Monday, August 31, 2009

237 reasons to have sex (not all of them good)

The complete list, and the survey itself, is below.

Number One?

1. I was attracted to the person

The answers themselves are lovely, and tell us a lot about ourselves.

Why Humans Have Sex

HT: TierneyLab

Sunday, August 30, 2009

So, this idea of pay-as-you-drive taxes, what's it all about?

Harry Clarke did the study for the Henry Review.

Here he guides you through it in 33 easy slides:

Road taxes

HT: Harry Clarke

Saturday, August 29, 2009

Want control? Chuck sand in the wheels

It's called a Tobin Tax, and now the UK's top financial regulator, Adair Turner is proposing a tax on all financial transactions around the world.

"The purpose of this tax, he argues, would be to prevent the return of "business as usual" for the banking sector: "If you want to stop excessive pay in a swollen financial sector you have to reduce the size of that sector or apply special taxes to its pre-remuneration profit."

Gillian Tett can see the arguments.

And guess what?

So can our Reserve Bank's Assistant Governor (Financial Markets), Guy Debelle.

You can hear him saying so here, at slides 6 and 7:

"One of the objections raised to the Tobin Tax is that if it wasn't implemented in every single country in the world y0u'd see the whole of financial services shift to the Cayman Islands or the like where this wasn't there.

And that argument can always be put in the way of regulatory change, but to some extent, if you’re throwing sand in the wheels, then some of the sand is probably going to slow things down.

Yes, it's not going to be completely effective, the car’s probably still going to keep on driving, and there’s always going to be regulatory arbitrage, but that doesn’t mean you don't contemplate these sort of things."

Gee he makes sense.


Friday, August 28, 2009

An October rate hike?

Rory Robertson is giving it credence:

"The October rate-hike bandwagon now is rolling fast. Analysts quickly confirmed that October is six months after April (the month of the final rate cut), and that the RBA generally likes to leave “at least six months” between changes in the direction of policy. The next phase of speculation will involve analysts highlighting the prospect of 50bp rather than 25bp hikes, given we’re starting from an extraordinarily low 3%.

I’ve always thought the RBA before hiking would wait until full-time employment stopped shrinking. That’s not wrong yet, but the story is under serious pressure, and I’m no longer rubbishing the fast-tracking of rate-hike prospects. With momentum for an October hike building, it may now take a particularly weak August jobs report on 10 September to nip such a move in the bud. (If I’m wrong and falling full-time employment is not enough to stop an early 25bp hike, the weakness - or strength - of each subsequent jobs report will influence the speed with which further hikes towards 4-5% or higher are delivered.)

Another possibility is that the latest sharp rise in market rates – 20bp or more in parts of the curve - will prompt major lenders to “top up” their mortgage rates before any RBA move, thus delaying official action."

Wer'e dusting off our investment plans - thank God

Victoria is the centre of an investment surge so big it is rendering forecasts in the federal budget obsolete.

Nationwide investment in plant and equipment and buildings surged 3.3 per cent or $764 million between March and June according to the Bureau of Statistics, but all of it was accounted for by an astonishing jump in investment in Victoria of $800 million - a jump of 20 per cent.

Private capital expenditure in Victoria is its highest on record, even after adjusting for inflation.

Investment fell in NSW, Queensland and South Australia, and jumped 6 per cent in Western Australia.

Private forecasters had been expecting nationwide collapse in investment of 8 per cent over the quarter and the Budget had forecast a further collapse of 18.5 per cent this financial year...

James McIntyre of the Commonwealth Bank was one of the economists who predicted an 8 per cent collapse. Yesterday he hailed the Victoria-centred rebound in investment as a "nail in the coffin" of the Treasury's budget forecast of an 8.5 per cent unemployment rate.

"Investment has gone from being our Achilles heel to the best foot we can put forward," he quipped.

ICAP Securities economist Adam Carr said until recently business investment had been the weakest link in the Australian economic story.

"It’s not looking so weak anymore, and this is during a period of significant uncertainty," he declared. "If the worst of the global financial crisis doesn't induce a significant drop in investment, I don’t think a global recovery will."

Importantly, business expectations for investment during the current financial year are now 15.4 per cent higher than they were during the framing of the May Budget, making it likely that business investment will climb to a new all-time high this financial year instead of sliding 18.5 per cent as the Budget predicted.

The survey took place before last week's announcement of the giant $50 billion liquefied natural gas export agreement with China and before recent strong news on construction and retail spending, suggesting that further upgrades in investment spending are on the way.

The results will feed in to next Wednesday's June quarter economic growth figures which are now less likely to be negative and less likely to portend a so-called "technical recession".

Late yesterday Westpac upgraded its estimate of June quarter economic growth from 0.4 per cent to 0.7 per cent. JP Morgan upgraded its estimate to 1 per cent.

Deutsche Bank economist Tony Meer credited Budget tax breaks for investment with the turnaround saying, "this is just further evidence, if any is needed, that policy has worked exactly was was planned and hoped."

The Commonwealth Bank's James McIntyre raised the prospect of the surge in investment would being too strong saying it was "coming as the impact of the government's infrastructure stimulus package is only beginning to be felt." .

"An earlier than expected recovery in mining and broader business investment could exert demand on the economy’s resources at the same time as the stimulus packages main boost," he warned.

Released as Reserve Bank staff finalised the briefing papers for next week's board meeting, the news increases the likelihood that the board meeting will consider bringing forward expected interest rate hikes.

David De Garis of the National Australia Bank said even the Reserve most-recent more-optimistic economic forecasts looked outdated.

"If there is a larger-than-expected GDP outcome next week, then the timetable for interest rate hikes may well be dragged forward," he said, adding that a hike before the end of the year looked "increasingly likely".

Financial markets are pricing in an even-money chance of a rate hike in November, followed by a series of hikes taking the Bank's cash rate from 3 per cent to 5 per cent by the end of next year.

Published in today's SMH and Age


Wednesday, August 26, 2009

Brendan's (indexed) $122,391

Nice, eh?

Here's the Parliamentary Superannuation handbook.

As Brendan Nelson was in Parliament for 13 years he gets 62.5 per cent of a backbencher's salary, as adjusted from time to time. It's currently $127,060 per annum.

That's $79,412 per annum.

Plus per annum 6.25 per cent of the additional salary he received for occupying positions of greater responsibility for each year that he did so.

So that's -

an extra $1,985 per annum for the one year he served as a parliamentary secretary;

an extra $34,544 per annum for the six years he served as a Cabinet Minister; and

and extra $6,750 per annum for the one year he served as Opposition Leader.

Grand total: $122,391 per annum, indexed, for the rest of the rest of his life.

Oh, and he can take half of it as a lump sum if he wants.

(The younger you are, the bigger the lump sum. Brendan is 51.)

Can anyone improve on these calculations?

Or those I did earlier for Peter Costello?

Meanwhile, politicians are less kind to the other kind of public servant:

Friday August 22

A government decision to deny to its former employees benefits already extended to pensioners and to politicians has been condemned as "heartless" and a breach of promise.

Finance Minister Lindsay Tanner yesterday released the results of a review of the indexation formula used to adjust public service pensions and declared that it wouldn't be changed to bring it into line with the more generous formula used to boost the incomes of aged pensioners and retired politicians.

Aged and disability pensions are adjusted twice each year in accordance with community wage movements, and parliamentary pensions are adjusted in line with movements in parliamentary salaries.

But Australia's 300,000 retired public servants and members of the military are stuck with the much less generous formula based on the Consumer Price Index that aged pensioners escaped from a decade ago.

Because wages typically climb at around 4 per cent per year and the CPI at 2.5 per cent, in the decade since the the change aged pensions have climbed 51 per cent and public service pensions only 29 per cent.

Both the present Prime Minister Kevin Rudd and his deputy Julia Gillard expressed concern about the disparity in Opposition and promised an independent review should they win office.

The review by superannuation expert Trevor Matthews has found that there is
no case for a change.

"I realise this conclusion will disappoint many of those who made submissions to me and who presented their case for change to me in person. However, I have looked at the issues objectively and I cannot find that there is a case for an employer to be required to update a former employee’s retirement income in line with changes in community living standards," the report says.

Mr Matthews found that the Commonwealth's only obligation was to maintain the real value of its employees pensions and that "any enhancement of such indexation arrangements would constitute reward for no additional service". It would add $28 billion to the Commmonwealth's unfunded superannuation liabilities, swelling to $57 billion by 2020.

Superannuated Commonwealth Officers’ Association campaign manager John Coleman said the decision betrayed his members and went against the recommendations of two Senate inquires.

"Rudd and Gillard created great expectations. In emails to us before the election they criticised the Coalition' for not accepting the Senate recommendations of those Senate committees."

"I don't see why they even needed to have another review," he said.


Looking for work? Expect to wait 10 weeks.

If you're unfortunate enough to lose your job, expect to be out of work for around 10 weeks.

The Bureau of Statistics says that's typical length of unemployment for men. For women, it's 9 weeks. And you stand a one in eight chance of losing your replacement job within months.

The Bureau's Survey of Labour Force Experience, released yesterday, paints a more frightening picture than the official unemployment total of 664,100.

It finds that over the course of the year to February a total of 1.7 million Australians found themselves out of work at some point - around one in every seven of the Australians prepared to work.

Fewer than 118,000 were out of work for the entire year, but the chance of finding a new job quickly depends very much on who's looking.

Teenagers get new jobs the most quickly, typically returning to work in 8 weeks. But roughly half of those who succeed find themselves out of work again within a year - around 18,000 of them four or more times.

Women have about as much success as men in getting new jobs until they turn 55 when they find it far harder...

A man who's out of work aged 55 or more is likely to find a new job within 13 weeks. A woman will wait 16 weeks. There's an even-money chance she'll still be out of work after a year.

Marriage appears to be an advantage when it comes to hanging on to jobs for both men and women with singles facing a 14 per cent chance of unemployment during the year compared to marrieds with just 6 per cent.

Unemployment is the most likely in NSW and Victoria where the chances are 15 per cent and 14 per cent and the least likely in the ACT where the chance is 9 per cent.

By contrast the current official unemployment rates in NSW and Victoria at 6.1 and 5.8 per cent and in the ACT, 3.8 per cent.

This suggests that the likelihood of spending some time out of work in a twelve month period is roughly three times the official unemployment rate.

Westpac warned of more job losses to come yesterday, releasing a quarterly labour demand indicator predicting job looses of 6,000 per month for the rest of this year with the risk of a substantial fall of 27,000 in August to offset the surprise 32,000 rebound in July.

Australia has lost 117,000 full-time jobs so far this year, offset by the creation of 109,000 new part-time jobs.

Published in today's SMH

Graphic: Allstaff Contract Services


Tuesday, August 25, 2009

"Once upon a time I was falling in love, now I’m only falling apart"

In case you haven't got the hang of the lyrics:

HT: KOUFUKURON via Joshua Gans among others.

There's a more detailed perspective on Bonnie Tyler's lyrics my earlier post about the literal video.

And guess what? Those clowns at EMI Music Publishing Limited have threatened a law suit and got got the video removed from YouTube!

Who's interest does that serve? No-ones. Not even EMI's.

Sometimes I despair about the misuse of intellectual property laws.

They'll probably try to take down the above diagram as well.

James Hardie - the video and audio

Matt Peacock's interview on today's Radio National Breakfast is here.

Gee it's worth a listen.

I learned that James Hardie even stole its name. It has no connection with the loved yachtsman, winemaker and republican Sir James Hardie.

It sought out older Australians as workers because it thought they would die before their asbestosis became apparent.

The video of Matt's Monday 7.30 Report story is here. Click on broadband or dial-up at the right of the screen.

Or click on this link. It should start the video immediately.

Killer Company: James Hardie Exposed, by Matt Peacock

Prices aren't rising, prices aren't rising...

Pensioners and Australians on benefits can hardly complain about rising prices. According to the first Pensioner and Beneficiary Living Cost Index the prices they faced climbed a barely discernible 0.1 per cent between March and June.

Employed Australians did even better. The so-called analytical indexes released with the new pensioner index yesterday show that they actually enjoyed a drop in prices of 1.1 per cent.

Which raises the question of who's actually paying the official consumer price index increase of 0.4 per cent...

The Bureau of Statistics says it calculates the living-cost indexes differently to the CPI, including direct measures of the cost of housing and insurance, both of which have been falling.

It made for a downbeat launch of the new near-zero pensioner index, promised by Labor during the election as a means of enhancing pension increases.

Families Minister Jenny Macklin said it delivered "on the government’s commitment to index pensions by a measure that best reflects pensioners’ living costs" and expressed confidence in the way it was calculated.

The index came under fire ahead of its release for understating actual price rises by winding back measured prices to compensate for improvements in the perceived quality of goods such as cars and houses.

Actual rents climbed 41 per cent at a time when the Bureau's measure increased 23 per cent and new car prices climbed 20 top 50 per cent at a time when the Bureau's measure increased 7.3 per cent.

The Bureau intends to stick with its methodology, but plans to "progressively refine" the index by more accurately surveying where pensioner and beneficiaries spend their money and pricing goods at the types of outlets they most likely to spend at.

The Pensioner and Beneficiary Index will be used to boost pensions on the occasions when it increases faster than both the consumer price index and male total average weekly earnings. Although male earnings usually increase faster than prices, in the most recent quarter they fell, raising the possibility that the new index will be used to calculate the next half-yearly pension increase due in September.

In the last six months it has increased faster than the CPI, climbing 1 per cent at a time when the CPI climbed 0.5 per cent.

The pensioners index is less stable than the consumer price index, giving a high weighting to the highly variable food prices that form a large part of pensioners' budgets.

Published in today's SMH and Age

Graphic: American Academy of Hypnosis


Monday, August 24, 2009

The living cost index that won't index living costs

"A living cost index is intended to be used to assess changes over time in the purchasing power of the after-tax incomes of households. It is therefore concerned with measuring the impact of changes in prices on the out-of-pocket expenses incurred by households to gain access to consumer goods and services." - ABS

A new cost-of-living index built specifically for pensioners to be unveilled today has been labeled a waste of up to $18 million by a critic of its design.

Promised in the Budget and recommended by the Harmer Pensions Review, the pensioner and beneficiaries index will be based on different a different mix of costs to the mainstream Consumer Price Index and will be used to increase pensions at times when it grows faster than wages.

But retired Canberra public servant Tom Hayes, a former head of the Department of Industry, says the index will hugely understate increases in the true cost of living faced by pensioners because it will measure only so-called "pure" price increases, rather than actual price movements.

"Washing machines, for example, increase in price," he told The Herald. "But because they get better all the time the Bureau of Statistics discounts the new higher prices to compare machines of equal quality. But in real life, lower-priced machines of the old quality will almost certainly no longer be available"...

"All that pensioners can find in the stores is an 'improved' model with a shelf-price not matched by the ABS estimate. That's how people dependent on on pensions indexed to the CPI find their purchasing power gradually eroded."

Mr Hayes says its hard to work out exactly how the Australian Bureau of Statistics adjusts shelf prices for changes in perceived quality, because it doesn't publish its detailed methodology.

"All that we know is that many years ago quality adjustments were limited to obviously-needed adjustments for things such as a change in the size of a tin of baked beans. Today the Bureau seeks information from many manufacturers and importers about quality improvements for all kinds of products and converts that data into pricing reductions based partly on obscure statistical techniques and partly on judgement," he says.

The Harmer Review itself found that rents had increased by 41 per cent at a time when the CPI said they had increased 23 per cent after adjusting for changes in the quality of the accommodation being rented. New car prices had climbed 20 top 50 per cent at a time when the CPI said they had increased 7.3 per cent.

"Aspects of this new index might well be more relevant to pensioners than the existing CPI," said Mr Hayes, "But they will be completely swamped by the use of pure pricing and not shelf pricing."

The ABS will put increase the weight it gives to food prices in the index to be released today in recognition of the fact that age pensioner households spend 21 per cent of their budgets on food, compared to 15 per cent for other households.

It has decided to include spending on alcohol and tobacco in the index on the basis that it should not make "social or moral judgments".

Costing $18.5 million over four years, the pensioner and beneficiary index will be updated every six months.

Published in today's SMH and Age

ABS 6466.0 - Information Paper: Introduction of the Pensioner and Beneficiary Living Cost Index, Australia, 2009

Comment on the ABS PBLCI Paper:

Sunday, August 23, 2009

Australia's James Hardie - close to evil

It's in the book, out now.

As the author Matt Peacock explained to me over a cup of coffee in Parliament House, you can trace every stage of James Hardie's asbestos production process and find a trail of death that is continuing still, in places most people - quite reasonably - don't suspect.

Such as carpet.

The hessian bags that carried the asbestos James Hardie transported were subsequently sold to carpet companies (among others) who used them to make carpet underlay.

Only now, two or three decades later, is that carpet being ripped up and replaced.

The Australian workers or families who rip up their carpets are being exposed to asbestos fibres and a high risk of a painful lingering death.

Here's the extract from my friend Matt Peacock's formidable book, printed in the Weekend Australian:

Bernie Banton, the former James Hardie employee who died from cancer in 2007, became the public face of victims of the company's asbestos products but, as Matt Peacock writes, the company spread the risk across the community -- where it remains

IN late 2005 James Hardie's embattled chairwoman Meredith Hellicar spoke warmly to me of a letter of support she'd received from an elderly woman. "This wonderful 93-year-old woman ... was married to two James Hardie plant managers in a row," Hellicar said. "She said they both loved asbestos. One of her husbands lined their driveway with asbestos."

For Hellicar, the letter provided reassurance that she was continuing an honourable company tradition set by her predecessor John Reid and his family, one that reflected the best moral corporate behaviour. But what neither Hellicar, nor anyone else from Hardie, said publicly was that such innocuous-looking driveways might kill. They are yet another part of the deadly legacy kept secret from an unsuspecting public by a company determined to minimise its legal liabilities.

The corporate culture of deceit identified by the NSW special commission of inquiry headed by David Jackson QC in 2004 developed many decades ago and persists to this day. Hardie's victims will continue to accumulate because the company has never told the full truth about the asbestos hazards left in its wake. Some, quite literally, have been swept under the carpet.

Until the 1970s it had been common practice to build such domestic driveways, paths and garage floors using Hardie's asbestos waste. The company encouraged its employees to help themselves to the "fines", as it was called. The compacted waste still remains in people's driveways. I have seen one in a quiet suburban street bordering the old industrial area of Elizabeth in Adelaide, where the Hardie factory had produced its asbestos pipes and sheets. It had the appearance of concrete, with its grey colour and hard surface. Only a close examination at the edges revealed the telltale fraying fibres, glistening in the grime.

According to Neil Gilbert, the former Hardie engineer who established Hardie's dust extraction system and medical surveillance scheme before quitting in 1971, thousands of driveways would have been built this way, but he shrugged at the suggestion that something should be done about it.

"That's fate," he told me. "I know where there's one or two. It would take a massive amount of publicity to track them down. Most people wouldn't recognise them. You couldn't tell the difference between it and concrete."

One of Hardie's biggest fears has been that litigation against it could extend beyond simply paying for the deaths and injuries it has caused to cleaning up the dangerous materials it has left behind. "The establishment of a broadly defined duty to remediate, whether at common law or by statute, could have a catastrophic effect on the company," Hardie's litigation manager Wayne Attrill warned in 2001, just before the company shed its asbestos subsidiaries and moved offshore. The prospect of such claims for remediation also featured in the early discussions held by Hardie's counsel Peter Shafron and Michael Gill when they first canvassed the idea of separating the company's asbestos subsidiary. In the protracted battle with the NSW government that followed, Hardie extracted unique legal protection from just such a duty.

No one knows how many people have been exposed to lethal doses of Hardie's asbestos waste. What is certain is that many thousands could have been; what is equally certain is that the company has known that their lives have been endangered.

For Hardie, the driveways were part of a bigger problem. Thousands of tonnes of its asbestos waste were dispersed in all sorts of places: in rivers and creeks, on vacant blocks, on roadways, even on football ovals. Wherever fill was needed, Hardie's waste was available.

The practice was made even more dangerous because a large percentage of the waste came from moulded products such as pipes, which had contained the deadly brown and blue asbestos.

As a Hardie memo in 1977 about its Camellia factory in Sydney noted: "It is understood that our dust was a sought-after item and was even sold. It was particularly useful for light duty paths, garage floors and general filling.

"Our reject and broken scrap was also very useful as a filling for driveways, etc in many of the market gardens west of our factory."

Father John Boyle, whose father worked at the factory, remembered the asbestos driveway and garage floor from his family house near Parramatta. His mother, Molly, had helped his father lay the asbestos waste and for years later used to sweep the garage floor clean: "I know well what it looks like. It's a fibrous, powdery material that along with water becomes as hard as concrete. It was a cheap fill and in those days it probably wasn't seen to be so bad.

"It's good for 10 or 20 years, but then it breaks up, and that's when the fibres are released. From the mid-70s James Hardie knew about them but didn't warn people."

In fact Hardie had known long before that, but it was only during the 70s that it began to do anything about it. The company's reaction, as Boyle noted, was not to alert people to the dangers; instead, it set about quietly stopping the practice.

Boyle's mother died from mesothelioma. She had also been exposed to asbestos from her husband's overalls, but it seemed likely that her greatest exposure was from the driveway and garage floor. Hardie settled her compensation claim.

I asked Hellicar if she was concerned about the possible danger to the public, especially given that children could be exposed. She was quick to answer: "If you're saying, `Should James Hardie pay for a clear-up?' No, at the end of the day. And why no? Because we cannot be a bottomless pit.

"The fact of the matter is ... this was not some James Hardie conspiracy to foist a product on the world. Governments were there, companies were there. We all were party to this great new product and at some point we have to just all recognise there was a big mistake made about asbestos."

APART from the driveways and paths that employees and others were encouraged to construct, the company also had deposited bulk asbestos waste in a multitude of locations across the country.

I first became aware of the practice in 1978, when former Hardie engineer Fred Sandilands contacted me after my ABC radio series about the industry had aired and I helped publicise his story.

Sandilands was 49 and had worked at Hardie for most of his life. He had remarried in 1975 and left the company to start a new life in Singapore, where he got a job with Humes, another asbestos manufacturer. After a medical check-up at Humes he was told that he had mesothelioma. He called me just after he had returned to Australia.

He knew he was dying. He spoke calmly, but slowly, as one suffering a lot of pain. Sandilands expressed disbelief that the company for which he had felt so much affection could be so tough in its compensation negotiations with him. The enormity of the Hardie cover-up was dawning on him. As his death grew closer it weighed on his mind.

Sandilands had supervised the dumping of thousands of tonnes of asbestos waste throughout the suburbs surrounding Hardie's Sydney factory. When his story went public in the newspapers and on ABC TV, Hardie's chairman Reid circulated a letter to shareholders and staff because, he wrote, "unfortunately the facts have not always been presented in full or objectively". Under the heading "Setting the Record Straight", Hardie set out a response carefully crafted by its PR consultant, Bill Frew: "Because the small amount of asbestos fibres in our products is locked in by cement, it cannot escape into the atmosphere as dust, and therefore poses NO RISK TO HEALTH."

Behind the scenes, Hardie and the Health Commission were scrambling for cover. There were many more sites than the two mentioned. Frank Stewart, the NSW health minister, urged householders not to be alarmed. "Asbestos dust does pose a health hazard, but it requires exposure over a long period of time," he said soothingly and inaccurately. The government soon identified dump sites at other Sydney suburbs, among them North Rocks, Wentworthville, Granville, Silverwater, Homebush and Parramatta Park.

Early this decade, Hardie waste in Perth was still being dug up in the road and rail reserves at Burswood, where the company had dumped it from its nearby factory. Other landfill excavated from Goodwood Parade in Riverdale to help construct a new freeway was discovered to be "massively contaminated". West Australian health authorities expressed surprise but played down any possible dangers, expressing satisfaction that test results had demonstrated "no risk to public health".

Federal and state government authorities had failed to regulate the safe disposal of asbestos until the late 70s. Hardie had been able to exploit this omission.

The practice was the same throughout the country. Hardie knew the public was at risk. Its secret monitoring in Adelaide during November 1974 revealed that even 20 minutes after tipping had stopped, there was an asbestos dust count of 30 fibres per cubic centimetre. Hardie's nominal safe level of exposure for a worker during a shift in its factories at the time was four fibres per cubic centimetre, soon to be halved. Hardie's dust committee warned of "the harm that such an event could cause to the company's good public relations" if the news leaked out.

The number of people killed by Hardie products in the course of their work, whether in the company's factories or outside, was sooner or later likely to become public knowledge. So, too, was information about the products that had killed them.

Many at the top of the firm, though, were also aware of those less visible potential hazards, in places such as driveways and dumps, where most of those exposed would have no knowledge of its presence. Yet time and again Hardie directors and executives chose silence. One example starkly demonstrates the company's continuing failure to warn the public of a danger that still lingers, possibly in thousands of homes.

For many decades the millions of tonnes of raw asbestos shipped into Australia and transported from mines at Wittenoom in Western Australia and Woodsreef and Baryulgil in NSW were carried in hessian bags. Once the asbestos had been emptied from the bags, many millions were recycled for other uses. Cleaning the bags did not make them safe.

John Downes worked for the Active Bag Company, based near Sydney's Mascot airport, for about three years until 1965. Downes, who later developed asbestosis, remembered picking up hessian bags from Hardie's factory at Camellia. His company sent two trucks over to the factory every week, each of which returned with 10 bales on the back containing 800 to 1500 hessian bags.

After the bags were tumbled in a machine to remove the obvious raw asbestos, Downes said, they were sold to various firms for use as "carpet underlay or onion bags". Just this company alone would have processed about a quarter of a million asbestos bags every year.

This is an edited extract from Killer Company: James Hardie Exposed by Matt Peacock, ABC Books, $35, available from September 1. Peacock will appear on September 13 at the Brisbane Writers Festival, which runs from September 9 and is co-sponsored by The Australian.


ASBESTOS is a fibrous mineral used for heat and fire protection and for insulation.

It was used in many kinds of products, including airconditioning ducts, ceiling tiles, bitumen-based waterproofing such as malthoid or roofs, floors and brickwork, roof tiles, cement render, oven door seals, compressed asbestos used in brakes and gaskets, compressed asbestos panels for floorings, verandas and demountable buildings, electric heat banks, flexible hoses, fire-door insulation, fire blankets, beverage and wine filters, insulation around the heating elements in hair dryers, lift shafts, pipe insulation and other products.

It was banned from all further use in 2003.

There is no safe level of asbestos fibre inhalation and cancer from it can take decades to develop.


Bishopwatch: She's reaching new heights (or plumbing new depths)

I reproduce without further comment the transcript of this morning's Sky News Agenda interview:

Sky News, Sunday Agenda

Julie Bishop, Deputy Opposition Leader and Shadow Foreign Affairs Minister

23 August 2009

Helen Dalley: What exactly was bungled about the visa given to Rebiya Kadeer? You said on Thursday that the visa was bungled.

Julie Bishop: I did not say the visa was bungled. I’m talking about the handling of the whole issue. Ms Kadeer has been here before . . .

Helen Dalley: Excuse me, I’ll just read you the quote. You said “the bungling of the handling of the visa to the Uighar leader”.

Julie Bishop: Exactly.

Helen Dalley: So, what exactly was bungled?

Julie Bishop: This has never been about the issuing of a visa. Ms Kadeer has received a visa in the past and there was no controversy, but this time because of the government’s mismanagement of this relationship the issuing of the visa became a controversy. It did not need to be. It should have been handled in a way as it was previously. Now 18 months ago the Rudd Government was able to deal with the issue of Ms Kadeer and the visa in a way that didn’t cause controversy, but this time relationships had so soured that Mr Rudd was not able to deal with the issue of a visa without it causing a great controversy. Now, Mr Rudd must take responsibility for that.

Helen Dalley: But are you saying that the government should have changed its position on the visa and not allowed it?

Julie Bishop: This is not about the Opposition’s position on the visa because we have never criticised it. We didn’t criticise it 18 months ago, we didn’t criticise it now. This is about the fact that 18 months ago this visa was issued without controversy, and then because of the deterioration of the relationship between Mr Rudd and the Chinese Government it became a controversy. Now, Mr Rudd must take responsibility for this.

Helen Dalley: But how can he if you’re saying that the visa was issued 18 months ago, the same visa was also issued now, why should he change the policy from what you’re saying he should have?

Julie Bishop: I am talking about his handling of the whole relationship. As many commentators have stated it’s the culmination of a series of mishandling . . .

Helen Dalley: Sorry, you are basing it on the handling of the visa.

Julie Bishop: . . . about the whole relationship. And so we’ve not criticised the issuing of the visa then, we’re not criticising it now, but we’re saying the whole mishandling of the relationship with China is such that now everything becomes a controversy and Mr Rudd should start focusing on repairing the damage that he has done to this relationship and not trying to deflect it away onto the Opposition. It is far too simplistic for Mr Rudd to try and say this is all about the issue of a visa to Ms Kadeer. There is a whole raft of issues that have gone on between the Rudd Government and the Chinese Government that have led to this deterioration in the relationships. Now, we were able to manage a very mature relationship with China based on mutual respect. We had common interests but we had different values and we understood each other and were able to deal in that way. But under Mr Rudd you have to ask yourself this key question, has the relationship with China improved under Mr Rudd? It’s patently clear that it has not and he needs to repair it and repair it swiftly.

Helen Dalley: Julie Bishop, I just go back to the earlier comment and question about your going hot and cold, your side of politics on this. I mean former Immigration Minister, Philip Ruddock, said this week that granting Ms Kadeer a visa was a mistake. Then current Senator, Barnaby Joyce, agreed with the government that it wasn’t a mistake to grant a visa. Do you think Australia . . .

Julie Bishop: Mr Ruddock did not say that.

Helen Dalley: Pardon?

Julie Bishop: Mr Ruddock did not say that. He clarified that position. He said that it was a mistake in the circumstances of the whole handling of the relationship . . .

Helen Dalley: I’m sorry I have the quote in front of me. He said, yes, it was a mistake.

Julie Bishop: I spoke to Mr Philip Ruddock, he said the whole handling of the relationship has been a mistake. No one in the Coalition criticised the issue of the visa, the first time nor the second time. What we criticised, and we will continue to criticise until Mr Rudd rectifies it, is his handling of this relationship. He is sending a confused message to China.

Helen Dalley: All right. You have said that several times. Can I just ask you about your position?

Julie Bishop: And no wonder the Chinese are confused because Mr Rudd has not had a consistent position on China. On the one hand he’s trying to be China’s ambassador overseas; on the other side he needlessly offends them over a whole range of issues. It’s not about one visa and it never has been.

Helen Dalley: It’s also the case, isn’t it, that the Coalition was against the Chinalco deal with Rio. That wasn’t necessarily the government’s position. So when the China Daily talks about the “anti-China chorus” from Canberra and Australian politicians being “sinophobic” they could be talking about you and Malcolm Turnbull, couldn’t they?

Julie Bishop: The Chinese Government is concerned about the government in power. They don’t even have an opposition in China. They are concerned about the government that makes the decisions of the day. And this was another example where the government did not make clear to China the arrangements with the Foreign Investment Review Board. It’s quite clear that the government was sitting on that decision hoping that events would overtake it as events eventually did. But again that sends such a mixed and confused message to China. Why didn’t they tell China that there was a foreign investment review board process that could take some time and could in fact end up with a recommendation not to proceed and it wasn’t just a rubber stamp. But the government wanted to wait and that sent a confused message to China.

Helen Dalley: Ms Bishop, if I could interrupt you please, do you agree that in fact Kevin Rudd’s Government did not cause the problem that arose when Rio reneged on the Chinalco deal. It had nothing to do with the Foreign Investment Review Board in the end. The government had nothing to do with that and that peeved the Chinese when Rio pulled out.

Julie Bishop: Well I’ve never said that the government caused the Chinalco problem, I’ve never said that.

Helen Dalley: But you are saying he’s caused all these problems with China, he has to take responsibility for.

Julie Bishop: I’m talking about the confused messages that the government is sending. And the key issue is: is our relationship with China better now than it was when Mr Rudd came to office and patently the answer is no it is not.

Helen Dalley: Well on many scores in fact some would say that now it is better because in fact right when you are saying this week that the relationship is at a crisis point the big Gorgan LNG deal came about. And even Rio and BHP are saying it was still very much business as usual with iron ore sales to China, which have actually increased in the past few months despite the Stern Hu debacle.

Julie Bishop: Absolutely. There is a complete difference between the political relationship between the Rudd Government and the Chinese Government and the commercial relationships between big companies in Australia and in China. Now, the Gorgon deal is a magnificent deal for Australia. It’s been in the making for some number of years. In fact the development of Gorgan has been underway for decades. And a contract was signed between ExxonMobil and PetroChina for $50 billion. That is a fantastic outcome for Australia, for Western Australia. And so the commercial relations can go on. The political relationship between the Rudd Government and the Chinese Government is in disrepair as evidenced by the fact that Chinese officials are cancelling meetings. And as I said the most humiliating blow for Mr Rudd is that China has withdrawn cooperation from Mr Rudd’s much touted Asia Pacific Community proposal. Now, without China’s backing that is unlikely to proceed.

Helen Dalley: All right. Can I move on? Should Kevin Rudd meet the Dalai Lama on his visit here later in the year?

Julie Bishop: I would hope he would. Prime Minister Howard met the Dalai Lama when he came here. He is the spiritual leader in Tibet and I would hope that Mr Rudd would meet him.

Helen Dalley: All right. Let’s turn very quickly to Afghanistan and there have been reports of some violence during the elections. But I want to ask you about reports that the top US Commander in Afghanistan, General McCrystal, wants our troops to be allowed to be deployed outside the current zones. Should Australia agree to the general’s request?

Julie Bishop: Well, I’m not sure that General McCrystal has actually made that request at this stage and obviously we would hope that the Australian Government would consider it. Our troops are making a fantastic contribution to the outcome in Afghanistan, not only in a military sense but also in a civilian sense, and the recent elections show, not withstanding the violence and the intimidation, that an election could be held and it is a step forward in democracy. And we certainly support the brave and courageous Afghani people who went out to vote in the face of the Taliban violence. But in terms of whether Australia should expand its commitment we would obviously have to consider what the request is and why Australia would be required to do that.

Helen Dalley: He didn’t appear to be . . .

Julie Bishop: But we most certainly . . .

Helen Dalley: Go on.

Julie Bishop: We most certainly give support to the Rudd Government in its commitment to Afghanistan. I made a speech in the House of Representatives last week speaking about the role that Australia is playing as part of the international forces. We need to ensure that Afghanistan doesn’t again become a headquarters for terrorism and we will need to stay the course. It is going to be a long hard road and Australia needs to remain committed. Now, the level of that commitment will depend on our capacity and the international community’s capacity as well.

Helen Dalley: Just an issue that’s come up again that’s been raised before, but this morning there are reports, and it’s more destabilising for the Liberals, with reports that Malcolm Turnbull actually lobbied various ALP figures very hard a decade ago to join them, including lobbying Bob Hawke.

Julie Bishop: Come on, Helen, the Labor Party’s going to have to make up their mind about Malcolm. On the one minute he’s this neo-Liberal capital extremist, and now on the other hand they’re trying to get us to believe that he’s a closet socialist. I mean this is an old Labor Party tactic. They tried it the other week in Western Australia when there was a person nominated as a potential Liberal candidate and they rolled out all the Labor heavies to say that this man had actually tried to join the Labor Party. It’s a familiar tactic. I have known Malcolm Turnbull for 20 years. . . .

Helen Dalley: But Julie Bishop, we have already known that Malcolm said there were you know casual talks. This is now saying that he actually lobbied. Are you saying he did not lobby to join the ALP?

Julie Bishop: I have known Malcolm Turnbull for 20 years. He has always been a Liberal. He has run for preselection, he’s held official positions in our party. He is now the leader of our party. If Malcolm wanted to join the Labor Party I’m sure he could have.

Helen Dalley: It’s nonetheless very destabilising, isn’t it?

Julie Bishop: But he didn’t. And of course there are going to be Labor people who were trying to get Malcolm to join their party. Who wouldn’t’ want somebody of Malcolm’s character and experience and intellect in their party? But Malcolm Turnbull has always been a Liberal. He’s in our party, he’s our leader. He’s a man of great character, great personality. His intellect and his analytical mind are unsurpassed in the parliament and if he were given the opportunity to be prime minister of this country he would bring his capacity for creative thought, his experience and his knowledge to the role.

Helen Dalley: Okay, Julie Bishop, we will leave it there. Thanks so much for your time.

Julie Bishop: Thank you, Helen.


Saturday, August 22, 2009

Ken Henry narrows his options (regretfully, I sense)

Small investors can breathe easy. As the Henry Tax Review enters its final stages, Treasury boss Ken Henry has revealed it won't be doing away with dividend imputation.

The announcement, in a speech delivered to the Australia New Zealand Leadership Forum in Sydney brings to an end months of speculation ignited by Dr Henry himself when he thought out loud in February about abolishing the concession on the ground that it provided a benefit to Australian-based shareholders not available to foreign-based shareholders.

Over 20 years it has ensured that investors in Australian firms such as Telstra, BHP, and Coles Myer paid no or little income tax on their dividends in those in years in which the companies paid the full rate of company tax.

Lateral Economics has told the Henry Review axing dividend imputation would free up $20 billion per year, enough to fund a cut in Australia's corporate tax rate from 30 per cent to 19 per cent, attracting far more foreign direct investment.

Yesterday Dr Henry told the Forum he did "not think, however, the time has yet come for dividend imputation to be abandoned"...

But in the "medium to longer term" there was a case for assessing its benefits in a way "better attuned to the needs of a global economy".

New Zealand and Australia were the last two countries to retain dividend imputation and in the meantime might consider mutual recognition of each others' imputation credits.

The Treasury Secretary said that down the track there might be a case for abandoning taxing company profits and instead taxing business spending.

After the close of business Friday Treasurer Wayne Swan announced the removal of the interest witholding tax on Commonwealth government bonds, brining them into line with corporate and state government bonds which had not been subject to withholding tax since 1999 and 2008.

Published in today's Age


Saturday, November 29, 2008
TAXING TIMES: Could Ken Henry be thinking really big?

Tuesday, February 24, 2009
Why not axe dividend imputation? Henry gets serious.

Thursday, February 26, 2009
A lower company tax rate? Swan wants it.

Saturday, February 28, 2009
TAXING TIMES: Why Henry will cut the corporate tax rate

Thursday, April 23, 2009
"I've set up this inquiry see, but I'm ruling out its ideas right now"

Friday, August 21, 2009

We're spending, but more carefully

We are spending more than at any time since the December cash splash, but spending more carefully.

The latest credit card statistics show we pulled out the plastic an mind-boggling 125 million times in June, roughly twice each week for each adult Australian.

We rung up $18.4 billion, a total only beaten by the $20 billion we poured onto cards during the December cash splash.

But we've done so more cannily. Whereas the total we owe on cards has been climbing, the total we owe attracting interest has been falling. In December $32.3 of what we owed attracted interest, around 72 per cent of the total. By June it had slipped to $31.7 billion, a long-term low of 70.6 per cent.

"It's a new era of consumer conservatism," says Commonwealth Securities economist Savant Sebastian...

"We'd rather use cash than run up debt."

Pure debt cards are doing even better with EFTPOS and debt card use up 17 per cent over the year. Cash advances are going out of fashion quickly. Once a popular use for cards but now attracting both high interest rates and fees, cash advances have slipped 9 per cent in the past year and 16 per cent over two years.

The Reserve Bank yesterday gave an indication of the scale of the stimulus payments, revealing that December and March were the biggest months for cash withdrawals from ATMs and bank branches in Australia's history.

So concerned was it that the financial system might not be able to handle the onslaught that it tested "all relevant systems for substantially increased overnight cheque presentation volumes" and ran all stimulus cheques presented to banks through its proprietary fraud detection machinery to identified whether or not they had been altered.

Concerned about ATMs running out of money it ensured that the payments were delivered in waves throughout the country "in order to avoid concentration of cash demand in any particular region".

It passed onto banks and ATM operators its advance knowledge of where payments would be going in order to enable them to place orders for extra cash, and put extra trucks and distribution agents on standby.

The most challenging day was Thursday December 11 when 1.6 million hit the accounts of Centrelink pension recipients in one hit.

The Bank discovered that on average we held onto the stimulus cheques for 9 days before presenting them, with almost all of us taking them to the bank within 5 weeks.

Published in today's SMH and Age

Thursday, August 20, 2009

"Gillard's been brainwashed" - Latham

From Latham's impressive Financial Review column today:

"A curious feature of the Rudd government has been the compliance of Labor's Left on defence and foreign policy. In a high-profile speech to the Australian American Leadership Dialogue in Washington last year, Julia Gillard declared herself to be a rusted-on supporter of ANZUS, designating to the US: "a unique role . . . in the world we try to help to build, in the civilisation we want to persist and prevail".

There was a time, of course, when the Left criticised America for its human rights abuses, gun-toting social values and imperialist foreign policy. Now the titular head of its parliamentary faction has declared the US (and remember at the time, this was George W. Bush's America) to be a champion of global civilisation. I cannot allow the wrongness and hypocrisy of this statement to go unchallenged.

Over the years I have received tender messages from Gillard saying how much she misses me in Canberra. One of them concerned her study tour of the US, sponsored by the American government in 2006 - or to use her moniker - "a CIA re-education course". She asked me to "stand by for emails explaining George Bush is a great statesman, torture is justified in many circumstances and those Iraqi insurgents should just get over it".

She promised "to catch up when I'm back from the US and I'll show you my CIA-issued ankle holster".

I never got to see her ankles or her holster, but I will say this: you have to hand it to those guys in Washington, they have a way of making lefties like Gillard change their minds on foreign policy. Within the space of two years they converted her from a highly cynical critic of all matters American into yet another political sycophant. The poor woman has been brainwashed."

Here's Annabel Crabb's take.

Turnbullspeak. More impressive than Ruddspeak

Compare it to Ruddspeak, below.

The Stubborn Mule writes:

"Just like Rudd, Turnbull’s favourite word is “Government”, and “Australia” is not far behind. But from there, differences appear. The word “billion” is far more prominent, reflecting the opposition leader’s obsession with growing public debt. The appearance of “Rudd”, “Labor” and “Coalition” clearly reflect the realities of life in opposition where so much time is taken attacking the other side.

Interestingly, the word “emissions” is clearly visible in the cloud, whereas nothing relating to climate change was visible in Rudd’s cloud.

“Now” is as prominent as Rudd’s “also”. Does this reflect a constant sense of urgency from a man of little patience?"

And here's The Chaser's brilliant tribute to Ruddspeak, in case you missed it:


Henry: "states could vary the rates of centrally administered taxes"

"While a whole-of-federation approach is a big challenge, and one which has not been seriously attempted before – the chance to take such an approach gives the review panel an unprecedented opportunity to influence tax-transfer policy across the whole of Australia. This is not an opportunity that any of us can afford to waste."

Australian Economic Forum, 19 August 2009, Dockside Convention Centre, Sydney:

I would like to start by thanking the organisers for the invitation to talk to you today. It is always a pleasure to speak to a group of people such as yourselves who share a passion for public policy. Today I want to talk about the subject of tax reform and fiscal federalism – an area that is attracting a lot of attention in the Australia’s Future Tax System (AFTS) review.

One reason why fiscal federalism is so important to this review is that, notwithstanding the fact that the well-being of taxpayers is affected by the entire federation’s tax-transfer system, past tax reviews tended to focus on improving the taxes only of the government that commissioned the review...

An example you may find interesting is that although the Review of Business Taxation (the Ralph Review) was asked to report on, among other things, “… the Australian business taxation system as a whole compared with international experience…”, its final report mentioned payroll tax just three times and no reforms were actually recommended.

This is not to criticise the Ralph Review, which was a first-rate exercise. It simply makes the point that past reviews have tended to confine themselves to matters that are the responsibility of the commissioning jurisdiction.

The AFTS review is therefore unique. As you are probably aware, it has been tasked with considering the taxes levied by the States along with those levied by the Commonwealth. And it has been tasked with reviewing large aspects of the Commonwealth transfer system. The terms of reference also ask us to consider how to simplify the tax system, including considering the appropriate administrative arrangements across the Australian federation.

And, to be frank, it is about time such an integrated approach to tax-transfer reform was undertaken. While it is nearly 20 years since the National Competition Policy reform agenda recognised Australia as a single market, rather than a series of state-based markets, no overarching attempt has been made to integrate the federation’s tax-transfer system into a single national system. While the GST replaced some highly inefficient taxes at both the Commonwealth and State levels, those reforms did not attempt to integrate the federation’s tax system.

My fellow panellists and I are well aware of the significant opportunity that the review provides to articulate a truly integrated, coherent tax-transfer system within the federation. Having said that, we are under no illusion that such a task will be easy. But if Australia is to meet the challenges and make the most of the opportunities of the 21st Century, then the federation’s tax-transfer system also needs a 21st Century architecture.

An integrated tax-transfer system for our federation

So what does this mean for the panel’s deliberations? As a first step, the panel is considering taxes and transfers on their individual merits, how they sit within the overall architecture of the tax-transfer system, and how they will meet the opportunities and challenges of the future. Importantly, this assessment is being undertaken without regard to the level of government which currently administers that particular tax or transfer.

The Panel’s concern is to ensure that our tax-transfer system is calibrated to emerging challenges and opportunities that arise from things like population ageing, the re-emergence of China and India and continuing technological change.

As part of its enquiry, the panel is assessing how different taxes and transfers rate against the standard policy assessment criteria – fairness, efficiency, simplicity, sustainability and coherence. These criteria will enable us to identify taxes which should be levied, taxes that are so irredeemingly poor that they should be abolished, and taxes that are reformable – the good, the bad and the ugly.

In this regard, I would note that there is almost unanimous agreement from submissions that stamp duties are ‘bad’. They can lock people into places they should not be; they tax those without the resources to avoid them with no regard to other social equity norms; they reduce liquidity; and they are volatile sources of revenue.

Similar comments were made on numerous occasions at the AFTS tax-transfer conference in June this year. However, abolishing all stamp duties – on conveyances, insurance premiums and other transactions – would result in a loss of revenue for State governments in the order of $20 billion2 a year. This is a significant amount of revenue that would need to be replaced by some other revenue source. Some delegates at the AFTS tax-transfer conference suggested that the revenue could be made up from the ‘ugly’ land or payroll taxes, provided they were broadened sufficiently to become good taxes.

Once the Panel has considered each tax on its merits, only then are we considering the level of government to which different taxes and transfers should be assigned, taking into account the long-term financial needs of each level of government.

The Panel will be particularly mindful of the incentives that the federation’s institutional arrangements place on State governments. There would be little point in reforming state taxes if unproductive competition between the States simply leads us back to the inefficient taxes and bases we have today. This mistake has been made in the past. In 1971 the States were given payroll tax on a single standard base but, for reasons unknowable to anyone, a mere 30 years later, there were base inconsistencies no one can provide a good reason for – such as several different definitions of a taxable ‘person’ and several different payment dates. Despite recent harmonisation efforts, the base is not what it should be.

The Panel will also be mindful of how raising tax revenue affects incentives on the spending side. In particular, how can the balance between a simpler tax system administered centrally be squared with the need for the States to be accountable by having to raise their own revenue to finance their marginal spending?3

As I noted earlier this year, there are mechanisms to minimise the effects of this trade off, particularly in relation to taxation. For example, the States could be allowed to vary rates of centrally administered and secured tax bases. The Panel is considering the benefits and costs of such an arrangement.

Centralisation would also make it transparent that Australian governments use many taxes to raise revenue from the same taBoldx base. For example, tax is levied on labour income through the personal income tax ($126 billion), payroll tax ($16 billion), fringe benefits tax ($4 billion) and superannuation funds ($12 billion). And there are eight different governments levying payroll tax. It is questionable whether such arrangements are the best way to levy taxes on labour income.

The expenditure side

I mentioned earlier that the revenue assignment of each level of government is dependent on how we view respective long-term financial needs. And this, in turn, depends on what we think is the appropriate role of each level of government in improving the well-being of Australians. Which government is best placed to be the financier of government services? Should a particular government be the sole provider of the service, or one provider amongst many?

I do not anticipate that the Panel will be recommending that the Commonwealth take over the delivery of any particular services currently provided by the States, nor vice versa. However, we shouldn’t assume that the present allocation of roles and responsibilities is optimal. Much of the fiscal federalism architecture reflects past thinking about the appropriate role of government and the available means of addressing disadvantage. This often involved the States receiving grants from the Australian Government to help fund State provision of essential services; for example public hospitals, education and housing. The States built hospitals because people needed health care; they built state schools because people needed an education; and they provided public housing as a safety net for people unable to afford private housing services. That these arrangements still persist relatively unchanged today – despite waves of reforms in other product and labour markets – speaks to their success.

But the strains have been showing for a while. Communities expect higher standards of service than many States say they can deliver. Confused responsibilities make it difficult for governments to be held accountable, with impaired incentives to improve performance. It might be time to look at things from first principles. Perhaps a different tax-transfer architecture could assist meaningful reform in this area.

The structure of our federal relations – involving overlapping accountabilities and large fiscal transfers from the Commonwealth to the States – encourages an assumption that improvements in service delivery can only come from increases in government funding; the currency of the “blame game” is dollars. Yet while providing further funding into the current system might see an improvement in outcomes, fundamental reform of institutional arrangements might deliver much better value for money.

The recent report by the National Health and Hospitals Reform Commission provides an interesting example. As with the tax system, there have been repeated calls for health reform. And many of the players have ideas on how to make improvements to individual components of the system. What I find particularly remarkable is how closely the thinking of the Commission and the AFTS panel align.

The Commission’s vision of reforming the health system so that it is better positioned to respond to emerging challenges is consistent with the Panel’s view for tax-transfer reform. And the need to streamline the complexity and inefficiencies caused by over-lap and inconsistencies is the same for health and tax.

The Commission proposes that the Commonwealth eventually finance health and hospital care on an activity-basis, leaving the States and perhaps some non-government entities as health providers. The important point here is that the proposed reforms are designed with an initial focus on how health services are provided, not which level of government provides them. The Commission’s health reform plan is obviously ambitious and obviously with a longer term view – again, two concepts that could be used to describe the AFTS review.

This highlights that the nature of fiscal federalism is changing. The financial, informational and institutional advantages of the Commonwealth have seen it assume an increasing role in addressing perceptions of horizontal inequity and as a social insurer against disadvantage. On the other hand, there appears to be at least a tenuous consensus that the States have distinct advantages over the Commonwealth in supplying front line services. They are closer to their own communities and have been doing it for years. Recently, other providers of such services have emerged; especially in the not-for-profit sector. Social housing services are a case in point. This seems to be a form of ‘good’ competition.

One of the questions the Panel has under consideration is whether further substantial gains, including from competition among providers, can be secured without quite specific reforms to our tax-transfer system.

Finally, designing an improved tax-transfer system for the federation is not enough. The Panel is also aware that the implementation and maintenance of a package of reforms is a difficult task in our federation. A new intergovernmental agreement (IGA) would be necessary.

A broad based reform agenda, rather than a series of stand alone reforms, increases the likelihood that the gains from wide ranging reforms can be enjoyed by the community at large – even if some changes might be portrayed as not being in the interests of particular groups of people. By setting out and agreeing these reforms in an IGA, governments will send a strong message to the public that all of the reforms will be delivered. This should provide additional comfort to those who will benefit from future reforms that they will actually be delivered.

An IGA will also need to have some specific timelines to ensure that the reform agenda is delivered but may also need to have some flexibility in relation to timing, especially if the reform package is an ambitious one. While some may think flexibility in timing simply allows governments to renege on their commitments, I believe, if designed properly, flexibility can enhance the reform process, not hinder it.

It is possible that part of the reform process will need to be contingent on certain events occurring. For example, the IGA may specify today reforms to road funding and transport taxes that will only be possible, sometime in the future, when technology is available and cost effective. Such flexibility may make a more ambitious reform program possible, as the parties can be sure that if conditions outlined in the IGA do not materialise, they will not be forced into unrealistic reforms. Further, this flexibility may result in earlier reforms than would arise if the IGA gave a specific date for follow on reforms. Under the latter approach, parties to the agreement might be unwilling to lock in a date for the delivery of more ambitious medium to long term reforms.

The IGA must also ensure that all the parties share in any gains of reforms, as well as any pain from not following through on the agreed reforms. This can be achieved directly or indirectly. A direct mechanism is to structure the reforms so each party has access to a tax base which will expand as the reforms are delivered. An indirect mechanism, which we saw used to progress the NCP agenda, is for the States to receive payments from the Commonwealth which are linked to the progress of reforms.

These are just some of the issues that any IGA will need to address. Perhaps we are lucky that I don’t have the time to go into all of them today.

But I trust my speech has highlighted the importance that the Panel places on reforms to the federation’s tax-transfer system, and the difficulty not just of designing an integrated whole of federation tax-transfer system but also of delivering and maintaining such a system. Yet I also trust that I have left you with the impression that – while a whole-of-federation approach is a big challenge, and one which has not been seriously attempted before – the chance to take such an approach gives the review panel an unprecedented opportunity to influence tax-transfer policy across the whole of Australia and its governments. This is not an opportunity that any of us can afford to waste. Thank you.

Wednesday, August 19, 2009

Forget nuclear power, we should be worried about expanding the Olympic Dam uranium mine

"To use a non-medical term, these proposals are mind-blowing in the potential risks to this and to future generations"

Sir Gustav Nossal
Fiona Stanley
Peter Doherty
and others

Their actual submission is below. First, here's The Advertiser's report:


August 18, 2009

SCIENTISTS and doctors including a Nobel Prize-winner and two Australians of the year have warned of the "mind-blowing risk" of the Olympic Dam expansion.

The State Government is taking public submissions on the BHP mine's environmental impact statement and the experts warn of arsenic, mercury and uranium which will enter undergroundwater and the atmosphere.

The 15 have written to the State Government warning that up to 5.5 million tonnes of toxic waste in dams with an area of 4000ha will reach ground water within 150 years and dust storms could blow thousands of tonnes from the 242 million tonnes of waste into the atmosphere and all over the state for hundreds of years.

"To use a non-medical term, these proposals are mind-blowing in the potential risks to this and future generations," the letter states.

"There will be direct adverse health impacts and also impacts on future generations."

A spokesman for BHP said the company was studying all the submissions to the EIS and would respond to all of the documents in a supplementary EIS.

The medical experts recommend the project be delayed until after health impact studies can be undertaken and that BHP be made to put aside funds to pay for the health effects for "centuries".

The letter is signed by, among others, Nobel Prize-winner and Australian of the Year Professor Peter Doherty, Australians of the Year Professor Gustav Nossal and Professor Fiona Stanley, former Dean of the University of Adelaide Medical School Professor Bob Douglas and Executive Dean of Health Sciences at Flinders University Professor Michael Kidd.

The experts also point out that South Australia may have to rely on the Great Artesian Basin water below the mine if the Murray becomes unusable.

The toxic waste created by the mine represents 5.5 million standard-size trailers of toxic acids stored in dams 15 times the area of Adelaide's CBD as well as another 242 million trailers of solid material.

Roxby Submission

BHP's Environmental Impact Statement
promotional video