Monday, February 28, 2011

It felt like I was at the birth of Medicare... Our proposed national disability insurance scheme

From the Productivity Commission:

An entirely new model for providing supports and services for people with a disability is needed, according to a draft report released by the Productivity Commission. The draft report — Disability Care and Support — identifies the current disability support system as underfunded, unfair, fragmented, and inefficient. It gives people with a disability little choice and no certainty that they will get the support they need.

The Commission is proposing two schemes to address the flaws, with a rollout to commence in 2013-14. The biggest scheme, the National Disability Insurance Scheme, would be like Medicare in that all Australians would know that they or their families would get long-term care and support if they acquired a significant disability. A second much smaller scheme would cover people's lifetime care and support needs if they acquired a catastrophic injury from any accident. It would be based on widening and strengthening existing state and territory schemes.

Patricia Scott, the presiding commissioner for the inquiry, said 'Every day nearly 100 people acquire a significant disability. This will have life long impacts on them and their family. Under the proposed new schemes, people would not wait years for suitable wheelchairs or only get two showers a week. Our preliminary estimate is that the additional cost of the big scheme would be around $6 billion per annum.'

The report says that reform is necessary and the current system is not sustainable without significant additional resources. Associate Commissioner, John Walsh said 'We have a 'death spiral' in the current system, with ageing carers unable to cope, giving up their adult children to expensive taxpayer-funded care, leading to reduced respite support, and putting more strain on the remaining carers. Not providing adequate support now requires increased dollars later.'

The report says Australia should move to a system in which people with a disability and their carers have a lot more choice. They could decide what service providers to use and some could cash out their support packages to organise their supports much more flexibly.

The Commission proposes a new body — the National Disability Insurance Agency — to oversee the main scheme. The Australian and State and Territory Governments would appoint its board, but the agency would run the scheme independently, using clear criteria for entry to the scheme, tight controls to ensure that spending is based on reasonable need, and a focus on cost-effectively achieving much better economic and social outcomes for people.

Interested parties and individuals are encouraged to provide feedback on the Commission's draft proposals either by submission or attending its public hearings in April. The final report will be delivered to the Government in July 2011.

Main Points:

  • The current disability support system is underfunded, unfair, fragmented, and inefficient, and gives people with a disability little choice and no certainty of access to appropriate supports.
  • There should be a new national scheme - the National Disability Insurance Scheme (NDIS) - that provides insurance cover for all Australians in the event of significant disability. While Australians would pay more taxes (or governments would cut other spending), people would know that if they or their family acquired a significant disability, they would have a properly financed and cohesive system to support them.
  • The NDIS would fund long-term high quality care and support (but not income replacement). Around 360 000 people would receive scheme funding.
  • Beyond that main function (and the biggest source of its costs), the NDIS would have several other important roles, including mustering community resources, providing information to people, quality assurance, diffusion of best practice among providers, and breaking down stereotypes.
  • The needs of people with a disability and their carers would be assessed rigorously by NDIS-appointed local assessors, with careful management to avoid assessment 'softness' or 'hardness'. Assessment would lead to individualised support packages. Strong governance would be necessary to contain costs and ensure efficiency.
  • The agency overseeing the NDIS - the National Disability Insurance Agency - would be a federal agency created by, and reporting to, all Australian governments. It would have strong governance arrangements, with an independent board, an advisory council of key stakeholders, clear guidelines to ensure a sustainable scheme and with legislation that protected the scheme from political influences.
  • Support packages would be portable across state and territory borders, as would assessments of need.
  • People would have much more choice in the NDIS. Based on their needs assessment and their individualised support package, they would be able to:
    • choose their own service providers
    • ask a disability support organisation (an intermediary) to assemble the best package on their behalf
    • cash out their funding allocation and direct the funding to areas of need they think are most important. There would have to be some controls over the latter to ensure probity and good outcomes. People would need support to adopt this option and, given overseas experience, it would take some time for many to use it.
  • The NDIS would cover the same range of supports currently provided by specialist providers, but would give people more opportunities to choose mainstream services and would encourage the development of innovative approaches to support.
  • In 2009-10, the Australian Government provided funding to the disability sector of around $1.7 billion, while state and territory governments provided funding of around $4.5 billion - or a total of $6.2 billion.
  • The Commission's preliminary estimates suggest that the amount needed to provide people with the necessary supports would be an additional $6.3 billion, roughly equal to current funding. Accordingly, the real cost of the NDIS would be around $6.3 billion per annum. That could be funded through a combination of cuts in existing lower-priority expenditure and tax increases.
  • Current funding for disability comes from two levels of governments, with an annual budget cycle - making it hard to give people with disabilities any certainty that they will get reasonable care and support over the long-run
    • currently, supports might be good one year, but insufficient the next.
  • The Commission is proposing that the Australian Government take responsibility for funding the entire needs of the NDIS. This is because the Australian Government can raise taxes more sustainably and with fewer efficiency losses than state and territory governments.
  • State and territory governments should offset the Australia-wide tax implications of the NDIS by either:
    1. reducing state and territory taxes by the amount of own-state revenue they currently provide to disability services or
    2. by transferring that revenue to the Australian Government.
    • The Commission prefers option (a) because it leads to a more efficient way of financing the NDIS, with greater certainty of long-run funding, and with a no greater level of Australia-wide taxes than other options. Compared with most of the alternatives, it would also have a lower risk that jurisdictions would not meet their ongoing commitments.
  • To finance the NDIS, the Australian Government should direct payments from consolidated revenue into a 'National Disability Insurance Premium Fund', using an agreed formula entrenched in legislation. A tax levy would be a second-best option.
  • The scheme would commence in early 2014, commencing with a full scale rollout in a particular region in Australia. That would allow fine-tuning of the scheme, while providing high quality services to many thousands of people. In successive years, the scheme would:
    • extend to all Australia in 2015
    • progressively expand to cover all relevant people with a disability, commencing with all new cases of significant disability and some of the groups most disadvantaged by current arrangements.
A separate scheme is needed for people requiring lifetime care and support for catastrophic injuries - such as major brain or spinal cord injuries. Currently, many Australians get poor care and support when they experience such injuries because they cannot find an at-fault party to sue. A no-fault national injury insurance scheme (NIIS), comprising a federation of individual state and territory schemes, would provide fully-funded care and support for all cases of catastrophic injury. It would draw on the best schemes currently operating around Australia. State and territory governments would be the major driver of this national reform.

Related Posts

. Another levy. A good one. Today.

. We've disabled ourselves. Henry to tackle Australia's shame

. NewStart is $231 and shrinking relative to other benefits. Can anyone else see a problem?


About those Tax Office computer problems...

The report of an eight-month investigation into the Tax Office computer meltdown that last year delayed millions of returns is gathering dust in the in-tray of Assistant Treasurer Bill Shorten.

Commissioned in April to take heat off the government in the lead-up to the election the report was delivered to Mr Shorten office three months ago on December 3.

A Senate estimates hearing has been told the Assistant Treasurer is not required to release it until July 6, which as independent Senator Nick Xenophon quipped, "is a new tax year".

At the peak of the problem more than one million returns were delayed, taxpayers were sent letters telling them refunds had been paid into their accounts when the Tax Office had no account details and letters were sent referring to enclosed cheques which were not enclosed.

Fifty per cent over budget and behind time the new $800 million Tax Office computer system replaced more than 180 systems, some more than three decades old. It sent unintelligible data to agencies such as Centrelink and was unable to interpret negative numbers.

Tax Commissioner Michael D'Ascenzo has seen the report... and at the Senate hearing twice declined to answer when asked whether the Taxation Inspector General Ali Noroozi had treated him fairly, saying that was "for others to judge".

A spokesman for the Assistant Treasurer said he would table the report "in the not too distant future".

Related Posts

. That investigation into the Tax Office computer meltdown?

. The Tax Office has set up a hotline to get around its hotline!

. The Tax Office supercomputer that will never quite be

. Why is the Tax Office sitting on your refund cheque?


Another levy. A good one. Today.

Already under pressure over the carbon tax and floods levy Prime Minister Gillard will today face calls for a third new tax, a Medicare-style national disability insurance levy costed at $5 billion.

To be unveiled in the interim report of a year-long Productivity Commission's investigation the levy would be set at 0.8 per cent of income on top of the 1.5 per cent Medicare Levy bringing the total impost to 2.3 per cent. An alternative option to be spelled out would collect money in the same way as the superannuation levy, at an average cost of around $400 per year per worker.

"Right now if you lose the use of your limbs falling off a ladder you are without support," says former NSW government minister John Della Bosca. "But if you lost use of limbs in a car you would be fully covered. It'd make sense to get up, get into a car and crash it."

John Della Bosca introduced Victorian-style compulsory no-fault car accident cover to NSW and believes both states have left the job half finished.

As campaign director for the lobby group Every Australian Counts he is confident the Commission will today recommend compulsory life-time cover for all disabilities however inflicted, including those acquired at birth.

He is less certain about how the Commission will suggest it be funded.

"I think it will set out options, the primary one being a Medicare-style levy. I would like to say to my political colleagues this isn't the sort of levy you should build a scare campaign around"...

"Doing nothing to provide disability cover is not an option. It can happen to anyone at any time, and it can happen to anyone's kid any time. Right now on a completely arbitrary basis some are denied support. The sector doesn't like me saying this, but it is true. Without support carers get burnt out. If carers can't get support they eventually break down and can't continue caring for their children.

A passionate critic of the government's flood levy, ANU professor Warwick McKibbin supports the idea of a disability levy, telling The Age that while one is bad in principle the other makes economic sense.

"One of the key things a government can do well is bundle the risk of a whole bunch of people and make it cheaper for everybody," he says.

Victorian leader Ted Baillieu is backing a national insurance scheme as are NSW leaders Kristina Keneally and Barry O'Farrell.

The total cost of caring for the $850,000 severely disabled Australians is estimated at around $10 billion per year, with only around half this presently funded through motor vehicle third party insurance.

Mr Della Bosca says the cost of the other half should come down over time as people are case managed and returned to work to boost Australia's productivity and pay taxes.

Published in today's SMH and Age

Related Posts

. We've disabled ourselves. Henry to tackle Australia's shame

. NewStart is $231 and shrinking relative to other benefits. Can anyone else see a problem?


Friday, February 25, 2011

What a time to leave. Henry quits as we're getting ahead

There's love. I'll post the transcript

Australia's best-known public servant took good news and bad news to his final Senate hearing.

Amid praise from both sides of politics and a warning that it it got any more chummy it would turn into a "group hug" Ken Henry said Australia would raise "several multiples" of what was predicted for the mining tax if resources prices simply stayed where they were, and said the boom would push other firms out of business.

Told this would be his 23rd appearance before a Senate estimates hearing and perhaps remembering some had been unpleasant, the Treasury secretary said he hadn't counted and hadn't thought he would would miss them but added, "there's a chance."

The 53-year old leaves after a decade at the top of Treasury next Friday. He'll take a very long break before deciding what to do with the rest of his life.

Coalition Senators praised him for designing the their Goods and Services Tax, Labor Senators praised him for designing their economic stimulus. Each was anxious not to dwell too much on the Henry Tax Review, its key recommendation opposed by one side and the other recommendations largely ignored by the other.

The report of his review was to be put to a tax summit before the middle of this year as part of the agreement between Labor and the independents to form government. But Dr Henry said he heard the date had been pushed out, although no-one had told him.

Asked how he felt about the mixture of indifference, hysteria and bungling that greeted his report... he replied he remained "very optimistic with respect to the implementation of many of the recommendations, very optimistic".

The mining tax, smaller and more limited than originally proposed, would make far more than any of the published estimates if mining prices merely stayed where they were.

"For prudent budgetary reasons we factor in a very substantial fall in commodity prices over a 10 year period," he said speaking about the numbers published in budget documents and also those obtained under the Freedom of Information Act.

"That isn't to say that will happen. We don't know that prices really are going to trend down over a 10 year period. If instead were they to remain at their present levels, our revenue estimates would be several multiples of what we have published."

The Treasury Secretary released long-term projections under the Freedom of Information Act, because he was obliged to, not because he thought they made sense. "There's something quite unreasonable about producing ten year revenue estimates for a tax measure," he told the committee. "The numbers are of such poor quality that I myself was very reluctant to see them in the public domain."

Although he had no idea how long the resources boom would last he spoke in decades.

"Lets' suppose that in 20 years time commodity prices come off, quite significantly. I would say to you then that the best industrial structure of the Australian economy then, in 20 years time, would be quite different from the one we had 20 or 30 years ago."

Asked by former union leader Doug Cameron whether the mining boom would push firms and industries to the wall, he said some would have to face "the very real question of whether with the exchange rate being where it is they are able to remain in business".

One of his long-term sparing partners Coalition senator Mathias Cormann asked whether he was leaving his job on a high or a low.

"Well, after this morning's questions I would have to say I am leaving on a high," Dr Henry replied.

And they shook hands, posed for photos and almost hugged.

Published in today's SMH and Age

Henry on industrial transformation:

Henry and Treasury Senate Estimates February 24 2011

Related Posts

. The barely spoken fear - our boom won't end

. Hurt by the dollar? Don't expect support. Henry

. We Need More Migrants - Treasury


Thursday, February 24, 2011

The future starts in July 2012 - The agreement on carbon tax


The Prime Minister Julia Gillard today outlined the Government’s plan to cut pollution, tackle climate change and deliver the economic reform Australia needs to move to a clean energy future.

This is an essential economic reform, and it is the right thing to do.

The two-stage plan for a carbon price mechanism will start with a fixed price period for three to five years before transitioning to an emissions trading scheme.

The Government will propose that the carbon price commences on 1 July 2012, subject to the ability to negotiate agreement with a majority in both houses of Parliament and pass legislation this year.

A carbon price is a price on pollution. It is the cheapest and fairest way to cut pollution and build a clean energy economy. The best way to stop businesses polluting and get them to invest in clean energy is to charge them when they pollute.

The businesses with the highest levels of pollution will have a very strong incentive to reduce their pollution.

The Government will then use every cent raised to:

. Assist families with household bills

. Help businesses make the transition to a clean energy economy

. Tackle climate change

The Government will not shy away from this difficult but vital economic reform to move Australia to a clean energy nation.

The global economy is shifting.

Right now, Australia is at risk of falling behind the rest of the world. The longer we wait, the greater the cost to the economy, and the greater the cost to Australian jobs.

An initial fixed carbon price will provide businesses with a stable and predictable platform to transition to a ‘cap and trade’ emissions trading scheme that will be linked to international carbon markets.

This will give businesses time to understand their carbon liability and begin the transformation in a steady and purposeful way.

Today’s proposal is the result of hard work by the Multi-Party Climate Change Committee which has been meeting co-operatively, determined to help deliver this crucial economic reform.

The framework has been agreed by Government and Greens members of the Multi-Party Climate Change Committee (MPCCC). The other members, Mr Tony Windsor and Mr Robert Oakeshott, have agreed that the proposal should be released for community consultation.

The Committee will continue to discuss other important elements of the proposal including the starting level of the fixed price, any phasing in of sectors of the economy, and assistance for both households and industry.

The document outlining the proposed carbon price mechanism is attached.

Members of the public and interested parties who wish to provide input on this approach should contact:, or write to:

The Multi-Party Climate Change Committee Secretariat
GPO Box 854
Canberra ACT 2601

MPCCC Carbon Price Mechanism Final

"The Australian Greens today joined the Gillard government in announcing an agreed pathway towards a carbon price that should commence on July 1, 2012, beginning the transformation of our economy from polluting fossil fuels to clean energy.

The agreement is a major step towards implementation of the Greens' proposal for a fixed carbon price starting as soon as possible, rising each year, with no international offsets allowed. The fixed price could be replaced in time with a well-designed emissions trading scheme.

“This agreement is the Greens in action, delivering certainty to the Australian economy, community, investors and the environment after productive negotiations with the government,” said Australian Greens Leader, Senator Bob Brown.

“We proposed a fixed price on carbon in January last year as a way of breaking the deadlock the parliament had reached on climate action.

“The Multi-Party Climate Change Committee that was established at the instigation of the Greens to support the Gillard government, is paying dividends for all Australians.”

Australian Greens Deputy Leader, Senator Christine Milne, said “This agreement to set a fixed, rising price on carbon with no international offsets means that, as of July next year, the transformation of our economy towards a zero emissions future can begin.

“This will be good for the community who face out-of-control energy price rises, it will stimulate the economy, create jobs and, of course, help protect the climate which sustains us all.

“The Greens' agreement with the government sets out elements of a transition to emissions trading down the track once the parliament can agree on emission reduction targets.

“But it is important to note that, in the absence of agreement, the fixed price would continue and keep rising into the future, giving industry certainty that, from now on, change is inevitable.

“The carbon price would cover the energy sector, transport, industrial emissions and waste. There is agreement to support change in the land-use and forestry sectors but details are still under consideration.

“The agreement sets out points for compensation, including helping the community meet rising costs of living, but the details are still to be determined.

“This is a big step forward for climate action in Australia. For the first time, everybody in Australia will have a clear signal that the old, polluting ways will have to change and a new, exciting era is set to begin.”

Related Posts

. Get set for higher power prices, with or without a carbon price

. Don't do it! Julia is walking into a carbon trading trap

. Earth to supporters of an ETS - we have a problem


We Need More Migrants - Treasury

The Commonwealth Treasury has spoken out in favour of higher immigration saying it will be needed to ease the pain that will flow from a mining boom and a high dollar set to destroy firms in other industries.

Treasury chief economist David Gruen told a conference in Melbourne the resources boom was set to last decades, boosting some industries and leaving others on life support.

"We are looking at the reentry of a third of the global population into the global economy," he said. "There will be volatility along the way but in a trend sense China and India are likely to grow strongly for an extended period."

"Currently it is generating great demand for our resources, but is also delivering literally millions of people into middle classes. Their disposable incomes will be used to buy other Australian products such as high protein food and funds management services."

"But we are unlikely to return to our pre-boom industrial structure."

"In declining sectors, we should support the workers not the firms... To the extent that we want to help people, we should do so directly rather than by trying to keep alive firms that perhaps have a limited future."

Dr Gruen said higher immigration could ease the pain for firms threatened by the high dollar.

"A larger labour pool reduces the extent to which declining sectors have to actually shrink. They are still going to shrink relatively, but if the pool of labour is bigger then they don't necessarily have to shrink in absolute terms," he told the conference.

"I am not necessarily saying we need to ramp up immigration, I am saying immigration is one way to make the adjustment less painful."

"Some of the resistance is a response to other things people blame on immigration, such as congestion, and disputes over water. I would argue we should deal with them directly."

Reserve Bank Governor Glenn Stevens told the conference there was a case for setting up a macroeconomic stabilisation fund to store some of Australia's mining wealth for use in a downturn but would say no more.

"I am a cautious enough person not venture further down that track today, the hares are already running I'm sure," he added.

Dr Gruen the right time for such a fund was "a few years down the track" when the budget was back in surplus.

A resource super profits tax would ease strains form the mining boom.

Mr Stevens said roughly half of Australia's mining sector was foreign owned meaning only about half of the extra income earned from mining was flowing to Australians.

Published in today's SMH and Age

The Resources Boom and Structural Change in the Australian Economy

Related Posts

. The barely spoken fear - our boom won't end

. Hurt by the dollar? Don't expect support. Henry

. Oh, and we're slowing down the flow of migrants - Access


Wednesday, February 23, 2011

Public transport, Melbourne style

Yes, bike racks.

With bikes, $2.50 for a day:

Your drop them back at any rack you like when you are finished.

But you have to come prepared with a helmet, which makes it difficult.

Gee I like Melbourne.

Related Posts

. "Some people hate the bus. Not me, I can't get enough"

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


The barely spoken fear - our boom won't end

What if Australia's longest boom lasts the rest of our lives? It is a prospect Treasury is only beginning to openly canvass because the implications are enormous and frightening.

Many of us have grown up with a recession a decade. We are entitled to believe the boom and bust cycle didn't end with the last recession in 1991 because we almost had another one in the 2001 tech wreck and almost had one more during the 2008 global financial crisis.

But we have now spent close to 20 years without recession and this month Treasury chief economist David Gruen talked of another 15.

Actually, that's what he was reported to have said. Skills Australia had asked him to speak about trends over only the next 15 years. What he did say was that China and India should continue their strong catch-up growth for "at least a few more decades, and certainly for the next 15 years".

Mindful of the 15-year time frame set for his address he said Australia was set to enjoy strong growth in demand for its resources, particularly iron ore and coal, "for at least the next 15 years".

But "at least a few more decades" is his central scenario... It could mean that a cohort of presently young Australians, perhaps even a generation, spend their entire working lives without recession.

So what's not to like? What could possibly be unsettling about happy ever after?

Part of the answer is that happy ever after will be different to what we are used to, and part is that getting there will impose strains on our political system it shows no sign of being able to handle.

Gruen gave a hint of the different world in his Skills Australia speech. He and Reserve Bank governor Glenn Stevens will expand on it today at a conference on the implications of the resources boom at Melbourne's Victoria University.

It will come about because India and China are growing rapidly in a way which is firing demand for Australian commodities. Taken together those two nations account for more than one-third of the world's population.

Gruen says even though each has been growing for decades, each is still "at the early stages" of its economic development. China's and India's living standards are still lower relative to the top OECD nations than was Japan's in the early 1950s before its four decades of explosive growth.

What drives demand for aluminum, steel and coal is urbanisation. Gruen's graphs show China's and India's urban population share (and also Thailand and Malaysia's) set to soar well into the second half of this century. By 2050 China would house more than 70 per cent of its population in cities, up from 50 per cent. India would house more than 50 per cent, up from 30 per cent.

Necessarily this will keep at record heights or more likely push up further the price of those commodities, even as other suppliers get in on the act.

For Australia this means continuing high buying power (the five-year moving average of our terms of trade is already much higher than it has been at any time in the past 140 years) and a continuing high dollar (it is currently about 35 per cent above its long-term average since the float).

And that means that "traded" goods and services, those that compete with imports or attempt to export, will be squeezed without an end in sight - unless they are exporting the products of our mines.

Untraded services will do just fine. We are not going to import hair cuts, and nor are we going to import nursing home workers (at least not officially, for a while). Because mining and mining-related construction are not big employers most of the new jobs created will be in untraded services.

But not in manufacturing, not even in information technology. Non-mining firms trying to compete overseas or facing overseas competitors boosted by a perennially high Australian dollar will struggle to survive or go under.

As each one approaches the edge there will be pressure to offer support in order to shore up jobs, as Australia did for Kodak before it closed its doors, as Australia did for Mitsubishi before it closed its doors.

Treasury boss Ken Henry told a Senate hearing in November there might be a case for acceding to such pressure, if it was thought the high terms of trade would be temporary.

But it would probably be permanent.

"I think it would be sensible on this occasion to contemplate the prospect that there has been a structural change in our terms of trade, not a short-lived change, and that that change will have to be associated with a change in the structure of the Australian economy," he told the Senators.

"If that is the case, again without talking about a particular policy option, policy would do better to focus on what could be done to support the change in a way that does least damage to people’s lives."

"That might mean, for example, avoiding the temptation to offer support to a particular
business which, with these terms of trade, does not really have a long-term future but to focus instead on programs that would support the transition of workers from that business to other businesses which do have a long term future with the sorts of terms of trade that we are confronting."

It's just about Treasury's deepest fear - that as a business struggling under the weight of changed circumstances asks for help to stay in business, the government will grant it, rather than offering to help its workers get out of the business.

Agreeing to few such small requests early would start an avalanche as more and more firms find it hard to survive the continuing high dollar and ask for the same treatment.

It would not only cost an ever growing portion of tax revenue, it would also be pointless, offering false hope.

With Australia's longest boom about to really get going, it believes we are at a critical juncture.

It would like our leaders to show steel they have yet to demonstrate they have.

Published in today's SMH and Age

The longest boom

Governor Stevens this morning. Let's act as if the boom won't last:

The Resources Boom - 23 February 2011

Related Posts

. Hurt by the dollar? Don't expect support. Henry

. We will be pressured to respond to policy proposals that are, frankly, bad.


Monday, February 21, 2011

What Treasury told Swan on banks

The ACCC is powerless to take action on pricing:


There is bugger all it can do about price signalling:


From a sheaf of FOI documents released tonight.

Related Posts

. Swan's symbol. Should the banks be scared?

. Swan's banking package

. Swan's second chance

. Swan's plan: Counterbalancing banks


Who'd try to manage Bahrain's economy?

Australia's John Edwards.

Remember him?

Former Keating advisor, Curtin biographer, HSBC Australia economist.

That's what the Bahrain website says right now:

If he is still there, he'll be facing a (very well paid) challenge.

Today's Crikey:

In Bahrain, a bloody day for martyrs

From Bahrain, Al Jazeera producer Soraya Lennie writes

His death certificate says Ali Ahmed Abdulla Ali. He was known to everyone as Ali Ahmed Mu'amin. Nationality: Bahraini. His funeral was the largest of the three held on Friday. For his family, it was the death of a dream. Despite high unemployment in Sitra, they had high hopes for him. He was studying engineering and was due to graduate this year.

Instead of an engineer, they have a dusty plot to visit in their neighbourhood. His broken body was wrapped tightly in a white sheet and lowered into the earth. Screams and sobs resounded through the cemetery. One mourner would not let him go. He sat inside the grave, caressing Ali's face through the sheet, rocking back and forth. A young friend slumped against another on the edge of his grave, his wails louder than the others. They watched as his body was covered with dirt.

Ali Ahmed was only 22 when he died. The primary cause listed on his death certificate is extensive bleeding leading to intractable hypovolemic shock. He bled to death from a projectile that had torn into his thigh.

The night before, at Salmaniya Hospital morgue, his body bore the signs of doctors' attempts to save him. Four large surgical slices ran up his calves and thigh, another at his groin. Also listed on his death certificate as a contributing factor: metal pellets and plastic embedded in his chest. A Human Rights Watch representative visited him at the morgue and is still trying to investigate exactly how Ali Ahmed ended up there.

This young man did not seek out martyrdom. He was not supposed to be at the Pearl Roundabout early Thursday morning. He ran there when he heard security forces had attacked people as they slept. Women and children were left behind. There was a stampede, people were trapped. But Ali Ahmed didn’t make it. Mourners say he was shot in the street and left to die.

"I'm Bahraini, I'm 42 years old. I've never seen such evil," Mohammed, a businessman, said after Ali Ahmed's funeral on Friday. Three of the four men killed on Thursday morning were from Sitra.

Ali Ahmed’s uncle, Jaffar, was resigned to his nephew's fate: "When I think of him, I see his smile. I can't forget that." But on Friday afternoon, he was not happy to describe Ali as a martyr. Jaffar said his nephew was well-known for helping people in the windswept town, a predominantly Shia island on the east side of Bahrain. There, grievances against the state run high.

The 2011 Index of Economic Freedom, published by the Heritage Foundation and The Wall Street Journal, listed Bahrain as the freest economy in the Middle East and North Africa region. It is listed 10th overall in the world.

Unlike many other Gulf States, Bahrain’s economy is not entirely driven by the petroleum industry. The government has fashioned Bahrain as a business and commercial hub, which attracts a steady flow of foreign investment.

The main demand of protesters has been fair access to employment opportunities. According the US State Department, Shias account for close to 70% of Bahrain’s native population. They paint a stark contrast between themselves and their Sunni rulers.

A middle-aged broker summarised at the funeral for Ali Ahmed: "It’s hard to get access to the system … to opportunities. The people here," he said, pointing to the tens of thousands of mourners, "most are educated, with degrees, but because they come from another sect they can’t get jobs."

Fatimeh Jaffer, an English teacher, also emphasised the point that Bahrain’s crisis is based on sectarian differences. She spent the day walking in funeral processions and could not contain her rage.

"The [ruling] Al Khalifa family have a lot of money, but it’s all for them. People are dying, look around you," she added, "look at the old houses, we don’t have jobs. The government just wants to increase the Sunni population by bringing in Sunni workers, when we, the real Bahrainis, are living in poverty."

In a televised address, the country’s crown prince countered this claim: "Youths are going out on the street believing that they have no future in the country, while others are going out to express their love and loyalty. But this country is for you all, for the Shiites and Sunnis."

Despite the prince’s claim, they say the situation on the ground is very different; take the army and police force as a example. The Bahraini security forces are mostly made up of Sunnis from countries such as Jordan, Yemen and Pakistan. Allegedly, the people who opened fired on Bahraini's in their own capital.

Emad, a 21-year-old student, has been arrested three times since 2008 for political activism. He is a supporter of the Shiia opposition, including the banned al Huq party. He says he was tortured in prison, hung by his hands for extended periods, given electric shock and sleep deprived. The primary torturer was Jordanian, he says, the others Yemeni.

"They are given money, houses and job when they come to Bahrain. We Bahraini can’t even get jobs, especially in the army and police force, they don’t trust us," he said.

Protesters say the fight is for Bahrain. They want a free and fair political system that represents all of them, not just some. They want freedom of the press, human rights and the release of political prisoners. At the beginning of the protests they wanted the prime minister to quit and a real constitutional monarchy. Now they want the entire Al Khalifa family gone.

Related Posts

. Egypt is attacking its citizens and shutting down the internet


Tony Abbott owes $16,100

Summer is almost over but Tony Abbott is yet to come good on his commitment to provide surfing lessons to two Afghan refugees.

The two won the lessons in June when GetUp! bid $16,100 on eBay to win the prize offered to raise money for the charities supported by the press gallery's Mid-Winter Ball.

The $16,100 tag eclipsed the $12,600 raised for lawn bowls with Kevin Rudd and the $10,000 for dinner with then deputy Julia Gillard.

GetUp!'s Simon Sheikh says seven months on he is finding it hard to nail Tony Abbott down...

"We were told that it couldn't occur because it was winter, around the election time, the surf might not break very kindly. Now it is summer again, now we are about to go out of summer... and soon we will be at the point where the deal, which is to do it by June, will expire," he told the Ten Network's Meet the Press.

"I think that is disappointing. It was for charity. They have won the auction. We have given them a chance to go surfing and we can’t seem to get a way of getting Tony Abbott on the surfboard."

Mr Abbott's office told the Herald he stood by the commitment and was "looking to schedule it soon".

"It is something Tony will definitely honour," a spokesman said. "He has a problem with his hamstring but it will probably be right soon."

Published in today's SMH

Related Posts

. Asylum seekers: Bring them here, please

. Please. Don't reopen Nauru

. Abbott also destroys tax reform


Get set for higher power prices, with or without a carbon price

A delay will make things worse

Electricity and gas prices are set to soar with or without a carbon price according to new study, and Australian businesses are ill-prepared to cope.

The Australian Industry Group says by 2015 electricity will be more than double its 2008 price and that eastern states gas prices will eventually climb to international levels after at first slipping.

"One of the factors keeping Australian gas prices relatively low has been our isolation
from world gas markets," the report says. "However once the infrastructure is in place to liquefy gas for export, domestic wholesale prices will increasingly converge with global prices as has already happened in Western Australia."

"Four large LNG export projects are planned in Queensland. Convergence with world prices would be likely across the eastern gas market. However, construction of the plants will take years, and there will be a large supply of 'ramp-up gas' on the domestic market as production increases dramatically before the LNG terminals are complete."

"Thus while in the medium term LNG exports will raise domestic gas prices, in the short
term prices may be depressed substantially."

The report finds coal fired power will become more expensive whether or not Australia gets a carbon price as international prices for Australian coal climb. Paradoxically, weak international climate change policies could push Australian coal prices still higher...

An "investment drought" has made new investment in generators urgent, but without clarity about when or how Australia will get a carbon price, investors are likely to err on the short-run more expensive and less carbon efficient solutions.

In what it says is a "sobering" finding the study reports that two-thirds of the Australian Industry Group members surveyed have made no improvements in their energy efficiency over the past five years. A further 7 per cent have gone backwards.

More than half expect to make no improvement in the two years ahead, a finding the Group says suggests energy efficiency "is not currently a high priority, whether because of limited options, the small role of energy in some companies' cost structure, policy uncertainty or barriers to uptake".

"This is a worrying result," said Australian Industry Group chief executive Heather Ridout. "We are going to have to adapt. Energy prices are going up with or without a carbon price. A well-designed price would soften the blow, but it would remain a big hit."

Published in today's SMH and Age

Energy shock_ confronting higher prices

Related Posts

. Don't do it! Julia is walking into a carbon trading trap

. Earth to supporters of an ETS - we have a problem

. "We've got to reduce our dependence on foreign oil" - Jon Stewart


Swan to banks - Your super profits are safe

Australian banks are in the clear. Treasurer Wayne Swan says they will escape both a mining-style super profits tax and a special bank transactions tax.

Speaking from the G-20 Finance Ministers meeting in Paris where the idea of a transactions tax was "floated and discussed" Mr Swan said it would not be applied down under.

"Our position is very clear. We are not looking at any such tax in the banking system," he told Network Ten. "There is a world of difference between the banking system and mining. Mining uses the resources owned by the Australian people for which a fair fee or royalty or rent should be paid. That is why we have put in place our resource rent tax. We are not moving in that direction in the banking system."

"Joe Hockey thinks the miners have been paying too much tax and that’s why he is opposing our mineral resources rent tax. He is opposing the tax in circumstances where the miners are making record profits."

"When it comes to a bank transaction tax, that was floated and discussed in the G20, but there is no action flowing from that"...

The Treasurer's reassurance comes just days after ANZ chief executive Mike Smith cautioned against the temptation for governments to pursue "populist" policies against business.

A string of bumper profit results handed down by banks over recent weeks has stoked calls for Canberra to revisit banking super-profits tax.

"Australia cannot afford to frighten off foreign investors by giving oxygen to populist policy proposals," Mr Smith told an analyst briefing.

"Without these investors, whether they're investing in our growth sectors such as resources or by funding the balance sheet of banks, growth in Australia will stall and unemployment will rise."

The Australian Bankers Association has said there is "no evidence" that banks are making excessive profits.

Published in today's SMH and Age

Related Posts

. Why not tax bank super profits? - 88 per cent

. Swan's symbol. Should the banks be scared?

. Swan's second chance


Friday, February 18, 2011

Listen in: "The US dollar took another pounding...

Those words sounded current this week as through a time warp on my favourite radio program I heard a replay of an extraordinarily unlikely 1974 hit single:

"The Americans" by Canadian commentator Gordon Sinclair (then 73 years old) must be about the only radio editorial ever to have to become a hit single, I thought...

...until I remembered this one, from my own home city of Adelaide:

Enjoy. Wallow. The group was "The Young Australians", the background was conscription for the Vietnam war, the year 1967, the voice TV executive Rex Heading (who is also famous for creating Humphrey B Bear).

It too became a hit single even though some DJs refused to play it, and was later included on Bob Hudson and Glenn A Baker's LP "Detestable Disks"

Have a good weekend.

Related Posts

. Really, really good news if you loved the 1970s. Casey's back!

. John Vincent is dead. He can't be.

. Remember when the ads used to be better than the programs?


Angus & Robertson, at Woden this morning

I guess they've been bracing for this.

Related Posts

. Bleak Christmas. And its about to get worse

. Suddenly we don't feel much like shopping


Thursday, February 17, 2011

It's a small levy, but a daft idea - McKibbin

So daft is the proposed $1.8 billion flood levy that if we kept doing such things we would end up a banana republic, a prominent economist has told a parliamentary inquiry.

Professor Warwick McKibbin is a internationally recognised economic modeler and a member of the Reserve Bank board.

He told yesterday's inquiry he was speaking in a personal capacity and not on behalf of the Bank.

While the amount of money to be raised was small, the principles would guide future bigger decisions, he said.

Most economists agreed borrowing was better than taxing to fund recovery from disasters.

"The analogy is the case of a person whose house is damaged after a storm. It does not make sense to stop eating until enough is saved to rebuild. A better strategy is to borrow to rebuild and to reduce consumption a little each year to pay for it."

The levy would be expensive, eating up perhaps 10 per cent of the amount raised in collection costs including "the reprinting of forms, literature and perhaps legal actions over who pays it"...

Although designed to apply only to incomes over $50,000 and to people not affected by the floods there was room for dispute over who would pay the levy and who would not.

And there was a danger the levy could also make Australians less generous in future crises, causing Australians who had dug deep before being hit to think twice about donating again.

By contrast borrowing to fund reconstruction would be welcomed by financial markets and could enhance economic credibility. The stumbling block problem was the deficit straitjacket imposed by both sides of politics.

Asked whether this mattered given that the levy was so tiny Professor McKibbin said it was important to "establish the principles because when the big decisions have to be made we will have a framework in which to act".

"If we continue to do what we have always done without considering the principles we end up becoming a banana republic," he said. "We have to be very careful that all decisions, even the small ones, are done in the appropriate way."

Asked later by The Age whether his criticisms would extend to other proposed levies for purposes such as national disability insurance Professor McKibbin replied they would not.

"I was speaking only about levies used to fund recoveries from disasters. One of the key things a government can do well is bundle the risk of a whole bunch of people and make it cheaper for everybody. If well structured, a national disability insurance levy could work well."

Professor McKibbin was supported by economist Saul Eslake of the Grattan Institute who said the decision to raise money by a levy rather than borrowing was "political" rather than economic. Borrowing would have had "no adverse implications".

"The Queensland government is taking on an extra $4.8 billion in debt as a result of the floods. No-one is suggesting, and nor should they, that is going to put upward pressure on interest rates," he said.

Asked to explain why the government had decided on a levy rather than borrowing, acting Treasury Secretary Nigel Ray said it was concerned about "fiscal discipline" but agreed the amount involved was "small".

The inquiry will report Monday. Independent Tony Windor has said he "leaning against" the levy and will be guided by the report.

Published in today's SMH and Age

Related Posts

. We think the levy is doing us good

. Knock me down with a feather - the levy that'll tickle

. Might this be the wrong time for a levy?


Wednesday, February 16, 2011

That tirade against Joe Hockey at Menzies House

Menzies would not have been in Menzies House.

Yesterday the libertarian website published a tirade against Joe Hockey.

This morning it removed it, writing:

Here's the original. Mmmm...

An anonymous senior Liberal Party staffer writes on how Joe Hockey's position is no longer sustainable:

The most interesting development in the Liberal Party of the last fortnight has not been the “silent pause gaffe” by Tony Abbott when confronted by journalist Mark Riley. It is, in fact, Joe Hockey’s decision to undermine his Liberal colleague Scott Morrison, and contradict official party policy on the issue of taxpayer funds being used to ferry asylum seekers across the country. This is a day of remembrance of a tragedy, and we all feel great sympathy for those affected by the recent horrific events. Yet Hockey attempted to manipulate this and grandstand for his own personal advantage. And that is unacceptable. To take advantage of an event such as this to advance your own personal agenda is simply beyond the pale.

This is the demonstrated proof that Joe Hockey is completely ill-equipped to ever be a member of the leadership team of the Liberal Party. In fact, it is the last straw, after a string of gaffes and failures, and our parliamentary team is furious.

Joe Hockey has a teddy bear-like appearance and demeanour. He appealed to many viewers when he appeared on the Sunrise programme with Kevin Rudd. He no doubt enjoys a strong relationship with many journalists. To the average person in the street, Joe Hockey probably comes across as a likeable fellow.

I do not deny that people like Joe. After all, how could you not. Yet there is a big difference between being likable, and being leadership material (a lesson Kim Beazley learned well - and he was actually competent!)

Despite Joe Hockey's jockeying for the top job, however, the Liberal Party is truly fortunate to have had Tony Abbott elevated to the Leadership in the ballot of late-2009. A poll just a few days ago shows The Coalition leading Labor on the primary vote by 46 per cent to 32 - a far cry from when The Coalition was in the 20's under Malcolm Turnbull. Tony Abbott has turned the party around, achieved the impossible, and the vast majority of Coalition MP's thank him for it.

So, despite being touted as the popular choice by numerous two-bit internet polls, there can be no doubt that Hockey would have proven to be the one contender monstrously worse in the role (and not just worse than Malcolm – worse than Brendan Nelson, worse than Alexander Downer... possibly even worse than John Hewson).

Why? Because truth is, Joe Hockey is far more gaffe prone than anyone else on the front bench. Compiling a list of silly things he has said would prove an arduous task. This previous MH post does provide a list of utter failures of a policy nature - but it's only getting started. We also have his disgrace in the Tourism Portfolio (where he was demoted in utter humiliation), his failure in Finance... the list goes on. Suffice it to say: remember when Hockey couldn’t keep on message during the dying days of the 2007 federal election campaign, despite having been charged with one of the most important portfolios of the Government (and the campaign)? Leadership material? Give us a break.

If you seek certainties in this life, give Joe Hockey an important task to do and make sure there’s a camera crew present. The Liberal Party’s Press Office will be shuddering in front of the Sky news telecast. Because there can be no doubt that Hockey will stick his foot in his mouth. Again.

It’s now well past the point of being an amusing joke. We are the Party that gave Australia Peter Costello as our Treasurer. We pride outselves on our economic managment. To say to voters that we propose Joe Hockey be the next Liberal Treasurer is an incomprehensible fall from grace - and a stain on our reputation that will not easily be fixed.

There are countless advantages to a politician being jovial and likeable. However, from the point of view of an Opposition and the Party that values its economic credentials so highly, what is equally important is that the spotlight be shone constantly on the waste and mismanagement of an incompetent Labor Government. And Joe Hockey has consistently failed to do so. In seeking the spotlight for himself alone, he has failed to advance the position of The Coalition - and this has many backbench MP's running scared.

Given the ongoing issues that having Joe Hockey in such a vital portfolio presents, it has naturally meant that murmurings have begun within certain, key Liberal circles that with a new Parliamentary year should come a new Shadow Treasurer.

It is no secret that many Liberal MP's desire a new Shadow Treasurer who does not activly attack the Party line; Someone who does not seek personal attention at every waking turn; Someone who can stay true to Liberal values of small government when formulating policy.

We are beyond the point of backbencher despair - we are at the point of open revolt. While Shadow Cabinet can continue to put on a brave face, there can be no denying the panic that is spreading through the ranks as members view the destruction Hockey is causing. There can be no doubt that there needs to be a mechanism found quickly within the party to replace Hockey as Shadow Treasurer without resulting in a wider bloodbath [Ed: Give him Health?].

After all, we have a far safer pair of hands ready in Andrew Robb - an MP with a proven track record of competence, combined with a consistent history of supporting Liberal Party values and fighting for smaller government.

The replacement might be messy, but the public have come to expect something a lot better from the Liberal Party in such a vital area.

Enough is enough. The Joe Hockey circus must come to an end. The Australian people deserve more. The Liberal Party deserves more. Hockey must go - and soon.

This post was written by a Liberal Party staffer who requested their name not be revealed. Menzies House can confirm, however, that we have verified that the author does indeed work as a senior adviser for a member of the Shadow Ministry. Menzies House wishes to stress, however, that all contributions reflect only the views of their authors, and that we do not take any editorial position on such matters. We welcome submissions disagreeing with this post.

Related Posts

. Early prediction - Malcolm Turnbull will go into the next election as Opposition Leader

. Who would have thought? It's all up to Hockey

. Costings are Go!


Don't do it! Julia is walking into a carbon trading trap

Julia Gillard is about to make a massive and avoidable mistake.

What she thinks is clever politics is neither good politics nor economics and will do long-term damage to public support for action on carbon emissions.

Reports suggest that this Friday she will unveil plans for a carbon tax from July 2012 and with it the same incredibly generous compensation for existing electricity generators agreed on by Rudd and Turnbull before each lost his party's leadership.

Worth $7.3 billion to existing generators over 10 years, and doubled at the last minute at their insistence, the free permits were meant to ease the pain of higher electricity prices.

Ross Garnaut pointed out at the time that simple game theory, combined with the statutory obligations of company directors, ensured they would do no such thing.

Here's why...

Imagine that instead the money had been paid to households, a move that by the way would be electorally popular. By definition it would ease $7.3 billion of their pain over ten years.

Exactly how it eased the pain would be up to each household. The payments could either go towards paying their higher electricity bills or be pocketed if the higher bills encouraged them to cut back on electricity.

Now imagine the behaviour of an existing generator. It would be given a gift which it could, but need not, use to keep the price of electricity down.

What it does would be determined by the behaviour of its competitors. If they are new competitors their behaviour is already known. A new coal-fired competitor would not receive compensation and would face extra costs of, say 20 per cent as a result of the need to pay the tax or buy the permits. The new competitor would be forced to charge, say 20 per cent more. A new low-emissions competitor would be forced to charge at least that much more because low-emissions technologies are at the moment much more expensive.

So the existing generator has nothing to fear from a new entrant if it decides to push up its charges, say 20 per cent. It is protected from compensation to the tune of say, 20 per cent in the same way as Australian manufacturers used to be protected from foreign competition by import duties of at times 20 per cent.

Company directors work for shareholders. They are required to maximize revenue. It if is possible to raise prices 20 per cent without retaliation they are obliged to do it.

Of course they may face retaliation. Existing generators have existing competitors who may be squeemish about raising their prices (although if their directors are similarly required to maximise revenue that is unlikely). And higher prices might mean less business as consumers turn away from electricity. But in any business by far the biggest restraint on lifting prices is the threat of being undercut by new entrants.

A carbon tax or carbon permit scheme would remove that threat, leaving existing generators fairly free to pocket $7.3 billion of compensation and lift their prices anyway.

Politically this would be a disaster. It would make action on carbon emissions unpopular when it needn't be.

It is a trap our otherwise politically astute prime minister shows every sign of walking in to.

I should add that none of this means we should not compensate exporting and import-exposed industries. Their claims have merit. Those of existing coal burning generators do not.

Published in today's SMH and Age

Related Posts

. Wong's $7.3 billion gift to dirty power stations

. "Never in the history of Australian pubic finance has so much been given...

. The real battle over Australians emissions trading scheme.