Is the ACCC right?

We all know that Rod Sims, head of the ACCC, just loves the sound of his own voice, particularly when his song is sanctimonious and threatening.

Just talking about cartels, evidently, should have Twiggy sent to jail.

But here’s another take on the issue.  Let us assume that iron ore can only be mined in Australia but there are many companies involved.  There are customers all over the world, but none in Australia.

From the point of view of Australia’s welfare, it makes perfect sense to allow a cartel to form (the alternative would be one big company doing all the mining) to extract a monopoly price from foreign buyers because, at the end of the day, we are worried about the living standards of Australians not foreigners.

(Hey, this strategy could be so successful that we could actually give foreign aid, rather than borrow to give foreign aid.)

Now I know you Cats will all let me know that my assumptions are not correct and there are other suppliers of iron ore.  But all that is telling me is that the underlying conditions for a stable cartel are unlikely to be met – which is generally the case.  But that is an empirical issue rather than a theoretical one.

Consider these two examples:

  • Through the 1960s and 1970s, Japanese purchasers of our coal and iron ore formed monopsonies to drive down the prices of Australian commodities.  Was that a bad thing for Japan.  (Japanese companies even took equity positions in Australian based ventures to ensure the continuation of the practice.)
  • The aluminium industry has only a small number of players and there is a clear strategy of taking production off stream to lift prices.  This is happening now.  It’s not clear that any domestic or international competition regulator can do (or does) much to alter this behaviour.  (Mind you, it is not clear that the returns to aluminium production are superior but that is another story.)

And should I mention Australia’s (and the National Party’s) traditional support for single desk selling of agricultural products?  Again, it’s clear that these types of cartels didn’t actually work and, of course, they stifled innovation and product differentiation.

So give me the Cat vibe on this issue.

Posted in Uncategorized | 91 Comments

Renewable energy industry: rent seekers extraordinaire

I thought there was a very good comment about the activity of rent seekers in the childcare making the Australian automotive industry’s efforts look quite modest.

But while we are handing out medals – or should that be wooden spoons – the renewable energy sector must surely win the prize.  It seems that the sector is now basically dictating policy to the government and Labor and proclaiming what RET target the industry would find acceptable.

Excuse me?

Note that all pretence has flown out the window that we are doing anything to alter the growth of emissions or affect climate change – no, what target would provide sufficient incentives for investment in renewable energy to recommence, with the inflated costs passed onto consumers?

To call this industry development is being polite.  It is a pure and simple rort imposed on us by gutless politicians.  The Coalition should not be negotiating with the industry; it should be seeking to abandon the target altogether on the basis that this policy has completely failed.

Here is the piece from The Australian:

THE renewable energy industry has moved to break the political deadlock over the Renewable Energy Target promising to accept a deal in the middle of the government and Labor’s positions.

The Clean Energy Council has told both the government and Labor that it will accept a large scale target of 33,500GWh by 2020.

Industry Minister Ian Macfarlane last week put a 32,000GWh figure on the table which was rejected by Labor.

Labor has not nominated a specific figure but has said it would accept a target in the mid to high 30,000s.

But given Labor has based its opposition to the government’s offer on the position of the renewables sector, the CEC’s latest offer may allow it to accept a lower figure.

The CEC’s compromise offer would equate to an RET over 24 per cent. The government’s latest offer puts the RET at about 23 per cent.

The CEC’s intervention will increase pressure on both sides to do a deal.

In a letter obtained by The Australian, CEC chief executive Kane Thornton, has told both sides while the sector is not prepared to accept the government’s previous proposal to cut the 2020 LRET to 32,000GWh due to the impact it would have on the sector, “we are prepared to accept a reduction of the target to 33,500GWh.

The original RET had a target of 41,000GWh by 2020. But the government has proposed reducing this because of lower electricity demand.

However the investment in the renewables industry has collapsed as the future of the scheme has been debated.

Major energy users such as aluminium smelters are also impacted by the negotiations as the scheme in its current shape costs the industry $80m a year.

The deal between the Coalition and Labor would exempt energy intensive users. However if a deal is not struck by the end of this week, the regulator will set the RET, based on the existing scheme, for the next 12 months.

“We accept that some level of compromise is necessary in any political negotiation and this figure represents the midpoint between the original position of government (often described as a “real 20 per cent) and the Opposition (41,000GWh as legislated,’’ Mr Thornton writes.

“It is also a compromise between the government’s current position of 32,000GWh and the Opposition’s mid to high thirty thousands.’’

Posted in Uncategorized | 44 Comments

Gratuitous Advertising: The 3rd Annual ALS Friedman Conference

If you were to believe most of our media, politicians and academics then you would be forgiven for thinking that what Australia needs are just a few more taxes, regulations, prohibitions, and mandates.

The steady stream of big-government rhetoric is so mainstream that many people find it hard to imagine how a free society could function.

We want to help spark that imagination.

That’s why we created the Australian Libertarian Society (ALS) Friedman Conference. And I hope you will be able to join us for the 3rd Annual Conference in May this year.

For most of the year, you will probably be surrounded by people who think that freedom is a fringe idea. But for two days each year you are invited to take a short break from the statist quo, and enjoy the intellectual stimulation and friendly banter that comes from Australia’s biggest libertarian conference. On 2-3 May in Sydney the best and brightest libertarians (and classical liberals) of Australia will come together to swap ideas, socialise and hear from world-renowned speakers at the 3rd Annual ALS Friedman Conference.

This year we are delighted to welcome back Dr Tom Palmer, who is perhaps the most persuasive advocate for liberty alive today. We will also be hosting the famous Arab-American libertarian comedian and viral video star GoRemy (who has over 100 million youtube hits for a reason!), libertarian Senator David Leyonhjelm, Australian Human Rights “Freedom” Commissioner Tim Wilson, Canadian legal scholar Professor Jim Allan, newly elected Victorian MLA Louise Staley, Dr Mikyala Novak, Professor Sinclair Davidson, Dr Keith Kendall, Chris Berg, and a leading libertarian activists from Iran. More exciting speakers will be announced over the coming weeks. but click HERE for the current speakers list and bios, but make sure you secure your spot now – this truly is an event not to be missed! And of course, don’t forget the presentation of the Annual Liberty Awards at the Gala Dinner on Saturday night.

As an added bonus: we are offering a special Early Bird Discount of $50 off the regular price for all registrations before March 31!C

The Early Bird special is just $200 for concession, or $250 for adults. This is amazing value, and includes 2 full days of conference, and a 3 course dinner with 4 hour wine package at the Gala Dinner.

Plus, for our most committed supporters, we are offering a VIP package which includes an exclusive VIP reception, a private luncheon with guest speakers and other dignitaries, preferred seating, and a DVD of all conference sessions & Liberty Awards. For only $700, the VIP package is an excellent opportunity to enhance your experience while helping us ensure the best possible conference.

In three short years the ALS Friedman Conference has grown from a tentative idea into one of the most important events on the liberty calendar. In large part, that success is due to the vision and dedication of Tim Andrews’ and the Australian Taxpayers Alliance, as well as the generous support of the Institute for Public Affairs, ANZ Students for Liberty, and the Mannkal Economic Education Foundation. As the liberty movement continues to grow, we look forward to the next stage of this exciting journey, and we hope that you are able to join us for the ride.

Visit http://www.taxpayers.org.au/event/friedmanconference2015/ to secure your seats.

Please note: Please add all dietary requirements, as well as, if you are purchasing multiple tickets, the names in the “additional information” column at checkout. You may also purchase DAY-ONLY and DINNER-ONLY tickets via this link.

Posted in Gratuitous Advertising | 5 Comments

Patrick Basham on the Nanny State – Updated

Update: Patrick Basham will be speaking in Sydney on Thursday.

This event is free for all Premium and Platinum members of the Australian Taxpayers’ Alliance, all members of the CIS and IPA, and all students, and $10 for everyone else. If you are not currently a Premium or Platinum ATA member, click HERE to take advantage of our March 20% off promotion and upgrade your membership!

Posted in Take Nanny down | 5 Comments

Wednesday Forum: March 25, 2015

Posted in Open Forum | 1,803 Comments

Choice architecture: kind Nanny

I went to hear Patrick Basham speak at an IPA function yesterday on the insidious creep of the nanny state and associated infringement of personal liberties.  My guess is that the IPA will have the presentation on its website and I would highly recommend it.

In the Q&A, there was some discussion of the right’s capitulation to the nanny state, but cloaked in the language of nudging and – wait for it – governments providing “choice architecture”.  What? because the bureaucrats know what is in our interests better than we do?

I came across this piece in The Guardian, urging kind Nanny to get on board.  We just don’t like choice, evidently.  We are no good at choice, even if we can access all sorts of means of helping us – personal research, asking advice, using private intermediaries.  And we all discount the long term too much.

The reason I am posting this here is that this sort of approach is no less dangerous that the thought-police of the Left, who want to ban/tax everything they dislike.  Arguably, it is more dangerous because it initially seems quite soothing.  I understand that there is still a Nudge Unit operating in the Baird bureaucracy.  And David Cameron cannot get enough of this stuff.

Actually, one of the speeches that most riled me – EVA that is – was given by red Tory, Philip Blonde.  Be afraid, I say to fellow Cats.

Here is the piece from The Guardian by Oliver Burkeman:

Choice can be a mixed blessing – as you know if you’ve ever spent an evening browsing hundreds of titles on Netflix only to repair despondently to bed without watching a movie. One famous if controversial study found that people were much more likely to purchase a jar of jam when faced with a choice of just six flavors than with 24, which short-circuited their brains. Even if we overcome “analysis paralysis” and make a decision, other research suggests that we’ll be less satisfied with our choice when forced to pick from a larger range of options.

Yet in politics – and in American politics above all – choice remains an unquestionably positive thing. Sure, it might not always be feasible to allow people maximum choice among doctors, say, or schools; but even politicians who oppose the expansion of choice tend to insist they’re doing so reluctantly and out of necessity. All else being equal, choice is good; in a free society, citizens should have as much of it as they possibly can.

That’s a view so widely held that howls of outrage will surely greet Choosing Not To Choose, a new book by legal scholar and former Obama administration official Cass Sunstein. He is, however, no stranger to howls of outrage: he was the co-author, with Richard Thaler, of 2008’s Nudge, which argued that governments could use insights from behavioral economics to steer people toward better decisions on health and personal finance. Glenn Beck called him “the most dangerous man in America”.

Sunstein and Thaler suggested that public officials and others in authority could (and should) become “choice architects” – for example by transferring a portion of a person’s paycheck into a savings account unless he or she actively opted out, or by requiring schools to put salads in easier reach than french fries at lunch. They called this “libertarian paternalism”. Nobody would be forced to save, or eat lettuce; their environments would simply be tweaked to make the wiser choice a little easier.

There are legitimate reasons to find the idea of the government micromanaging your choices a bit troubling, especially since a government could ultimately enforce its plans for your self-improvement via the courts, police or military. But there’s a problem with arguing that nudging fundamentally undermines freedom: “choice architecture” is always, inevitably all around us and influencing our behavior in countless ways of which we’re unaware. If you prohibit the mayor of New York from nudging people in the direction of smaller quantities of Coca-Cola, for example, you don’t leave New Yorkers in a state of perfect liberty, free to decide to drink however much they like. You just leave them to be nudged much more forcefully in the opposite direction by the multi-million-dollar advertising and sponsorship budgets of the soft drink industry, whose executives you can’t even vote out of office. Continue reading

Posted in Uncategorized | 18 Comments

Guest Post: Bob Carter – What has climate change got to do with energy supply anyway?

As the Abbott government ponders the political realities of making needed changes to the economically damaging Mandatory Renewable Energy Tariff (MRET) scheme, late last year the European Union took the giant step backwards of combining climate change and energy matters into a single Commission portfolio.

In line with this, but nonetheless remarkably, nearly all governments currently view climate change and energy supply as closely related policy issues. Yet climate change issues are concerned with environmental hazards, whereas energy policy is concerned with supplying cheap, reliable and secure electricity supplies to industry and the populace. Where is the relationship?

Until the 1980s there was no relationship between energy policy and climate change. That one is perceived now testifies only to the effectiveness of relentless lobbying by environmentalists, NGOs and commercial special interests towards the cause of connecting climate and energy policies. Truth, scientific balance and commonsense have been casualties along the way.

The conflation has been brought about by evangelizing the view that carbon dioxide emissions from power-generation using hydrocarbon-based fuels will cause dangerous global warming. That (false) view has become embedded in society to the point where even heads of state misuse “carbon” as a shorthand for “carbon dioxide”, and then label it as a pollutant to boot. The ignorance that this misuse of scientific language signals is frightening.

In truth, carbon dioxide is environmentally beneficial; it is the elixir of life for most of our planetary ecosystems and greens the planet. To badge it as a pollutant is therefore grotesque rather than just wrong.

Second, the amount of carbon dioxide produced by human industrial processes is small compared with existing natural fluxes through the atmosphere and ocean (human emissions being less than 5% of natural emissions).

Third, and most important of all, despite carbon dioxide being a greenhouse gas no evidence exists that the amount humans have added to the atmosphere is producing dangerous warming; or, indeed, any measurable warming at all.

Many negative consequences flow from conflating the energy and global warming issues, but foremost amongst them has been a lemming-like rush by governments to massively subsidize what are otherwise uneconomic sources of power – especially solar and wind power generation.

These alternative sources are painted by lobby groups and governments alike as environmentally virtuous, because they are claimed to reduce carbon dioxide emissions as well as being both “renewable” and “clean” sources of energy.

Well, yes, wind and solar energy are indeed renewable when the wind blows and the Sun shines, but they are absent otherwise and tough luck if that is when you want to boil the kettle.

Wind and especially solar energy are very expensive, and their intermittency makes them unsuitable to be major contributors to a national energy grid.
In addition to their expense and impracticality, the claims as to the “cleanliness” and environmental friendliness of both solar and wind power generation are routinely overstated to the point of propagandization.

A wilful increase in the cost and complexity of energy supply systems has occurred worldwide over the last two decades, and that for generally negative environmental and social return. Yet despite the expenditure of trillions of dollars of public money in subsidy of “clean” energy sources, and huge political pressure on the citizenry to adopt them, wind and solar power generation still barely exceed 1% of the world’s energy supply.

Thanks to 30 years of sustained propaganda and gross profligacy with taxpayer money, power prices have escalated sharply. Nowhere has this happened to a greater degree than in Australia, which once had the cheapest electricity in the industrialized world; remember that?

As the political pressures build, so even the European Union is being forced to confront reality. For example, EU Energy Commissioner Gunther Oettinger stated in Berlin in 2012 that European energy policy must change from being climate driven to being driven by the needs of industry – which is why the recent decision to combine the two into a single portfolio seems so strange.

What, then, needs to be done to improve the situation?

It is that individual nations return to the formerly clear separation that they recognized between energy policy and climate policy, and analyse and plan for each with respect to their own separate requirements and resources.

This means abandoning the woolly conflation of the two that has been so skilfully foisted on society by powerful vested interests over the last three decades. It also entails abandoning the monopoly IPCC advice about global warming and the use of fossil fuels, advice that engendered most of the confusion in the first place and continues to do so.

Posted in Global warming and climate change policy, Guest Post | 31 Comments

Softening us for more waste on childcare and small business

Here is one of the slides presented by Joe Hockey to the party room this week.  I guess Tony and Joe feel they have to be inclusive given their near-death experience earlier in the year.

It is complete mush and tells us there will be deficits for years and years to come, notwithstanding the confected chart that shows smaller (bit still large) deficits over time.

Here is the slide that really mad me cross:

Main beneficiaries from the Budget will be families and small business
•The IGR showed that our future prosperity will rely on boosting workforce participation and increasing productivity
•PC Childcare Report showed that roughly 165,000 parents with children aged under-13 would like to work but are not able to
•Small business employs around 4.5 million people but could create even more jobs and innovation

 

What a joke.  Asking people whether they would work if they had childcare is about as reliable as the figures on hidden unemployment.  We know that many people say they would love a job (right pay, right hours, etc) but don’t have one at the moment.  The trouble is when you track these ‘hidden unemployed’ persons, they remain out of the labour force.

Quoting the figure of 165,000 is just a nonsense and in fact elsewhere in the PC report, it is noted that the vast majority of parents report are happy with their childcare and employment arrangements.

The more accurate figure – and even that is an overstatement because it assumes that the employment of others is completely unaffected – is 16,400 which is the PC estimate of the additional number of mothers that would enter the paid workforce if the proposal to overhaul childcare subsidies is implemented plus a compulsory activity test.  That amounts to an additional 1.2 per cent of working mothers with young children.

The number is completely trivial when it comes to a workforce closing in on 12 million and monthly increases in employment generally much higher than 16,400.

Here’s the real test for the government: will it impose a work test on all those parents who receive childcare subsidies?

The answer is: no it will not, because the rent-seeking childcare centres would SQUEAL very loudly and the government would not like that.

And don’t be confused with the commitment of 15-hours per week for all 4 year-olds to attend pre-school – that is a completely different issue and applies to all children, whether or not they are go to a childcare centre.

As for small businesses, another group of rent-seekers:

  • Two-tiered company tax schedule – oh dear
  • Other tax reductions for non-incorporated businesses – oh dear
  • Accelerated depreciation to create a disjunction between the real life of assets and the tax rate of depreciation – oh dear

What Joe Hockey doesn’t seem to appreciate is that while the small businesses may be the main source of job gains, they are also the main source of job losses.

Leave small businesses alone, remove the regulatory clutter and let them get on with making a buck without this wasteful spending of taxpayer money.

Posted in Uncategorized | 22 Comments

The penalty rates deal: good or bad?

There is some doubt about whether the penalty rates template agreement negotiated between Business SA and the Shoppies – the SDA, the union representing retail workers – is good or bad.

My take on the issue is that, while the agreement is far from perfect, it represents a real change in the thinking of the union and an acknowledgement that the current structure of penalty rates is unsustainable.

Moreover, the agreement completely wedges Labor and other unions on the issue.  They have fought tooth and nail to resist any changes to penalty rates, so this agreement really exposes them on what they would do about penalty rates (see Brendan O’Connor’s hysterical commentary below).

The agreement also puts pressure back on the Fair Work Commission to give serious consideration to altering the penalty rates that sit in awards.

We should completely dismiss Ai Group’s Innes Willox’s criticism of the agreement on the basis of the presumed dangers of an industry-wide agreement being manipulated by the unions.  Business SA (part of the ACCI group) is a competitor of the Ai Group and all Willox is saying that it is a pity he didn’t get in first.

And bear in mind that it is not compulsory for a business to enter into the agreement with its workers using the template agreement.  Indeed, a business can do nothing or attempt to modify the agreement.

But one of the advantages of the template agreement is that an employer knows that the SDA will not object to its certification.  Unions have the habit of objecting to non-union agreements and, in any case, the FWC is likely to go over such an agreement with a fine tooth comb.

Now there are some who argue that there is a very easy solution and that is using Individual Flexibility Agreements, which are provided for under the Fair Work Act.  Take a piece of paper, simply slash penalty rates, add a few bob to the wage (not too much) and there’s the solution.

The trouble with this advice is that IFAs must meet the BOOT – the better off overall test. And if this test is found not to be met, the Fair Work Ombudsman will ping the employer.  Of course, an employer may take the view that the chances of this happening are low, but it is taking a big risk, including being caught up in a costly and time-consuming legal dispute leading to the payment of back wages and fines.

Here is the background to the agreement, which is yet to be certified by the FWC:

In exchange for a rise in the hourly rate of pay and agreed further increases, the penalty rates that currently apply under the award will be significantly reduced.  On Saturdays, there will be no penalty and on Sundays, the loading is reduced to 50 per cent, from 100 per cent.  For public holidays, the rate is cut to 100 per cent rather than the current 150 per cent.  These are very significant reductions.

Moreover, workers who would prefer not to work on Sundays or public holidays will able to exercise this option.

Of course, employers who find it difficult to get the workers they need on the days where lower penalties will apply may find it necessary to up their wage offers.  But that’s how markets work.

But my guess is that they will have no problem, because working on Sundays and public holidays suits very many people, including those combining their education with work.

We need to be a little cautious at this point because the Fair Work Commission has not yet certified any agreement made using this template.  The Hours of Work clause may be problematic.

On Labor’s response:

It’s a bit rich of Labor’s environment spokesman and ex-union official, Mark Butler, to say that this development in his home state represents the end point of Keating’s industrial relations reforms.

Labor and the union movement have resisted virtually every attempt to modify penalty rates, including the union’s vehement opposition to the slight modification to the Restaurant Industry Award imposed by the Fair Work Commission last year.  Note that the union in that instance was Mark Butler’s own United Voice.

And this year we have had Labor’s workplace relations spokesman and ex-union official, Brendan O’Connor, issue the following demented rant about penalty rates.

“So weekends matter because community matters. Family matters. Togetherness matters. And when the Abbott Government says it wants to take away penalty rates, it is attacking more than the wages of some of the lowest-paid Australians. It is also attacking those things that make our lives worthwhile.”

“Labor will stand against abolishing penalty rates because they are a fair reward for working unsocial hours. But we’ll also do so because going into bat for penalty rates means protecting the idea some parts of the week are for work, and others for doing things we enjoy.”

 

Posted in Uncategorized | 13 Comments

What’s good for the goose is …

downloadis not good for judges.

Now some might say good luck to them on their high salaries and obscene retirement benefits, but when it comes to self-righteous sanctimony, I personally draw the line.

Take this sermon (in a speech delivered in Adelaide) from Justice Richard Edmonds of the Federal Court who stated that the superannuation system is “totally skewed in favour of the wealthy because of the opportunity for tax avoidance.  I dare say if the ordinary man (sic) in the street had any knowledgeable notion of what certain sections of the community are getting away with in this regard, any semblance of consensus would disappear.”

Let me add to the body of knowledgeable notion by telling you about the deal for Federal Court judges:

  • Federal court judges are paid a salary of $412, 550 per year, a fully serviced car and other benefits;
  • When they retire after a mere 10 years on the court and assuming they have reached the age of 60, they retire on 60 per cent of their final salary, indexed according to direction of the Remuneration Tribunal, until they die.
  • If they predecease their spouse, he/she gets a slightly reduced pension.
  • The scheme is non-contributory – judges make no monetary contribution during their tenure.

But here’s the big contribution to the body of knowledgeable notion, judges are not required to bear the cost of any superannuation taxes, including Costello’s superannuation surcharge or the recently introduced 30 per cent tax on contributions for those earning more than $300,000 per year  (which of course covers judge

All Commonwealth judges and State higher level office holders who have superannuation contributions paid into a Constitutionally Protected Fund are completely exempt from the reduction in tax concession on the super contributions of very high income earners.

It really was a bit rich that the judges fought the imposition of the Costello surcharge on the basis that this would reduce judicial remuneration which is not allowed constitutionally – a case decided by judges.  It is not as if the surcharge targetted judges alone, which is really the point of the constraint.  Next thing, they will be objecting to an increase in the top marginal tax rate – for them, alone, of course.

So to self-serving judges without much in the way of a knowledgeable notion, my suggestion would be to SHUT UP, lest angry people make a fuss about this issue as it applies to the judiciary and the semblance of consensus breaks down in respect of them alone.

Posted in Uncategorized | 50 Comments