Obama and the Israeli election

Obama has only one enemy in the world, American’s closest ally in the Middle East. From Drudge today:

White House ratchets up criticism of Netanyahu…
Inside HQ of ex-Obama staffers’ campaign…
Iran Targets Netanyahu Children for Assassination…

In case you are not keeping up with the latest from the White House, this is where we are:

A U.S. State Department-funded group is financing an Israeli campaign to oust Prime Minister Benjamin Netanyahu, and has hired former Obama aides to help with its grassroots organizing efforts.

U.S.-based activist group OneVoice International has partnered with V15, an “independent grassroots movement” in Israel that is actively opposing Netanyahu’s party in the upcoming elections, Ha’aretz reported on Monday. Former national field director for President Obama’s 2012 reelection campaign Jeremy Bird is also reportedly involved in the effort.

He would probably send in the troops if he thought he could. We are dealing with such insanity that it is hard to understand why this remains so low key. Is this now how things are? The stories that the CIA brought on the dismissal back in 1975 is a story that won’t go away, but that, at least, was supposed to have been clandestine. This is right out in the open, and as public as you could wish.

Posted in International | 16 Comments

Most people don’t like hard decisions

This is the story from today’s Australian, Queensland election 2015: ‘some people don’t like hard decisions’.

QUEENSLAND Premier Campbell Newman has put his party’s dramatic fall in the polls to “hard decisions” he made that “some people didn’t like”.

The Liberal National Party (LNP) annihilated Labor in the state election three years ago, scooping 78 seats in the 89 seat parliament.

The opposition was left with just seven seats, but polls suggest the LNP and Labor are now neck and neck.

This is how politics seems to work. There is one side who wrecks things and the other side who tries to put them back together. Think of the following pairings: Whitlam-Fraser; Keating-Howard; R-G-R-Abbott. But because the wreckers had their heart in the right place, and will almost never be attacked by the media, we keep going. The interesting part of the latest is that Shorten has misunderstood his own part in the process, and is stopping the Coalition from repairing what everyone agrees is broken (see W. Swan). If Labor wins at the next election, it will be just in time to have to deal with all of the worst fiscal horrors left behind by R-G-R, and they will no longer stop the boats.

I don’t think it is the case that people don’t like hard decisions, but they certainly don’t like not having things explained to them in ways that bring to the surface the nature of our emergency. When you have a PM who thinks he needs to leave his imprint on knighthoods and our literary awards, and leaves economic policy for others to sort out, you have a problem, with the even bigger problem to come, that the spending party may return to government before the party of restraint has actually fixed things up.

Posted in Economics and economy, Federal Politics | 18 Comments

Shame on them

(HT: MT via Twitter)

Posted in Hypocrisy of progressives, International | 9 Comments

How to lose a bill or so, Dan-style

download (12)Here’s the thing: the government is the government until the caretaker period commences. Any contract entered into by one government binds the next.

Now our Dan knew all this, but decided it was electorally attractive to assert that the East West Link contracts were invalid and there would be no need for compensation.  He even got a tame lawyer and ex-judge – Labor inclined Finkelstein – to back him up, although in fact his advice did admit that payment for damages to the contracting parties was a possibility.

Now the CFMEU-backed, my name is now Dan, is in office, it doesn’t seem that simple.  In fact, the Labor government hasn’t even given notice under the contract to the relevant parties.

To think that over a billion dollars of taxpayer money could be blown away on a tacky political ploy – it simply beggars belief.

Here is the update from the Fin:

A billion-dollar compensation bill payable by the Victorian government for breaking the East West Link road contract is mounting by the day.

Talks over the disputed pay-out have stalled as the Andrews government delays formally terminating the $6.8 billion contract while advisers ponder taxpayers’ liability.

Separately, the government’s own sunk costs on the cancelled road project could take a direct hit if the Reserve Bank of Australia cuts interest rates in response to weak inflation.

The government’s sunk costs are already about $300 million for land acquisition and managing the road project, which has been in the works since the last Labor government.

Losses on $6 billion of finance – interest rate swaps and hedges – put in place when the deal closed in September would also swell if the RBA cut rates.

Premier Daniel Andrews has previously claimed the compensation clause is not valid because Labor warned before the contract was signed it would cancel the project if it won the election.

That reversed Labor’s position. But formally giving notice under the contract could be seen as an action ­consistent with its validity, weakening the government’s argument. It is understood the government has not approached the East West consortium since an acrimonious meeting before Christmas at which Mr Andrews declared the contract was invalid.

Consortium members say they were dealing with the government and faced penalties themselves if they withdrew from negotiations at that late stage.

The termination for convenience clause in the East West contract replicates a standard clause in public private partnerships in Victoria and other jurisdictions in recent years.

The government refused to say why it had not activated it, given it only requires them to send one formal letter to the Lend Lease-led consortium for the compensation bill to stop climbing.

The twist is that any failure to proceed if the courts ruled the planning approvals for the project invalid in a case brought by inner-Melbourne councils would be treated as termination for convenience. In the standard compensation clause, if the government terminates for convenience it effectively pays out future profits, one source said.

Such a clause has never been triggered in a major infrastructure project in Australia. After the councils challenged the planning approval, East West Connect sought a letter guaranteeing the state would pay the contracted compensation, which the then treasurer Michael O’Brien supplied.

The amount of compensation from cancelling the project is devised from an equation. It is understood that the compensation bill hit $1 billion in January and could reach $1.1 billion by March.

The termination for convenience clause is a somewhat standard clause for the government to include and was used in the Parkville Comprehensive Cancer Centre Project. By not activating the clause in an attempt to get out of paying any compensation, the government could be costing taxpayers more.

Sources suggest the contract is “water tight” and the compensation bill will have to be paid out, not just the costs already incurred.

Consortium members can always accept a lesser amount than the contracted compensation. But doing so would weaken the position of international groups like Bouygues and Acciona if governments in less-stable countries terminate contracts on them.

East West Link investor Queensland Investment Corp – the Queensland government owned fund manager – would also find it hard to justify short-changing its superannuation fund members in order to get Victorians out of a hole.

Posted in Uncategorized | 25 Comments

Carbon taxes: the ALP’s gift to the Coalition

Earlier this week, Andrew Leigh the junior shadow Treasurer floated the essentiality of a carbon tax (and, oblivious of the collapse of commodity prices, a mining tax).

Our man in Davos, Assistant Treasurer Josh Frydenberg was fast out of the blocks attacking the proposal which will surely prove more damaging to Labor than any setbacks the Libs have felt caused by Tony Abbott downgrading a Prince of the realm to a mere knight.

Angus Taylor managed to spin Orwell, Hawke, Whitlam, Fraser and Santa Claus into a goring of the proposal today.

Greg Hunt, also in The Australian reminded us that the ALP’s preferred carbon tax approach, a floating price, would, according to its hand-picked Treasury team, result in a price of $38 compared with the tax set at a fixed price of $25.40 per tonne. And he did the crude arithmetic to demonstrate that, even if the carbon tax was responsible for all the reduction in emissions that Australia experienced during its currency, it did so at a $5310 per tonne of abatement.  He might have extended the analysis and said if we are to take out 200 million tonnes a year, according to a conservative version of the program going forward, the cost at the level of performance achieved would be $3,000 billion year after year.  And that assumes that it doesn’t get progressively more difficult to engineer successive reductions

Greg Hunt’s own Direct Action plan would be unlikely to be cheaper but it at least has the merit of being capped and subject to budget considerations  that are unlikely to give it much of a priority.

Meanwhile, the hottest year ever myth, which warmists hoped would give a dose of adrenalin to their economy-busting ambitions is deflated by the data which shows a continuation of the decade and a half “pause” in temperature trends.

2014 NASA


And the climate models that have spurred all the warming hysteria continue to massively outperform the empirical data on global temperatures.

models vs reality


For more on most recent developments, see the latest issue of Climate News

Posted in Uncategorized | 10 Comments

I think this is right

Annabel Crabb makes the correct point about Abbott’s super-size blunder this week.  He didn’t ask anyone’s advice because he knew what they would tell him.

And there is something boyishly rebellious about the way this Prime Minister avoids advice. It’s not that he forgets to seek it, it’s that he actively evades it – especially on occasions where he knows what he’d probably hear.

“It is better to seek forgiveness than to ask permission,” went Mr Abbott’s famously sheepish half-apology for announcing the paid parental leave policy without asking any of his colleagues about it first. He didn’t ask – not because he didn’t want to know what they thought, but because he already knew. There’s a difference.

Posted in Uncategorized | 16 Comments

Kooky stuff from the Kouk

683398-732007dc-f80f-11e3-9b4b-c275dbac2021I just love it when ‘experts’ write about stuff about which they know nothing.  It is extremely revealing of their biases and intentions.

Macreconomist, Stephen Koukoulas, decided to try his arm over at The Drum defending Australia’s high minimum wages.  It is quite hilarious … ly wrong.

His two points are:

  • The supply price matters;
  • Australia’s system of minimum wages reduces red tape for employers (yes, bear with me).

On the first point, of course, markets throw off pay levels at which workers at the margin are prepared to offer their labour services.  Yes, we can all go along with demand and supply.

But here’s the thing: the key to the establishment of the reservation wage in Australia, at least at the bottom end, is the DOLE – or what we call the Newstart Allowance – the alternative source of income for low skilled workers.

Check out these comparisons:

Fortnightly Newstart Allowance (no children):                   $515.60

Fortnightly Newstart Allowance (children):                         $557.90

Fortnightly full-time job at National Minimum Wage     $1282.12

Now I know there are some complications with part-time work, potentially irregular shifts and the taper rate for the Newstart Allowance, but a lot of the associated problems have been sorted out.

The point is this: minimum wage could be much much lower in Australia and there would be no risk of the rates falling below the supply price.

This is simply a nonsensical and desperate point made by the Kouk.  And the Kouk should know that most of the decline in the labour force participation rate in Australia has been caused by ageing as well as the soft labour market leading to a discouraged worker effect.

But in some ways it pales by comparison with his proposition of minimum wages reducing red tape for employers.  Oh please:

It would be time-consuming and expensive for large firms to negotiate with each worker on their appointment and as each contract came up for renewal. With a set minimum wage, this red tape is eliminated from the cost of doing business.

The Australian system of minimum wages is a red tape feast.  Just take a look at the following:

  • There are 122 modern awards;
  • Each award contains around 10 minimum wage rates;
  • The description of the classifications in many modern awards is completely inadequate, creating great confusion for employers (eg.  A Grade 2 employee is someone who undertakes tasks above a Grade 1 employee)
  • There are extreme complications when it comes to penalty rates and shift allowances and whether or not the casual loading is included.

And it if individual wage setting is such a nightmare for employers, why is that 37 per cent of employees have their pay set on an individual basis (45 per cent for full-time employees)?

The reality is that if employers were free to negotiate/set rates of pay for all their employees, including on a take-it-or-leave-it basis, there would be massive reduction in red tape for them.

Here is the desperado piece from the Kouk:

To suggest that minimum wages are a path to poverty is emotive and arrogantly assumes workers will work for whatever pay is offered to them, writes Stephen Koukoulas.

The Institute of Public Affairs’ Chris Berg reckons set minimum wages are “creating a poverty trap”given the laws do not allow firms to pay a wage below the legislated minimum which at the moment is $16.87 an hour.

This is not correct.

In his article in The Drum, Berg rightly notes that the laws of supply and demand work in the labour market, and he refers to a range of research papers that conclude that if the price of labour is too high, driven by a minimum wage, then employers will “shrink their workforces” which means less employment and higher unemployment.

Like many other low-wage proponents, Berg looks at the market dynamics of the labour force only from the demand side; that is, how much labour firms will demand given a particular minimum wage. The higher the wage, the lower the demand for labour; and the lower the wage rates, the higher the demand for labour. The issue of supply, which is an individual’s willingness to supply their labour services for a given wage, is ignored. Continue reading

Posted in Uncategorized | 20 Comments

Lessons from Victoria

Tonight I’m talking about some of the lessons that can be drawn from the 2014 Victorian election.

Lessons from Vic

In preparation I thought I would post an op-ed I wrote in 2013 after Ted Baillieu got dumped as leader.


AUSTRALIANS awoke yesterday to news of another political leader getting knifed by his colleagues during the night. This time it was Victorian premier Ted Baillieu. But that is where the similarity with Kevin Rudd ends. Nobody will miss Ted.

The Victorian Liberals accidently won the 2010 state election, having been in opposition for 11 years. The Libs hadn’t used their time in opposition wisely to understand why they had lost unexpectedly in 1999 – perhaps it was all some mistake. They also hadn’t given much thought to the logistics of holding office if they ever won an election.

Much to their own surprise, their 2010 slogan “Fix the problems” led to the Coalition picking up 13 seats and holding a one-seat majority in the parliament. Despite the final outcome being so close, there was a massive swing from Labor to the Coalition. Yet Baillieu has been extraordinarily timid.

Victorians were quietly angry in 2010. Once you consider the declining public transport standards, alcohol-fuelled street violence, skyrocketing electricity and gas bills, the bungled implementation of the Myki ticketing system, the gold-plated desalination plant, the perceptions – rightly, as it turned out – that crime was on the increase and increased nanny state interventions, there was much to be angry about.

The arrogant, aloof, out-of-touch Brumby government found itself out of office.

Baillieu had a long list of problems to be fixed. Yet his only achievement – getting rid of the police chief – is looking more and more like an accident. His anti-corruption commission is toothless. Public transport is still poor. The Myki card rollout was a disaster. It also turned out that Victorians had been overpaying for water and Baillieu couldn’t work out that people might want their money back.

Political appointments under the Brumby government have been maintained, and some of those individuals have been promoted.

Baillieu fixed none of the problems he was elected to fix. He failed to stamp his authority on the public service and was unable to articulate why his government should remain in office. On present polling, the ALP will return to government at the next election.

What Victoria needs is a roll-up-the-shirtsleeves premier who is going to fix all the service problems that annoy voters, or at least one who can be seen to be trying to fix those problems. Baillieu was just not that man.

Dumping him from a position for which he clearly was not suited will be one of the better decisions the Victorian Liberal Party has made in a decade.


The lesson from this, of course, is that when you have a dud a leader you should dump him sooner rather than later.

Posted in State Politics | 17 Comments

Queensland election betting III

Since yesterday the market has deteriorated for Campbell Newman:

Probability of LNP victory/ALP winning in Ashgrove: 56.0%
Probability of LNP victory/LNP winning in Ashgrove: 27.1%
Probability of ALP victory/ALP winning in Ashgrove: 12.0%

Saturday night is going to be interesting viewing.

Posted in State Politics | 42 Comments

Regulations prevent agricultural output from supplying markets opened by trade negotiations

“I can feel a dam coming on” was the refrain made famous by the Modest Member.  A new dam, new road, additional water rights, were among the baubles seemingly available from governments to be scattered among the voters when favours were needed.  Their urban counterparts were job subsidies, new training schemes to counter the high regulated youth wage, and even more darkly, trade restraints and subsidies to manufacturing.

Although few of these expenditures actually added more value than they cost, at least in the case of the majority, they added some value.  All that has changed.  Starting with the Hawke Government campaigning against the Tasmanian Franklin dam in 1982, governments have seen the route to the voters’ support as being a promise to stop some productive activity.

  • Dams building embargoes justified on wilderness grounds have been extended to cover all such ventures.
  • The Victorian ALP differentiated its product by campaigning against a freeway, while both it and its Coalition opponent promised to stop fracking for gas, an issue that has the NSW Government seeking to hide from and is rattling the Queensland Government.
  • Governments have found merit in hobbling productivity by among other measures:
    • limiting the size of commercial fishing vessels,
    • accepting Greenpeace’s latest war on the economy by targeting mythical illegally logged timber,
    • preventing land clearance in the cause of global warming,
    • finding ever new “rare and endangered” species to curtail agriculture and mining,
    • preventing the adoption of new technology in the form of GM crops,
    • interventions preventing  trade in the face of confected animal cruelty allegations as with beef to Indonesia and prior to that live sheep,
    • reducing irrigation water allocations to enable environmental flows to the ocean

Two centuries of steady growth in agricultural output from Australia came to a halt with the turn of the present century.  Karen Schneider of ABARES has logged the sad story and published it in the latest Agricultural Outlook conference.

value of agric production

Over the next forty years, ABARES sees a steady climb in the growth of food demand as indicated below.

global food demand

Plausibly, ABARES estimates that 71 per cent of the growth in world food demand will come from Asia, with China and India accounting for the bulk of this.   Beef to China figures particularly prominently.

So, we have the anomalous position of the Commonwealth signing free trade agreements with a range of countries, which offer prospects of a burgeoning demand for agricultural products.  Australia is well placed to expand the output of these commodities and yet state and federal governments are conspiring to reduce the capabilities of domestic producers to respond to the opportunities.

Posted in Uncategorized | 39 Comments