on the night of the spill.

I didn't overlook it. I checked it out and found it wrong. But I was unwise not to say so, figuring that there was not much news in something that was wrong.

I'm still getting emails. So rather than reply to each one, and to the others that are bound to come, I'll set the record straight.

The story is almost - but not completely - baseless.

The small amount of truth lies in a document some of the believers keep circulating on the internet. It's an account from the Parliamentary Library of the Parliamentary Retiring Allowances Act. The account notes that in 1959 the "period of service for prime minister to attain eligibility reduced from three years to two years".

Proof, right? But eligibility for what? For a small supplement to the pension worth at the time 2000 to 3000 pounds per year.

It's not the pension itself, it's an add-on for ex-prime ministers.

And that's where the believers stop reading, having found what they were looking for. But further down in the same document it says the provision was repealed in 1978 and the "discreet prime ministerial benefit discontinued".

The Library is right. Today section 19A of the renamed Parliamentary Contributory Superannuation Act refers to a supplement only available to prime ministers who held the office before 1978, none of whom are alive.

If Abbott retires, he will get around $300,000 per year, based on his length of service and the jobs he has held. The provisions don't step up with every two years of service.

But I'm sure I'll be told again that they do. The internet has both made it easier to find out the truth and easier to be fooled by dated information that looks as if it is truth.

In The Age and Sydney Morning Herald

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Australia heads to Atlanta for last-ditch talks to revive the Trans-Pacific Partnership

The stalled Trans-Pacific Partnership negotiations will be restarted next week, with the possibility of an agreement by the week's end.

"There are some unresolved issues, but I don't believe they are intractable," Trade Minister Andrew Robb said as Australian officials prepared to travel to Atlanta, where officials from 12 nations including the United States, Japan and Singapore will meet to narrow down differences before ministerial talks due later in the week.

Talks aimed at creating the world's biggest free-trade zone broke down in Hawaii in August, with disputes over medicines, cars and dairy products the main stumbling blocks.

Mr Robb is understood to have withstood enormous pressure from the US to extend the period of so-called data protection for new biotech medicines known as biologic drugs. The US wanted 12 years in which drug companies could be able to charge high prices, Australia wanted no more than the present five.

It had been thought that an agreement would be impossible once the Hawaii talks broke up, because of the start of the US election season and an election in Canada. US President Barack Obama is keen to land the deal before he leaves office in January 2017.

The fresh round of talks begins in Atlanta on Monday, and then if progress is made ministerial talks including Mr Robb will begin on Wednesday.

The timetable means a deal could be sealed by Sunday, creating a new trade zone that would encompass 40 per cent of the world's economy...

It could only be done if the US, Japan, Mexico and Canada reach agreement on market access for agriculture and vehicles in separate talks that will take place in Atlanta as officials are meeting.

Mr Robb said he remained committed to playing a constructive role to help conclude a high quality TPP.

All going well he would be in the US next week.

More than 150 health experts including 60 professors of medicine have written to Mr Robb calling on him to remain firm in opposing measures that would add hundreds of millions of dollars to the cost of the Pharmaceutical Benefits Scheme.

They are also opposed to so-called investor-state dispute settlement mechanisms that would allow foreign corporations to sue Australian federal, state and local governments over policies to protect health that are seen to hurt foreign investment.

"We understand that the government's agreement with the ISDS clause is dependent on both the adequacy of health and the environmental safeguards," the letter says. "However, we believe the safeguards are insufficient to prevent corporations from using ISDS to challenge legitimate health and environmental measures."

The Australian Fair Trade and Investment Network has sought a meeting with Prime Minister Malcolm Turnbull to argue that Australia should continue to oppose stronger monopolies on biologic medicines, draconian copyright rules and foreign investor rights to sue governments.

In The Age and Sydney Morning Herald

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Why Sydneysiders are pulling up stumps. Victoria becomes Australia's fastest-growing state

An "extraordinary surge" in population has pushed Victoria to the top of the national ladder after it gained an extra 97,500 citizens in the year to March, a growth rate of 1.7 per cent.

The next fastest-growing states, NSW and Western Australia, had growth rates of only 1.4 per cent, which was also the national average and the slowest rate for a decade.

Australia's population growth rate is now well below the 2.1 per cent achieved during the height of the mining boom and below the 1.5 per cent per year assumed in the intergenerational report.

The slowdown is the result of both a slide in the birthrate and a sharp fall in so-called net overseas migration as fewer immigrants come to Australia and more Australians move overseas.

Victoria has also benefited for a surge in internal migration, as relatively affordable housing and good job prospects make it a magnet for the rest of Australia.

In the past six months, 37,800 Australians have moved to Victoria from other states and only 31,900 Victorians have left.

By contrast 45,400 Australians moved to NSW but 48,800 NSW residents left.

Victoria and Queensland are the only two states gaining population as a result of interstate migration...

Demographer Bob Birrell from the Australian Population Research Institute said conditions in Sydney were driving the exodus to Melbourne.

"If you want a freestanding house in Sydney for less than $600,000 you have to move out 55 kilometres," he said. "In Melbourne you can still get one for $300,000.

"I am actually a little surprised that more Sydneysiders aren't moving to Melbourne."

Immigration was also feeding the extraordinary surge in Victoria's population. Although NSW received slightly more immigrants than Victoria, Victoria received more as a proportion of its population.

Population projections produced by the Bureau of Statistics have Melbourne's population exceeding Sydney's on two of the three scenarios modelled.

Under the "high fertility, overseas migration and life expectancy" scenario, Melbourne's population would be 9.193 million by the middle of the century and Sydney's 8.431 million.

Under the "medium fertility, overseas migration and life expectancy" scenario, Melbourne's population would be 8.162 million, and Sydney's 8.124 million.

Under the "low fertility, overseas migration and life expectancy" scenario, Melbourne's population would be 7.353 million and Sydney's 7.716 million.

Dr Birrell said the projections assumed that recent rates of population growth would continue, something that was unlikely. The Melbourne CBD simply couldn't keep growing as fast as it had because it would run out of room.

The bureau had assumed that the mining boom-related surge in immigration would continue 40 years into the future.

In The Age and Sydney Morning Herald

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Thursday, September 24, 2015

Like the Black Knight. Why the tax white paper needs a reset

The tax white paper was badly in need of a reset. Like the Black Knight in Monty Python and the Holy Grail, the Treasury was continuing to draft the paper after its arms and legs had been chopped off.

Originally told that nothing was off limits, the Treasury was then told (through the prime minister via the media) that superannuation was off limits, that negative gearing was off limits, and that capital gains tax was off limits.

It had already got the message that mining taxes and carbon taxes were off limits.

With so few arms left to reform the tax system, it would have produced a document that would have not only lacked impact at the time it was released, but that wouldn't have even been filed away for bringing out when the time was right.

When it restarts work it will get a clearer idea of the priorities of the new administration, and it will be able to make it an administration document.

That's what a white paper is: a statement of the goals to be pursued by the administration. (The "green paper" that precedes it is a statement of options. It's green because it's not fully formed).

It is highly likely Malcolm Turnbull will lead by example. There's nothing to stop him making a few quick symbolic changes to the tax system before the white paper process is complete, giving the Treasury and the public an indication of his priorities.

The green paper would be postponed until the first half of next year, and the white paper, with concrete serious options for further tax reform, until after the late 2016 election.

It's easy to guess at the measures that won't be candidates for quick reform.

The goods and services tax can't be changed quickly. It would need the agreement of the states, and it would need a lot of time to persuade the public.

While cutting company tax might be a good idea, it's a difficult case to put before an election, and (as was generally agreed at this week's Australian Financial Review tax summit) it's expensive to do to the extent that would actually make Australia competitive.

The government has already cut the small business rate from 30 per cent to 28.5 per cent. Doing the same for big business would scarcely make any difference in a world where some of Australia's competitors offer tax rates as low as 16 per cent.

By instinct Turnbull would like to cut personal income tax and fund the cuts by removing the "swiss cheese" raft of exemptions and concessions that make the system so complex. He said so, shortly joining Parliament.

But that's very hard work. It can't be done in the next few months.

What can be done, right now, is to blunt superannuation tax concessions. The biggest of them are overwhelmingly directed to high earners, who don't need them to put away for their retirement.

Former NSW treasurer Michael Egan told the tax summit it was a scandal that he and everyone else well advised over 60 paid nothing on their super, thanks to Peter Costello.

"It is the worst thing that any treasurer has ever done in the history of federation," he said. "It is a treasurer's responsibility to protect the revenue, and he didn't."

Action on super, perhaps limiting the absurdly generous amounts high earners can pump into funds each year in order to pay less tax, would raise big dollars straight away. It would show that the new Prime Minister lacked the blindspots of the old one. It would be a downpayment on more complete tax reform when the time comes.

In The Age and Sydney Morning Herald

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Wednesday, September 23, 2015

AFR tax summit: Strip GST powers from states, John Brumby says

State premiers should be stripped of their power to block changes to the goods and services tax as part of a plan to kick-start tax reform, a former premier has told the AFR tax summit.

John Brumby, Victoria's premier from 2007 to 2010, told the summit that when he reviewed the distribution of the GST for the Gillard government in 2011, he was given explicit instructions not to investigate raising the rate.

He said it was "nonsense" to suggest the rate couldn't be changed without the agreement of every single state as had been claimed by the former treasurer and prime minister.

"That may well have been the arrangement under an intergovernmental agreement, but it needn't be in the future," he said.

"If you think about it, everything else we do goes through the parliament with a simple majority, an absolute majority. If it's constitutional, it's a two-thirds majority.

"What if you got every state and territory in Australia across the line except for the Northern Territory and Tasmania, constituting less than 5 per cent of the nation's GDP? Could they hold up the whole of the nation? I think the threshold needs to be lowered to a two-thirds agreement of the states and territories."

He also rejected the notion that boosting the GST would especially hurt low income earners...

"The UK has done some excellent work on this. A large cohort of the people who are poor are actually university students, and they are not poor all their life. We need to rethink just how regressive the GST is."

The head of the Australian Council of Social Service, Cassandra Goldie, said she would not be "verballed" into saying she supported increasing the GST.

She would be prepared to consider it as part of a "grand bargain" to reform Australia's tax system.

"Before we look at that, we should look at broadening the base of the income tax and cutting superannuation tax breaks," she said.

Grattan Institute chief executive John Daley told the summit the simplest quick tax reform for the Turnbull government would be to scrap the generous $180,000 annual limit on the amount individuals could contribute to super from post-tax income.

"Anyone who can pay in that much per year out of post-tax income doesn't need help with their retirement," he said.

He proposed instead a lifetime cap of $650,000 indexed to inflation.

Prime Minister Malcolm Turnbull has denied reports that he has instructed the Treasury to stop work on the the tax paper, pending a "reset".

However, Treasury staff say they have been asked to stop and rethink tax "from the ground up".

Mr Daley told the summit he guessed that super would be "at least, to some extent, the first against the wall".

South Australian Premier Jay Weatherill told the summit that "very substantial opportunities had opened up" with the ascension of Mr Turnbull.

"He is talking about respecting the intelligence of the Australian people. I haven't heard those words since Bob Hawke," he said.

"We are in a period where we are relatively free of elections. I talked to the Prime Minister last Friday, and I have to say I am encouraged. We have the potential to strike a grand bargain."

South Australia has proposed extending a GST-style tax of 10 per cent to banks, to be charged on the margin between the cost at which they borrow money and the price at which they lend it. It would apply only to consumer and not to business loans.

It would raise $3 billion to $4.5 billion per year for the states, but would have to be administered nationally, to prevent tax competition between the states.

In The Age and Sydney Morning Herald

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Tuesday, September 22, 2015

Bigger on the inside. Turnbull's administrative reshuffle

There's more to Malcolm Turnbull's reshuffle than a change of ministers. There has also been change in the nature of ministries.

Copyright, long the responsibility of the Attorney-General's Department, has been quietly moved out of the hands of Attorney-General George Brandis and given to the Minister for Communications and Arts, Mitch Fifield.

Senator Brandis was a strong proponent of heavy copyright enforcement, pushing for internet service providers to send copyright warning notices to users they suspected of illegal downloading. For almost two years he has sat on a report from the Law Reform Commission that recommended more liberal access to access to published works through a system known as fair use.

Matthew Rimmer, professor of intellectual property law at the Queensland University of Technology, said Senator Fifield would have a "clean slate" to reconsider options "pointedly ignored" by Senator Brandis.

The Attorney-General's Department was always an odd place for copyright, apparently justified because it involved the law. The Treasury might have made more sense, on the ground that copyright is a restriction of trade with implications for competition policy.

The inclusion of copyright in the Communications and Arts portfolio opens up the possibility of change.

Monash University copyright specialist Rebecca Giblin said the minister would need to examine reforming Australia's "archaic exceptions regime", finally ending the ban on the so-called parallel import of books, ending perpetual copyright for unpublished works, and ratifying the Marrakesh Treaty which would give greater access to books to the vision impaired. 

The Department of Communications has also lost a responsibility...

It will no longer look after Government 2.0, the move to get all government services online. The responsibility will move to the Department of Prime Minister and Cabinet where it will remain under the eye of the former communications minister, new Prime Minister Malcolm Turnbull.

Another change transfers responsibility for childcare benefits and family assistance from the Department of Social Services to the Department of Education and Training. The move will give Education Minister Simon Birmingham a much broader responsibility than his predecessor Christopher Pyne, encompassing all forms of financial support to families with children.

In a move interpreted as a sign that the Clean Energy Finance Corporation will not be abolished as had been government policy, the agency will move from the Treasury to the Department of the Environment. The department will also gain responsibility for the Renewable Energy Agency.

As foreshadowed in the agreement between the new Prime Minister and the National Party, responsibility for the management of water resources moves from the Environment Department to the renamed Department of Agriculture and Water.

Although seldom examined closely, changes in the so-called administrative arrangements can provide useful clues to the government's plans.

On its election in 1996 the Howard government moved responsibility for ports from the Transport Department to the Department of Industrial Relations. Two years later the industrial relations minister rather than the transport minister was able to handle the 1998 waterfront dispute.

In The Age and Sydney Morning Herald

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Labor says no to a higher GST, yes to lower company tax

Labor has rejected co-operating with the Coalition on boosting the goods and services tax, whatever the outcome of next year's tax white paper and negotiations with the states.

Addressing the Australian Financial Review tax summit in Sydney, Labor treasury spokesman Chris Bowen said while any GST rise would be permanent, any income tax cuts funded by it would be eaten away by bracket creep.

"Are we really going to increase the GST every time the nation needs to deal with bracket creep?" he asked. There were as many as five suggestions for what to do with any extra GST, among them funding state budgets, cutting the deficit and cutting company tax. Only one could be afforded.

"It's like when you get a raise in your salary and you think of five things you'd love to do with the extra money," he said. "Deep down you know you can only do one."

But Labor was prepared to negotiate with the Coalition on cutting the company tax rate.

Asked if he agreed that company tax was ultimately borne by a firm's employees rather than its owners, Mr Bowen replied: "It is a statement of fact which I agree with.

"I would like to see the corporate tax rate come down over time. I have previously said the nation should be aiming for a 25 per cent corporate tax rate."

BHP defended its tax record at the conference, saying it paid more than the Australian statutory rate of 30 per cent, and paid 35 per cent when royalties were included...

Last year it booked $60 billion of revenue in Australia and only $1 billion in the low-tax jurisdiction of Singapore. Much of that faced top-up tax in Australia at a rate of 58 per cent.

"We support measures to crack down on base erosion and profit shifting. We support it even though it is going to cost us more money in compliance," BHP's head of tax, Jane Michie, said. "That's not because we are altruistic; it's because we are realistic. There's a growing consensus things have to change."

On Wednesday, BHP will release a complete account of its tax payments broken down by commodity and country.

Tax expert Greg Smith, who was a member of the Henry tax review, said Australia shouldn't bother trying to compete on corporate tax rates with countries such as Singapore and Britain with rates below 20 per cent.

"There's no doubt in my mind that Australia cannot chase footloose investment as its strategy," he said. "To do that you've got to go to 15 per cent. You'll blow your political equation way before you get there."

Economist Saul Eslake said there were clues to Malcolm Turnbull's approach to tax in one of his speeches given soon after he became an MP 10 years ago. He called for lower income tax rates and a broader base. That would mean fewer exemptions, disproportionately used by high-income earners.

"Australia's personal income tax base is like a giant Swiss cheese, riddled with holes that allow people to pay less tax on particular types of income," Mr Eslake said.

In The Age and Sydney Morning Herald

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If the Abbott government was paralysed by something as simple as the effects test...

By the end, Abbott couldn't govern.

Obliged to respond to a report it had commissioned, his cabinet froze.

Pressuring it from one side were small businesses and the Australian Competition and Consumer Commission, the body charged with protecting consumers and advancing competition. They backed the finding of the Harper competition review, that it had become next to impossible to successfully prosecute big businesses for monstering small ones.

Pressuring it from the other side were Australia's biggest businesses, among them the big banks and Woolworths and Wesfarmers (which owns Coles). Backing them were the Business Council, some big-business-friendly unions, and the Australian Labor Party.

Abbott's initial instincts were oppose the Labor Party, the unions and big business. Almost by definition, anything they agreed on had to hurt someone. His minister for Small Business Bruce Billson strongly backed the Harper review, as did the National Party.

Harper had found that Section 46 of the Competition and Consumer Act lacked force. In Billson's words, it was "a dud" – "like a hunting dog that won't leave the porch".

The section prohibits a corporation with substantial market power from taking advantage of that power for the purpose of eliminating or substantially damaging a competitor.

Which sounds fine, until you consider the loopholes, as lawyers do.

One is that the corporation has to "take advantage of that power" for the purpose of eliminating or substantially damaging a competitor.

It would be perfectly legal for a big firm with market power to sell its products for next to nothing and run up huge losses in order to force a competitor out of business, so long as it did not "take advantage of its market power" to do it.

Alan Fels, a former head of the Competition and Consumer Commission, points out that there have been cases where the Federal Court has found that blatant anti-competitive behaviour by big businesses is lawful because there was no "taking advantage".

"The lawyers and economic consultants representing big business have had a field day, earning a king's ransom in fees, by producing Houdini-like escapes from the law based on reasoning about the meaning of these words."

The other loophole is the words: "for the purpose of"...

Under Australian law, appalling behaviour that destroys competition and competitors is quite OK, so long as it is not for the purpose of destroying competition and competitors.

Short of a confession, the purpose of an action is almost impossible to prove. It involves looking inside someone's mind and asking why they did something rather than looking at what they did.

Only two of the 129 countries with competition laws build them about intent. The rest look at effects.

"No other economy in the world has such a weak provision dealing with dominant businesses able to use their economic muscle – not to win the contest to delight customers, but to take out businesses or to fortify their positions so that new entrants don't get a chance," Billson said this month shortly after Abbott's cabinet rolled him.

Actually, it didn't roll him. It decided to shelve the decision on Section 46 indefinitely.

Harper wanted it reframed to prohibit a corporation with substantial market power from engaging in conduct that had the purpose, "effect or likely effect" of substantially lessening competition.

Harper recommended the effects test in March. For the entire six months since – right up until his last day – Abbott was unable to decide what to do, becoming cooler and cooler about the idea the more that big business lobbied. The Business Council is reported to have threatened a public relations campaign that would have said that $2 milk was under threat, or something like that; $2 milk would indeed have been under threat if its effect had been to take out competitors, eventually resulting in higher prices.

So too would the behaviour of Qantas, which in 2001 helped push Ansett over the edge by taking out full-page ads showing the sea of red seats it was preparing to add to routes all over Australia just as Ansett's receivers were negotiating with a buyer that might have saved it. It would have been hard to prove intent, but it would have been easier to prove effect.

Business lobbyists warned of a "lawyers' picnic" if it became easier to convict big businesses for destroying competition (putting to one side the role that lawyers already played). And they warned of a "chilling effect" if the boards had to consider the effect of their actions on competition in the same way that they did in other countries.

Labor's Chris Bowen backed them, insisting that sometimes big businesses needed to trample on small businesses in order to get big enough to take on Asia.

"As you seek to grow scale to compete in Asia in the coming decades, I could think of nothing worse than a group of competition lawyers saying you have to be a little careful," he told an industry function. An effects test was "one of the most dangerous economic ideas considered by a cabinet in living memory".

Labor's pro-big business stance is easier to make sense of when you realise that big businesses are more unionised than small ones. Unions want them to take out non-unionised competitors.

Turnbull's cabinet is going to have to make a decision, and not only about that. There are scores of completed inquiries that have been piling up in Abbott's in-tray, among them the financial system inquiry which reported in December. With Billson out of the cabinet, and with Labor almost guaranteeing not to attack him, he'll find it easier to back the big guys.

In The Age and Sydney Morning Herald

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Productivity Commission: Abbott commissioned reports that vanished

The independent Productivity Commission has lashed the Coalition for so far failing to respond to reports it commissioned up to two years ago.

Productivity Commission chairman Peter Harris will tell a competition summit on Tuesday that two years after launching what it said would be the most comprehensive review in two decades the government has done nothing about competition policy despite “occasionally reported sightings”.

The 550-page Harper review cost $3 million and was delivered to the government in March.

“For too long now, under governments of both political persuasions, major reports seem to be left to languish if they no longer suit the immediate political agenda,” Mr Harris will say.

“An issue here or there may selectively be picked off, but the outcome is minimal change despite the initial promise.”

“Reports like Harper, or closer to home my organisation’s report on Justice in Australia, now twelve months old, deserve a serious response, even if it is to reject, but explained with logic and thoughtfulness.”

“The issues involved in these reports are not second order. They are social or economic first order matters.”

The Murray inquiry into Australia’s financial system was delivered to the Abbott last December 2014. It wasn’t put on the agenda of the Abbott Cabinet until last Monday, at a meeting set down for the night Mr Abbott was deposed. The new treasurer Scott Morrison and the new assistant treasurer Kelly O’Dwyer want to delay responding to the report again while they get up to speed.

Mr Harris will say that at least the Council of Australian Governments noted the Harper Review, but he will say: “it is rare to recover bureaucratically from the fate of being noted by COAG"...

Mr Harris will say there is massive scope for the Turnbull government to benefit from taking up the sort of reforms suggested by the review.

“Take health, on which Australia presently spends about $150 billion per annum,” he will say. “The Productivity Commission has estimated gains of up to 20 per cent in health budgets from applying known clinical best practice across the board. I emphasise these are known reforms, not hypotheticals.”

“We didn’t give an estimate of gains to welfare and fiscal positions of States and Territories, but we could if a government sought such a number, as part of a wider inquiry.”

In The Age and Sydney Morning Herald

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