Parliamentary Moral Hazard

Moral hazard is a wonderful thing, when you are the beneficiary of it.  It is a situation where people who make bad decisions or bad choices do not pay the price for those choices.

Consider a child who steals the toys of another child but is not punished for the theft. Rather, it is the classroom or other parents who have to contribute to replace the stolen toy. What message is sent to the child who stole? You are good to go.

Moral hazard has plays out in all sorts of areas in the economy, but it is a big thing in insurance (formal and informal).

Consider 2 houses in a bush fire area; one house has fire insurance and the other has not. A fire destroys both houses. What happens? The owner of the insured house has to fight with the insurance company every step of the way. The owner of the uninsured house will go to Government and then get a bail out. Does this sound familiar? What message does this send to anyone else living in a bush fire area?

Ditto flood insurance. Consider a state that under-insured against the risk of flood and then went to the citizens of other states to bail them out, literally and metaphorically.

It happens all the time, and more often than not, it is government that likes to socialise the costs onto all citizens.  But hey.  The politicians get a great press conference out of it showing how generous and caring the government is.  It shouldn’t happen, but it does and it completely distorts the operation of markets. Free healthcare anyone?  Electricity outage anyone?

Which brings us to the political issue du jour, Parliamentarians compliance with Section 44 of the Constitution.

As Sparticus has previously disclosed, he is not a lawyer. He can see his reflection in the mirror. But his question is this.  When replacing a disqualified Senator, the disqualified senator is treated as never having been on the ballot and the next person on the list is appointed.  Why does this not apply to House of Representative replacements?

Why, as in the case of New England, can’t the Australian Electoral Commission just pull out the ballot papers from the previous election and just work out who would have won if Barnaby Joyce was not there?

If the Electoral Commission behaved like that, you would think that the political parties would be extra careful in vetting their candidates. It’s not like Section 44 was added to the Constitution in the last couple of years or that the High Court has not considered Section 44 issues before.

The price of this stuff up is not paid by those who made the stuff up. It is paid by everyone else.

But what about the cost of the by-election, and by-elections in general.  Why are not the costs of by-elections for voluntary resignations (Joe Hockey or Kevin Rudd anyone) charged to the political party of the resignee?  The parties have failed to properly vet their candidate. What price are they paying?

It’s even worse that that.  Based on the 2016 election, every first preference vote attracts $2.63.  It is not beyond the realm of possibility that the New England by-election could be a fund raiser for the National Party with them receiving more funding than it costs them to run a campaign.

Why are we tax payers being forced to meet these costs?

But citizens should not fret.  Your money is always easier to spend than their money.

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12 Responses to Parliamentary Moral Hazard

  1. Mak Siccar

    Heartily agree. Make the sods accountable for their actions or inactions, as the case may be.

    Moral hazard is a wonderful thing, when you are the beneficiary of it. It is a situation where people who make bad decisions or bad choices do not pay the price for those choices.

    I reckon that this applies to just about all pollies and public servants. It would appear that they really don’t suffer the consequences.

  2. duncanm

    There should be no funding given for these byelections.

    Speaking or moral hazard — what does this new guy Fraser Anning stand for?

  3. Rossini

    We generally vote for the party in the house of reps.
    If 90% vote for national party candidate and 10% for the Liars party and the person elected is then found
    ineligible why give it to the liars party …….just to save a few bucks……..think NBN

  4. RobK

    If you are not careful, you’ll be in danger of turning me into a cynic. 🙂

  5. Shine a Light

    I wonder where aethists find their moral standards , their moral compasses, especially those aethists in the press and political arena.
    Does anyone have a clue?

  6. Imagine if Windsor was the next on the numbers ( he may well be) what a shitty result that would be. By-election sounds right to me but I agree the taxpayer should not fund the candidates as we have already been forced into that at the election. What a mess and not helped by high court.

  7. Lysander

    We live in a dictatorship that is occasionally frequented by elections where you get no choice.

    Everyone from Rod Culleton to Bob Day to Parry and the rest of them should all have to pay back their salares.

  8. sabena

    Why should there be a by election at all-just leave the seat vacant until the next election,with the party who caused the vacancy being prohibited from standing a candidate.After all there are senators who can fulfil the constituency obligations.

  9. Louis

    Let me just shorten this down for you Spartacus

    Moral hazard is… a situation where people who make bad decisions or bad choices do not pay the price for those choices – also known as government.

  10. Mundi

    Anyone remember 2011 qld floods?

    Donate $1,000 to charity, only for Gillard to turn around and tax an extra $1,000.

    You can’t even give charity in this country without a politician turning around and deciding what the “proper” amount you ought to give is.

  11. JohnA


    Look no further than the medical insurance racket in Australia.

    The concept of “community-based rating” for sickness and medical needs means that this industry has institutionalised moral hazard.

    Since the Medicare changes of 1986, nothing I do to remain healthy or safe can reduce my medical insurance premiums, and anything the neighbour does to destroy his/her life whether by smoking, drugs and alcohol, or various other forms of reckless living will eventually push up premiums for everyone.

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