per capita

PerCApita on The Drum ABC 24, twice

2011-06-25T13:34:00.000+10:00

Watch David Hetherington exec director PerCapita on The Drum ABC 24 22/06/11 http://www.abc.net.au/iview/#/view/788652 (expires 2/7/11 days)

Watch Tim Soutphommasane of PerCapita on The Drum ABC 24 23/06/11 http://www.abc.net.au/iview/#/view/788655 (expires 3/7/11 days)

Tim Soutphommasane appears on ABC24's THE DRUM

2011-06-23T09:45:00.000+10:00

Per Capita’s Tim Soutphommasane will be appearing on THE DRUM, ABC24, tonight at 6.05pm Thursday 23 June 2011.

ENERGY MATTERS VIDEO NEWS

2011-06-23T07:50:00.000+10:00

Energy Matters V-News reports on David Hetherington's recent AFR op-ed "Solar yield beats BHP any time."

David Hetherington on Life Matters today

2011-06-21T07:39:00.002+10:00

David Hetherington, Per Capita’s Executive Director, will be appearing on
Radio National, Life Matters, at 9.05am this morning Tuesday 21 June 2011.

Solar yield beats BHP any time

2011-06-16T07:48:00.000+10:00

Per Capita’s David Hetherington writes in today’s AFR. "Forget the blue-chip shares, opt instead for the sun’s rays. It’s a far better deal." p59 http://bit.ly/khD4ng (subscription required).

Unedited version:

Is Ross Garnaut right to suggest that big business in Australia is anti-reform? Are we foregoing innovation opportunities because business has “returned to old type” of the pre-reform era?

Let’s test the proposition on one proposed innovation which holds iconic status in the battle between skeptics and Greens: solar power. Writing in the Herald Sun this week, Andrew Bolt decries the appeal to solar, observing pithily that solar power stops when the sun don’t shine.

Yet what if innovation can detach solar from its reliance on green credentials? If you look at solar power from entirely another perspective it makes enormous financial sense for a growing part of our population, independent of its sustainability.

For emerging ‘solar plus storage’ technologies for homes and small businesses offer a new investment class that is more profitable than BHP Billiton shares and safer than bank shares. Tosh? Let’s see.

The first great law of technological change is that the existing players, no matter how big, how successful, universally fail to make the change to new disruptive technologies. Flown on a Cunard airliner lately? Booted up your RCA Victor computer? Used a Bell mobile phone?

At the moment we see newspapers and recording industries being undermined by the Internet. In the past railways and steamships yielded to aeroplanes and cars. It will happen in the electricity industry too, no matter how many times they are warned they will still be shocked to discover their bread and butter business is disappearing, just like the traditional telcos were shocked when punters abandoned land lines.

When you buy electricity for your home it costs around 23 to 27 cents per kilowatt hour plus supply charges. But the wholesale price of power at the power station is only around 3.3 cents. So the distribution increases the cost 800% or more. So the problem is not one of supply but distribution. And most of the money needed for the power industry in the next 10 year is not for generation, it is for wires.

Even Mr Bolt would agree that large bits of Australia are very sunny. In many locations, the cost of carbon-neutral solar power from the sun, falling on the roof of an Australian home is cheaper than electricity coming down the wire. This is because the price of solar panels and storage batteries are falling rapidly in part due to technology, but also increased supply and lastly, the exchange rate. It just depends on how you look at the cost.

Consider what Australian investors need over the next 20 years. The post-war baby boom and the superannuation industry mean that an enormous number of Australians are already, or will become, self funded retirees in the next 10 years. What they need are safe, high yielding, stable, inflation-proof investments.

If you buy property you have to face the prospect that Australia's property market is unlikely to continue to grow at its recent rate. On present indications, it might even fall. So too it is unlikely BHP will always enjoy such halcyon commodity prices and terms of trade. The Chinese aren't franticly building mines in darkest Africa for no reason. One thing we can say for certain is that power prices are going to rise. The other great certainty is tax.

So our self-funded retiree has to invest their lump sum and first pay tax on the dividends, then pay their power bills. If your power bills are $1,000 a year and you pay them with after-tax money earned from BHP dividends today you need $47,000 of BHP shares just to pay your power bill. And if the price of iron ore in China falls (not something you have a lot of control over) you will need even more shares to pay the bills. Investment property returns are not much better.

So it seems to Per Capita a sensible option is to take some of this lump sum and invest instead in solar panels, whack them on your roof (a place over which you do have some control) and put a battery in your garage.

Two kilowatts of solar panels on your roof in the most parts of Australia will make $1,000 of power a year. These 2KW panels cost a lot less than $47,000 of BHP shares - and when the price of iron ore falls in China, you don't care. When the price of conventional power rises due to inflation (and it is predicted to skyrocket), you still don't care.

For the sake of argument let’s say you can install 2kw panels with batteries for $15,000.
So an investment of $15,000 will save you $1,000 of power bills per year. This is a 6.7% return, but you don't pay tax on savings so would need to earn 9.5% on shares or rental property to match this rate (if you are paying 30% tax)

To match this your BHP shares would also have to yield 9.5% (instead of 3.0%), with dividends increasing at the same rate as electricity prices. That’s not going to happen.

These calculations assume no bounties, no feed-tariffs, nothing. If these extras are available, they simply make the economics better.

And happily, all this saves the planet since solar power is essentially free of carbon emissions.
It begins to look like you can have your can have your cake and eat it too.

This kind of direct action has three huge benefits: it reduces household Co2 emissions to nearly zero at zero cost; it takes load off the grid, so saves the nation money; and it future-proofs one small aspect of retirement. It just needs an innovative approach to market design and secured financing that seems beyond some of today’s business leaders.

The paradox of prosperity

2011-06-10T07:37:00.000+10:00

David Hetherington

Despite the booming economy, most Australians aren’t feeling so positive about Labor's recent spate of progressive political reforms

At the recent Progressive Governance conference in Oslo, Norwegian Prime Minister Jens Stoltenberg’s concluding remarks brought a wry smile to the faces of the Australian delegates. Pressed on challenges of a green economy, Stoltenberg said: “It’s quite simple, really - you adopt the ‘polluter pays’ principle and put a price on carbon.”

If only it were so easy in Australia. Putting a price on carbon remains an existential challenge for Julia Gillard’s Labor Government. While the government remains resolute in its commitment to carbon pricing, it is under siege from big business and the conservative media, and is foundering in the opinion polls.

Read full story here

David Hetherington to appear on ABC24 The Drum 06/06/11 6:05pm

2011-06-06T13:34:00.002+10:00

David Hetherington, Per Capita’s Executive Director, will be appearing on ABC24, The Drum, at 6pm tonight, Monday 6 June 2011.

Karl Bitar's leap to Crown Casino

2011-06-01T10:45:00.001+10:00

by David Hetherington

It’s hard to know whether to laugh or cry at the news that former Labor boss Karl Bitar is joining Crown Casino. The scriptwriters at the Simpsons couldn’t have cast a more delicious storyline, but at the same time it simply cements the public’s rock-bottom perception of politics and its practitioners.

... In some sections of corporate Australia, it’s assumed that anything which threatens a company’s quarterly earnings is by extension a cancer on our body politic. Over the last year alone, a host of policy proposals have attracted organised corporate resistance: the resource rent tax, banking competition, pokies reform, MySuper, cigarette advertising and, not least, a carbon price. An American CEO is famously misquoted as saying in the 1950s that “what‘s good for General Motors is good for the country”. In the last few months, we might have rephrased this to say: “If it’s bad for BlueScope or Rio or British American Tobacco, it’s bad for Australia.”

To read full article link here.

Wayne Swan, The Story Behind the Budget Part Three - Spreading Opportunity, Melbourne, 17/05/03

2011-06-01T09:56:00.001+10:00

Wayne Swan addresses PerCapita Luncheon: The Story Behind the Budget Part Three - Spreading Opportunity.

Wayne Swan praises PerCapita as one of the "most important think tanks we have in this country".

Video 1

Link to YouTube 1/2: http://www.youtube.com/watch?v=C87WYEy5Q6k&feature=player_profilepage

Video 2

Link to YouTube 2/2: http://www.youtube.com/watch?v=5jNpeipqa5U&feature=player_profilepage

Link to transcript: http://bit.ly/jmqLX1

Penny Wong speaks at PerCapita public forum, Melbourne 03/05/11

2011-06-01T09:47:00.002+10:00

Penny Wong speaks at PerCapita public forum in Melbourne on 03/05/11,
The 2011 Budget and the return to surplus - Link to transcript: http://bit.ly/jkfIJG

Introduction by PerCapita Executive Director, David Hetherington.

Video 1

Link to YouTube - 1/2: http://www.youtube.com/watch?v=Z7b0PY-kD7M

Video 2

Link to YouTube - part 2/2: http://www.youtube.com/watch?v=iZZWS4N1vzk

Cost of living crisis? Life in Australia is better than ever

2011-05-27T10:11:00.000+10:00

Check out PerCapita's Rupert Denton excellent piece on The Drum: Cost of living crisis? Life in Australia is better than ever. Link here for the full article

Swan among sympathisers

2011-05-18T11:27:00.002+10:00

Today the Australian Financial Review writes on p46: After the hammering he’s been getting around the country spruiking the budget, Wayne Swan was happy to be among friends in Melbourne yesterday. Wayne Swan was the star attraction at a lunch put on by PerCapita. Link: http://bit.ly/jbGy4C (subscription required)

The Story Behind the Budget Part Three: Spreading Opportunity

2011-05-17T19:38:00.000+10:00

Transcript of the address to Per Capita by the Treasurer, the Hon Wayne Swan MP, in Melbourne today http://bit.ly/jmqLX1

Middle class welfare: not happy Julia

2011-05-17T19:23:00.000+10:00

Chris Berg writes on The Drum “Perhaps families earning $150,000 a year are “rich”. Perhaps they’re not. But it’s intuitively obvious they shouldn’t receive welfare”. He goes on to say “In the Weekend Australian (Open the public purse to meet need, not greed - http://bit.ly/lDBNBe), Tim Soutphommasane (of the progressive think tank Per Capita) said “Any fair and efficient system of welfare … should be guided by a principle of need.” To read the full article, link here: http://bit.ly/k1DRo9

Open the public purse to meet need, not greed

2011-05-17T19:16:00.002+10:00

Tim Soutphommasane writes in the Weekend Australian “Should a household with an income of $150,000 consider itself to be rich? THE treasurers and finance ministers of the world know better than anyone the iron laws of fiscal politics: there is nothing easier than promising an extra share of the public booty and nothing more difficult than raising taxes. ... Any fair and efficient system of welfare, ..., should be guided by a principle of need. The government simply cannot support everyone. ... Those aspiring to a life of plasma screen televisions, posh European cars and private schooling for their children shouldn't be crying poor. They certainly shouldn't be looking for largesse from the public treasury. If they are doing it tough, they should have more realistic expectations about what it means to live well.

To read the full post, link here: http://bit.ly/lDBNBe

PerCapita hosts Treasurer's post-budget address and luncheon, 17 May 2011

2011-05-11T13:19:00.001+10:00

The Hon. Wayne Swan MP, Federal Treasurer, will deliver a Post-Budget Address to the Melbourne business community, highlighting the challenges and opportunities in the 2011-2012 Federal Budget, and how it will impact corporate Australia.

Please join us for lunch to hear the Treasurer deliver the first public post-Budget Address in Melbourne.

Date: Tuesday 17 May 2011, 12.30pm.
Venue: Swanston Room, Melbourne Town Hall, Corner Swanston and Collins Streets, Melbourne

Tickets: $2,700 + GST for a table of ten ($270 + GST individual tickets)
$1,350 + GST for non-profit organisations

For further information or to book tickets, please visit our website or contact Allison Orr on 0423 602 771 or a.orr@percapita.org.au

David Hetherington to appear on Radio National, Wednesday 11/5/11 9am for post-budget discussion

2011-05-10T08:05:00.000+10:00

David Hetherington to appear on ABC24 The Drum 09/05/11 6:05pm

2011-05-09T14:43:00.001+10:00

Marcus Priest writes about PerCapita Forum in today's Australian Financial Review

2011-05-04T07:58:00.000+10:00

In today's Australian Financial Review (p5) Marcus Priest notes that speaking at a forum organised by the left-wing think-tank Per Capita "Finance Minister Penny Wong has warned that spending cuts in the budget were needed to avoid a higher tax burden on future generations."
To read the transcript link here: http://bit.ly/jkfIJG

PER CAPITA PUBLIC FORUM MELBOURNE TOWN HALL MELBOURNE THE 2011 BUDGET AND THE RETURN TO SURPLUS

2011-05-04T07:42:00.002+10:00

The following information was released by the office of the Minister for Finance and Administration of Australia:

It is a pleasure to be speaking here today for Per Capita, an organisation that makes an invaluable, although occasionally lonely, progressive contribution to public policy and discourse.
In the descriptor of the Per Capita story, the rationale for its establishment includes the presentation of the “economic and moral cases for progressive policy reform in Australia”; a focus on the long term and the avoidance of both old and false debates.
Today I want to speak to you about the values underpinning the Budget and the economic circumstances in which it has been put together.
In this context I want to focus on the progressive case for returning the Budget to surplus, why it is in our collective long term interests; and why some of the avowedly left arguments for not doing so are part of a debate which is both old and false.
Budgets are not just an exercise in accounting; budgets reflect the values and beliefs of governments.
They are not an end in and of themselves.
They are the means by which governments deliver on their priorities.
For a Labor Government, a Budget is not just about numbers, it’s about people.
The coming Budget is framed by the need to deliver strong and progressive outcomes for this generation, and the next.
It will deliver on Labor’s tradition of fairness and our recognition that equality demands opportunity.
It will reflect our belief that a strong economy is the foundation of prosperity and fairness. That prosperity must be created to be shared.
It will enhance opportunities for those in work and remove barriers to those who are not.
It will ensure that the right supports are in place for the transition from education to employment.
The Budget will also confirm the Government’s fiscal strategy, and the pathway for returning the Budget to surplus in 2012-13.
This strategy is driven by an understanding of the consequences of failing to take responsibility on fiscal matters, both for the next few years, but also beyond.
It’s driven by an understanding of the challenges that come with the mining boom and the importance of spreading its benefits as far and wide as possible.
And it’s driven by an understanding that we must look not only to our own interests but also to the next generation’s.
We know that unsustainable spending is neither responsible nor progressive – and we know that it imposes very real consequences on our children.
The Challenge
The current economic environment presents a unique set of challenges.
It can be easy to forget the economic destruction Australia avoided due to the Government’s swift response to the global financial crisis (GFC).
The current situation in most OECD nations shows what happens when countries feel the full brunt of a financial crisis.
A recession was averted by the actions of this Labor Government.
But the effects of the GFC can still be seen in the Commonwealth Budget – although stimulus spending has wound down, revenues are lagging as companies carry forward losses and consumer sentiment is still hesitant.
The GFC was a shock to the Australian economy, and to Australians.
Consumers have responded to that shock by being cautious - paying off credit cards rather than shopping, paying down their mortgages rather than going on holidays.
In addition, the impact of the Queensland and Victorian floods and Cyclone Yasi are having a significant impact on the economy in the short term, and therefore Government revenues.
Yet these short term factors will not knock Australia off its growth trajectory.
The coming record investments in the mining and resource sectors, the best terms of trade in living memory and low unemployment will see surging growth in some sectors of the economy.
As this boom gathers pace, it will exacerbate capacity constraints and further the pressures on the patchwork economy.
Without the right policy response, this wave of investment risks increasing price pressures across the economy.
Different approach?
In facing these challenges some have called on the Government to put aside its commitment to return the Budget to surplus and allow one, two, three years or more years of deficits.
We see this call particularly from some on the left, who characterise the Government’s budget strategy as an unnecessary discipline.
But consider the consequences of this course of action.
What would be the impact of not returning to surplus in 2012-13?
In the year we will return to surplus:
the mineral sector will be booming as today’s round of investments come online, exacerbating capacity constraints and pressures on the patchwork economy;
growth will be strong and above trend; and with
an unemployment rate with four in front of it.
To not have the Budget in surplus in 2012-13 would see the Government competing with the private sector for the same resources.
Restraining spending and building surpluses means we’re not compounding inflation and cost of living pressures in the years ahead.
To do otherwise would disproportionately hit those least able to adapt, those in low paying jobs, and those on fixed incomes including students and the elderly.
It would erode incomes, putting pressure on the cost of living and additional stress on household budgets.
It would aggravate the challenges of the patchwork economy, as the cost of inputs rise, putting job creation in some sectors at risk.
As the boom surges the pressures on manufacturing, services and non-mining sectors will increase, as it draws in resources and workers.
Delaying the return to surplus can also impact the longer term sustainability of the Budget – forcing us to make harder decisions in the future.
Because we need to remember that a decision today can close off a more worthy decision tomorrow.
The Government’s response
So the Government will do what is responsible.
The Government will make the difficult decisions needed to get us back in the black.
As the Treasurer has said – If we are going to be Keynesians in the downturn, we have to be Keynesians on the way up again.
Central to framing a progressive response to these challenges is the belief that responsible fiscal policy is also responsible social policy.
With this background the Government’s budget position is clear:
returning the Budget to surplus in 2012-13;
boosting skills and participation;
addressing the pressures of a patchwork economy; and
spreading the opportunities of the mining boom.
These will be the hallmarks of this Government’s fourth Budget.
Just as there are imperatives in the near term to return to surplus, so too there is a longer term rationale.
The coming Budget will also reinforce the Government’s commitment to a fair and equitable society.
We know that a strong Budget is needed for a sustainable social safety net, and that failure to make tough calls today will require tougher calls for the next generation.
A Labor Budget – looking to the long term.
A sustainable safety net
In my time in politics I have been driven by the notion of intergenerational fairness – asking this generation to think about the next, and to act accordingly.
In Government, this idea has a particular resonance.
We expect Governments to represent the nation as a whole.
We expect them to act in the best interests of the nation.
But we also need Government to look after the next generation.
To ensure that the nation they leave for their children is better than the one they inherited from their parents.
This includes managing the budget, but it also is relevant to the broader delivery of Government services – particularly those for the most disadvantaged in society.
At the core of the Labor project is the belief that the role of Government includes helping those in need.
Those that are vulnerable.
And those that cannot provide for themselves.
Labor Governments have been central to creating our social safety net, driven by the belief that a progressive society is a just and fair society.
The idea that a strong community helps those in need and provides opportunity for those that can look after themselves.
If we focus only on meeting today’s demands we will, in the end, crowd out those in need from this generation and the next.
Creating opportunity is at the centre of Government.
But as a Labor Government we need to provide opportunities to those most in need of opportunity.
For today, and tomorrow.
From some on the Left we see the push to meet these demands – free tertiary education and increasing funding for public transport are just two examples.
On their own, these policies can be persuasive, on their own they have merit – however in aggregate they are unsustainable.
The Government providing funding for services to someone who can afford them, squeezes out funding for those who cannot.
Government’s budgets are finite, and always will be.
And in the end it is the most vulnerable that often lose out.
We know that without sustainable finances, progressive outcomes are not possible.
Labor values of fairness, equity and opportunity will not be realised.
We only have to look to the UK or the US to see the impact on social safety nets when budget positions deteriorate.
In the United Kingdom we are seeing this played out right now. You have a government faced with an economic crisis slashing spending on education and public services.
For example the UK Government has made deep and lasting cuts into the higher education sector, matched by increased university fees to a level that puts tertiary education beyond reach for thousands of Britons.
The circumstances in Greece and Ireland paint an even darker picture.
This is what can occur without sustainable and responsible budget practices.
Interestingly, when it comes to fiscal matters, arguments from some on the left can diverge from other significant policy positions.
For instance, you would struggle to find anyone associating with progressive politics who would not support action on climate change today so that tomorrow’s generation don’t have to carry an even heavier burden.
And yet this same rationale does not always apply to budgeting.
Locking in spending today is locking in a tax burden tomorrow.
With an ageing population and known structural pressures in the Commonwealth Budget, the burden on the next generation will already be heavy – and yet many on the left seem keen to add to it.
This is not the view of our Government.
For our Government, fiscal responsibility is ultimately social responsibility.
And our record is clear.
The Government has been repairing the long term structural position of budget, making family and age pensions and healthcare expenditure more sustainable.
By 2050 these saves are expected to have generated a cumulative save of $300 billion in real terms.
This is $300 billion that can be allocated to helping those most in need, investing in education or improving access to healthcare.
The Government’s position is clear – making budget cuts today will provide the foundations of a sustainable safety net and strong progressive programs.
This will require prioritisation. This will invariably require tough choices.
But it is the right approach.
The Gillard Government is acting today, to ensure higher living standards and better services for the next generation.
Jobs
Key to the framing of the 2011-12 Budget is the importance of employment.
This is not surprising.
The Labor Party was founded on the value of employment, on the principle of a fair day’s wage for a fair day’s work.
And our record stands proud following the GFC.
Where the Opposition would have faltered, the Government acted.
The stimulus program rolled out by the Government saved 200,000 jobs and stabilised the economy.
Compare these facts with other countries and you quickly see how effective the Government response was: approximately 30 million jobs were shed around the world, with around 7 million jobs lost in the US alone.
Each of these unemployed Americans has a family, each has aspirations, and each has to find another means to make ends meet.
This human side of the financial crisis was largely avoided in Australia.
And yet the imperative to work – the value of a good job – should never be taken lightly.
Against the back drop of the Mining Boom Mark II, the imperative is even greater.
And it is this imperative that will sit at the core of the Budget.
Indeed this is at the core of what it means to be a member of the Labor party – providing lifelong opportunity through improved education, training and employment.
We recognise the dignity that comes with having a job, and earning a decent wage.
This starts with job security.
We know people are doing it tough - but we also know how much tougher it would be for those without a job.
A good job provides more than your fortnightly pay cheque – it gives purpose and provides security for the future.
And in a growing economy, the Government needs do its part to realise the abilities of more Australians and invest so that they have the training and skills they need to participate.
In the current economy – in these historic economic circumstances - inclusion through participation must be our central focus.
With already low unemployment levels and high growth, the need for more workers is the catalyst needed to break persistent cycles of social and economic exclusion.
Drawing these two strands together – an economy in need of workers, and the many Australians that need work – is true to our Labor principles.
As the Treasurer outlined on Sunday, the Government will harness the boom to extend opportunity through the creation of 500,000 jobs in the next couple of years.
The Budget will provide other ways to extend greater opportunity in our society and to imbue more responsibility into the system.
This involves getting the incentives for work right.
It also requires investing in the skills and training necessary to unlock opportunity.
We want our workforce to be skilled and in jobs.
And this will be reflected in the coming Budget.
By putting in place the right incentives for work we will encourage more Australians than ever into the workforce, to enjoy the security and dignity of employment and break patterns of exclusion.
True to our Labor values we will be using the coming Budget to invest in skills and training to ensure that the economy’s thirst for labour is met, and workers are provided with the opportunity to enjoy the boom.
The return to surplus is also important in getting the settings right for the long term prosperity of Australia.
By stepping back and letting the private sector expand, the Government is making way for the creation of jobs, and putting in place the settings to see as many Australians benefit as possible.
Our participation reforms and investment in skills will not only nurture the boom, they will ensure the opportunities the boom creates are felt across our country and for years to come.
Concluding comments
In many ways the themes of the coming Budget echo my first speech to the Parliament.
In that speech I drew attention to the disadvantage in particular areas of Adelaide – the lack of post-school qualifications and high rates of youth unemployment.
I spoke of the need for an adequate safety net.
But I also expressed the view this could only be a baseline policy, that in Government we have to provide opportunities for people.
These ideas - of addressing inequities and ensuring a strong and lasting safety net and of providing opportunity through training and skills - have been close to my thinking as I’ve worked through this budget process with the Treasurer.
Together with the Prime Minister we will be delivering a Budget that is imbued with the values of the Labor tradition.
We all bring our own values to these debates, and to the Cabinet room.
For me, the belief that we should look beyond ourselves and beyond today has been central.
This drove me when I was Climate Change Minister.
Perhaps it was my father’s exhortation as I was growing up that “the next generation must be better than this one”.
After all, it is a universal human aspiration.
Yet not often enough does this common aspiration, so familiar to us in our personal lives, define our national politics.
Indeed, it is often a struggle even for well-intentioned politicians to keep that focus.
Because the politics of today focuses so much on today.
But a progressive vision demands we look ahead.
Because we know no prosperity can be secured and no social reform sustained unless we do.

Progressive Australia

2011-04-30T12:51:00.000+10:00

PerCapita's Tim Soutphommasane discusses "Social inclusion" today 1pm Progressive Australia check the live stream http://bit.ly/maJkuv

Progressive Australia

2011-04-30T09:11:00.002+10:00

PerCapita's David Hetherington participates in Progressive Australia event. He is a panel member discussing "Fairness, work and the economy" from 1pm to 2:15 today.

Progressive Australia will be held on 30 April and 1 May 2011 at the state of the art complex Sydney University Law School Building. For more details go to: http://bit.ly/lmj2nm

Public forum with Senator Penny Wong, George Megalogenis and John Freebairn, Melbourne, 3 May 2011

2011-04-30T08:49:00.002+10:00

INVITATION

Please join us for a public forum, with guest speaker Senator the Hon. Penny Wong, Minister for Finance and Deregulation, and panel members journalist and political commentator George Megalogenis from The Australian, Professor John Freebairn from the Department of Economics at the University of Melbourne, and Per Capita's Executive Director, David Hetherington.

The Minister will be discussing the importance of the return to surplus, to ensure the Government can continue to provide a safety net for the most disadvantaged in our society. This will be followed by a lively discussion with our panel members.

When: Tuesday 3 May, 1.30pm
Where: Melbourne Town Hall, Condell Room
Cost: No charge
RSVP: Allison Orr, 0423 602 771, a.orr@percapita.org.au

Afternoon tea will be served.

The False Trade-Off of Prosperity and Fairness

2011-04-29T17:30:00.000+10:00

Published by Progressive Australia in Economics, Fairness
by David Hetherington

At the heart of a debate around the future of work and the economy is a presumed trade-off: prosperity versus fairness. Economists like to dress this up as efficiency versus equity, and this is where the problem starts. Equity is as a troublesome caveat which serves to detract from the efficient (and elegant) solution in a zero-sum game. The first issue with this is that it implies a necessary trade-off between the two. The second is that it dehumanizes the central problem, which is why I prefer prosperity and fairness.

The evidence suggests that the trade-off between prosperity and fairness is far from clear-cut. Countries with higher incomes per person tend to be more equal. This doesn’t mean high incomes causes greater equality or vice versa, only that high incomes do not necessitate inequality. The great exception to this trend is, of course, the United States which has high incomes and high inequality. Yet even there, an interesting picture emerges. As inequality has grown in the US since 1970, average weekly earnings have fallen in real terms. Again, it’s not clear that prosperity and fairness are a necessary trade-off.

What is clear is that presenting prosperity and fairness as a trade-off makes people behave as though it is. The public debate takes the trade-off as a given and the public responds in kind. Ross Gittins writes of how participants in economic experiments behave less selfishly and more in the common interest when the experiment is titled Social Exchange Study rather than Business Transaction Study, or Community Game rather than Wall Street Game.

Over the last decade, the Australian public debate has embraced the false trade-off between prosperity and fairness, and the public mood has moved significantly in favour of prosperity over fairness. The reasons are varied, but the key point is that as a community, we are less willing to embrace solutions which deliver long-term prosperity and fairness if they involve any short-term sacrifice or cost. Deferred gratification ain’t our thing.

Companies fight tooth and nail against any proposal that remotely threatens their quarterly earnings, even where it’s clearly in the public interest – we now expect this. The orchestrated campaign against pokies reform is a case in point. What’s more curious is that they resist these proposals even where they may provide profitable opportunities down the track. The resistance of corporate Australia to a carbon price shows a lack of imagination about the opportunities presented by the transition to a low-carbon economy.

Individuals have also become less willing to sacrifice short-term prosperity in the pursuit of long-term outcomes which combine fairness and prosperity. Responses to Per Capita’s annual tax survey show that Australians want higher spending on public services and infrastructure, but believe their taxes are too high. They believe higher income earners are taxed too little, even when they are themselves high income earners who describe themselves as overtaxed.

This community sentiment has got politicians scared. The Rudd Government retreated from the CPRS in the face of focus group pressure, and Labor has been surprisingly reluctant to trumpet the success of its Keynesian response to the global financial crisis, presumably for fear of being painted as antiquated Lefties addicted to debt. While Julia Gillard’s (re-)embrace of a carbon price is welcome, progressive political leaders should do more to decouple the false link between prosperity and fairness by advancing solutions which instead reinforce a virtuous circle between the two.

The virtuous circle involves a recognition that markets provide powerful forces that can be harnessed to promote prosperity and fairness, but remain a means rather than an end. Market design has already been used successfully in areas as diverse as employment services and water management, and a well-designed carbon market is a logical next step.

The virtuous circle requires a further recognition that, contrary to the claims of classical economics, much human behaviour is predictably irrational. Policy should be developed with this insight in mind, rather than the assumption that individuals are perfectly rational, utility-maximising calculating machines. Initiatives which put pre-commitment limits on gambling losses, or provide opt-out default superannuation accounts explicitly recognize the limits of human rationality. And they demand small short-term costs, often by producers, in the pursuit of long-term social and economic gain.

The list of policy ideas that builds on these insights is long. We can capture the dividends of the mining boom by channeling super-profits tax into a sovereign wealth fund. We can increase housing supply by restricting negative gearing to new-build dwellings only. We can finance infrastructure by tapping the nation’s superannuation pool. We can stimulate R&D, not only through extra public spending, but also by promoting competition so that our large oligopolists are forced to compete on innovation as well as price.

Each of these initiatives will attract resistance from privileged incumbents threatened by change. Yet each advances fairness as well as long-term prosperity. As we’ve seen in the carbon tax debate, the battle will be fierce. Progressive leaders face no more important fight.

—

David Hetherington is the Executive Director of the progressive think tank Per Capita.

Gillard boldly reignites Australia's climate debate

2011-04-27T19:36:00.000+10:00

by David Hetherington, 18 April 2011

By announcing a tax on CO2 emmissions, Julia Gillard's Australian Labor Party has taken on the fight of its political life

Finally, the battlelines are drawn, and the contours of the political debate in Australia in 2011 are clear. It’s not an overstatement to say that Julia Gillard’s Labor government has embarked on the fight of its political life. The outcome will determine whether Gillard ends up a one-term Prime Minister or a reformist leader in the spirit of Labor heroes Bob Hawke and Paul Keating.

The battle centres on carbon pricing. Against the wishes of business leaders, the labour movement and a majority of the electorate, the Gillard government has announced that it will place a tax on CO2 emissions from July 2012. This has lit the fuse on the most heated policy debate since the introduction of a consumption tax 12 years ago.

To understand the emotions this proposal has aroused, it’s helpful to reprise Australia’s schizophrenic relationship with emission reduction policy. Australia has vast, high quality reserves of coal which have underpinned the country’s economic development by providing cheap electricity. It is one of the world’s largest coal exporters. The flipside, of course, is that Australia is the world’s largest emitter of CO2 per head.

Given this, emission reduction policies were always going to be contested. Although a healthy minority of the public supported action on climate change, the conservative Prime Minister, John Howard, refused to sign the Kyoto Protocol and for a decade chose not to attempt emissions reduction.

Then the public mood began to shift around Howard. Australia endured its worst drought in a century, which many associated with climate change, and Al Gore’s Inconvenient Truth helped join the dots. The Labor Opposition was promising to act on emissions, and voter support was swinging behind them. In response, Howard committed to introduce an emissions trading scheme (ETS). This meant that both sides of politics went to the 2007 election on a promise to introduce an ETS.

To read the full opinion on Policy Network link here: http://bit.ly/fYaOJp

Sane minds know there's money to be made from green steel.

2011-04-27T07:07:00.000+10:00

The Australian Financial Review Opinion Pages (p55 - 27/04/11)
by David Hetherington

(unedited)
The pitiful cries now emanating from the steel sector bring strongly to mind Jean Baptiste Colbert's famous observation that, “The art of taxation consists in so plucking the goose as to get the most feathers with the least hissing.” The hissing is now powerful enough to operate a battery of pneumatic jackhammers.

What AWU National Secretary Paul Howes, Opposition Leader Tony Abbott and BlueScope Chairman Graham Kraehe are all practicing is a form of NIMBYism - but NIMBYism on steroids. We might call these pumped-up NIMBYs “Bananas: Build Absolutely Nothing Anywhere Near Anyone.” Hitherto thought to be the preserve of the radical greens, our three musketeers have adapted it to carbon pollution schemes. If a single soul is financially worse off, we cannot have it. And the result will be economically catastrophic, because these Bananas will prevent the building of cleaner steel plants in Australia in the future.

In the meantime, in the real world, perhaps we could look at what saner folk are doing (not just saying).

The Europeans, for instance, have a consortium called ULCOS - 48 companies from 15 countries working to halve emissions from the steel sector. In our neck of the woods, a small New Zealand start-up called Lanzatech has formed a joint venture with China’s Baosteel, the second largest steel maker in the world, to build a pilot plant to capture carbon rich gases from the steel making process. After cooling and cleaning the gases, those gasses are fed to bugs that produce ethanol. Depending on the processes, the carbon-rich gases from 1 ton of steel can make up to 100 litres of ethanol, which is currently selling for more than $1 per litre.

Paul Howes, a numbers man par excellence, should immediately see that the money you can make from this ethanol far exceeds the cost of any carbon tax. 1 ton of steel emits about 1.5 tons of CO2 in manufacture, so at $20 a ton carbon tax you are $70 in front if you make ethanol from the carbon-rich gases. Call me old fashioned, but this sounds like profit to me. And that $70 doesn’t include the generous exemptions that are presently the subject of the hissing fits.

Posco, Korea's national steel maker, and the world third largest, has also signed with Lanzatech for another type of zero carbon steel making. In Posco’s case, the coking coal used in its steel making will be used to "reduce" the iron ore (essentially rust plus sand) to more or less pure iron. You can also do this with hydrogen and get very low emissions of CO2 from the process.

When coking coal gets expensive (the spot price is currently more than $300 a ton, to the joy of Queenslanders) hydrogen reduction becomes viable. The Koreans were going to use hydrogen from nuclear reactors, but post-Fukushima that may be more problematic.

Of course our three musketeers will dismiss this as pie in the sky fantasy. But there is another plentiful source of hydrogen, natural gas. Conveniently God put lots of natural gas just near where he put lots of iron ore - Western Australia.

And this is why BHP built, then closed, a hot briquetted iron (HBI) plant near Port Headland. It’s a long complex story, because there are technical challenges, but in the end BHP decided that it was easier to dig up more iron ore for $20 a ton and sell it to China for $130 a ton than make it into iron briquettes that now sell for $400 a ton.

This is a perfectly rational decision that will help BHP and its executives attain their profits and bonuses. But since the total resources of iron ore will only last 20 years if we ship it off at 1 billion tons per year we have to ask ourselves just what is in the best long-term interest of Australians (including Australian workers, Mr Howes).

Clearly the long-term international demand for iron ore is gigantic. Study after study has showed there is no end to the demand from China, India, Vietnam, Indonesia as they use steel to rehouse billions in the hundreds of giant cities springing out of the ground across Asia.

Clearly the future international requirements will be for low CO2 emission steel. This is what is known in the trade as a prediction.

Clearly Australia could supply low CO2 steel and capture the difference between the $130 it gets now for iron ore and the $800 a ton that is currently the world price of steel. And we can use our resources more slowly and extract more value from it. And employ many more workers.

Clive Palmer, for one, can certainly count. His company Austeel (part of his Mineralology group) has proposed to build an integrated iron-ore-to-slab-steel plant using natural gas in WA. This could, if configured correctly, make very green steel, for many years.

---

David Hetherington is executive director of the progressive think tank Per Capita.

2011-04-21T08:26:00.000+10:00

The Drum Opinion (ABC Online)

Our false cost of living crisis
Adam Clancy
Australians are facing a cost of living crisis: prices are soaring and family budgets are being pushed to breaking point. Leaders of both major parties have been repeating this schtick ad nauseum in recent weeks and they could not be more wrong. According to the Australian Bureau of Statistics, households are now saving more than 10 per cent of their income. It must be pretty hard to save that kind of money were the cost of living truly punching the kind of hole in our wallets that the Prime Minister and Opposition Leader would have us believe. Additionally, credit cards and mortgages are being paid off faster than at any time in recent memory, while the surging Aussie dollar continues to keep imports and petrol prices lower than would otherwise be the case. Given the cacophony surrounding the cost of living debate, it is understandable that many Australians feel they are not as well off as the numbers suggest they are. Lost amid Julia Gillard's “dignity of work” speech at The Sydney Institute last week was the way the Prime Minister positioned the ALP as the party of fiscal responsibility. Foreshadowing the spin that will accompany the government's upcoming spending cuts, Ms Gillard said her decision to reduce expenditure in key areas such as medical research is “the best way of helping Australians manage cost of living pressures.” It was similarly instructive when Tony Abbott defended his controversial attendance at an anti-carbon tax rally last month by arguing that “middle Australia” was “understandably angry... about how this carbon tax will hit their cost of living.” Cost of living may not be the new black, but it certainly appears to have replaced rising interest rates as the bogeyman of Australian politics. It may seem counter-intuitive, but the cost of many goods is actually decreasing. Research by CommSec economists has revealed the average wage for Victorians now buys you more milk, bread, margarine, cheese, steak, chicken and petrol than it did a year ago. Additionally, nationwide, clothing is down six per cent, major household appliances are down four per cent, and audio/visual equipment has dropped 18 per cent in the past year. Nor does this accurately take into account the tremendous quality improvements in areas such as mobile phones, computers and TVs which are now hundreds of times faster – and considerably cheaper – than their predecessors. 

To read the full article, link here

Adam Clancy is a researcher at Per Capita, a progressive think tank, working on cost of living and quality of life issues.

Guardian Focus Podcast: The AV referendum

2011-04-13T11:47:00.000+10:00

Presented by Michael White and produced by Phil Maynard

On 5 May, voters in Britain will be asked to choose whether they wish to retain the first past the post voting system or switch to the alternative vote method.

The referendum was agreed as part of the coalition agreement that brought the Conservatives and Liberal Democrats into government, and the parties are on opposing sides over the issue.

So how would the alternative vote system change politics? Who supports it, and why? The Guardian's political columnist Michael White tours Westminster to hear from MPs, campaigners, pollsters and experts.

... And finally, we hear from journalist Tim Soutphommasane in Melbourne. Australia is one of the few countries to use the AV system. Soutphommasane says that while results can be slow to come in on election night itself, AV does not lessen the drama.

To read the article listen to the podcast, click here.

David Hetherington to appear on Radio National, Tuesday 5/4/11 9am

2011-04-04T14:33:00.002+10:00

Listen to David Hetherington, Executive Director of PerCapita, on Life Matters, tomorrow 5th April at 9am on Radio National.

David Hetherington to appear on ABC24 The Drum 04/04/11

2011-04-04T14:30:00.002+10:00

Watch David Hetherington, Executive Director of PerCapita, appear tonight at 6pm on The Drum on ABC24.

Government can win carbon tax debate

2011-03-17T04:17:00.000+11:00

By David Hetherington, Executive Director of Per Capita writes in The Australian, March 17, 2011

THE moral outrage over Julia Gillard's carbon tax is running white hot. The conservative commentators are up in arms. The masses are outraged, Newspoll tells us. How dare she? A sitting Prime Minister proposing significant new economic policy?

The gall of it.

Yet far from decrying Gillard's audacity, we should welcome the debate it brings. Not just the specifics of the carbon tax argument but the debate itself.

For the arrival of a keenly contested substantive argument over policy goes some way to answering an emerging and important question of our time: "Is our politics broken?"

To read the whole article, click here: http://bit.ly/gmGkQ9

Great expectations lead to an age of anxiety

2011-02-26T10:47:00.000+11:00

Op-Ed in The Weekend Austrian 26/02/11 by Tim Soutphommasane

RATCHETING concerns about the cost of living confirm one thing: we are living in an age of abundant anxiety. For all that we may be enjoying economic prosperity, this might not translate into a better quality of life. Our politicians haven't yet demonstrated they know how to deal with this undercurrent of angst. Available evidence suggests there is little basis for feeling worried. Last November, the UN's Human Development Index ranked Australia as the second most developed country in the world behind Norway.

Read the whole post here.

The full paper can be found at http://bit.ly/eqE4Ad . Video: http://bit.ly/hRT04x

Australians need to get a grip on quality of life anxiety

2011-02-26T10:42:00.000+11:00

Despite widespread complaints about the cost of living and population growth, the Australian quality of life remains strong and any crisis is purely imagined. That is the conclusion of More than just lifestyle: quality of life anxiety and wellbeing, a report published by the think tank Per Capita.

According to Dr Tim Soutphommasane, a senior project leader at Per Capita and author of the report, public concern about quality of life does not accord with official pictures of Australian liveability. Studies such as the United Nations Development Programme’s Human Development Index 2010 ranked Australia the second most developed country in the world.

“By every measurable standard, Australians enjoy one of the world’s highest quality of life. That many Australians imagine otherwise reflects misplaced middle-class angst and insecurity about a sunkissed, suburban Australian lifestyle,” Dr Soutphommasane said.

More than just lifestyle, the first publication in Per Capita’s Quality of Life research program, offers a confronting critique of Australians’ understanding of quality of life. It contends that quality of life must be more than just a lifestyle concern.

The report argues that a cultural understanding of quality of life leads Australians to miss the connections between quality of life, wellbeing and freedom. Living well and the good life cannot be reduced to enjoying the material comforts of suburban lifestyle.

“It is important to understand quality of life in terms of an ethical conception of wellbeing. Politicians today still haven’t found the right register in which to speak to Australians about their desire not only for prosperity but sustainability, community and fulfilment,” Dr Soutphommasane said.

The full paper can be found at http://bit.ly/eqE4Ad . Video: http://bit.ly/hRT04x

Home-grown values a multicultural triumph

2011-02-24T07:59:00.000+11:00

by Tim Soutphommasane

The trouble is the word multiculturalism can mean different things to different people. Perhaps ironically, supporters of multiculturalism have been as much to blame as its critics for any ambiguity. Rather than defending multicultural policy in muscular liberal terms, they chose flaccid cosmopolitanism; diversity became celebrated for its own sake and not as part of the contract of citizenship. This is one of the contradictions of Australian multiculturalism. For all its liberal, nation-building genius, it is misunderstood, including by many who see themselves as its champions.

Read the whole story here

Public intellectuals a real community benefit

2011-02-14T14:44:00.002+11:00

"Public intellectuals a real community benefit" writes Tim Soutphommasane on 12/02/11 in The Australian. "Every now and then, we are reminded that intellectual power is capable of serving public purposes and can rightly assume partisan forms.
Think of the impact Milton Friedman had on Ronald Reagan, or the impact Friedrich von Hayek had on Margaret Thatcher.
Intellectuals implicated in the affairs of state? It will always be thus. We gain little from precious lamentations about scholars losing their political virginity.
Politics, after all, is nothing if not a contest of ideas. It would be enriched if more men and women of ideas proved capable of entering the public conversation."
Read the whole article here

Vote for a sweeter weekly household budget

2011-02-14T14:33:00.000+11:00

Tim Soutphommasane wrote over the weekend in The Australian "IT has become an iron law of Australian politics that leaders must pledge to ease the cost of living. ...But why must governments be responsible for ensuring that people can live with a mortgage and a pattern of consumption that they can't actually afford? Read the whole article here

Per Capita on ABC24's The Drum

2011-02-07T15:59:00.002+11:00

Tim Soutphommasane, Senior Project Leader at Per Capita will appear tonight, Monday 7th February 2011, on The Drum, ABC News24, at 6pm.

Tiger mums not great for human children

2011-01-31T17:21:00.000+11:00

Have parents become too afraid of tough love? Tim Soutphommasane, The Australian
Tim Soutphommasane asks in The Australian "Have parents become too afraid of tough love?"
"THREE years ago, journalist Lenore Skenazy wrote a column in The New York Sun about letting her nine-year-old son ride the New York subway on his own. ...Overnight it made her "America's worst mom". ..."Skenazy may now have to move over. America has a new "worst mom", Amy Chua. A law professor at Yale University, Chua has written Battle Hymn of the Tiger Mother, a memoir that celebrates the strict regimen of "Chinese" parenting."

To read the full article click here.

Per Capita on Life Matters

2011-01-31T14:26:00.002+11:00

Per Capita's David Hetherington will appear tomorrow, Monday 1st February on Life Matters, ABC Radio National, at 9am.

Per Capita on ABC24's The Drum

2011-01-31T13:57:00.001+11:00

Per Capita's David Hetherington will appear tonight, Monday 31st January 2011 on The Drum, ABC News24, at 6pm.

Per Capita on ABC24's The Drum

2011-01-28T10:52:00.000+11:00

Watch Per Capita's Tim Soutphommasane appear on ABC24's The Drum (iView 26/01/11) http://bit.ly/fBufdR

Watch Per Capita's David Hetherington appear on ABC24's The Drum (iView 19/01/11) http://bit.ly/fBufdR

6pm The Drum ABC24

2011-01-26T17:26:00.002+11:00

Tim Soutphommasane will appear tonight at 6pm on The Drum on ABC24

Alan Stokes calls for the revival of a volunteer corps

2011-01-19T13:23:00.000+11:00

In today's AFR Alan Stokes calls for the revival of a national volunteer corps and cites Tim Suthphommasane idea of a new patriotism through national service, civic or military duty.

David Hetherington to appear on ABC24 The Drum tonight at 6pm

2011-01-19T13:17:00.002+11:00

David Hetherington, Executive Director, Per Capita, will appear on The Drum ABC News24 at 6pm tonight, 19th January 2011. #auspol #ausvotes

SOCIAL-DEMOCRAT parties lack self-belief

2011-01-15T06:59:00.000+11:00

Per Capita Fellow Dennis Glover writes in the Australian “SOCIAL-DEMOCRAT parties have many problems at present, but perhaps the most serious is the lack of self-belief that results from their tendency to underestimate the potential appeal of the progressive agenda.” Read the full article here

Best of times are the worst for some,

2010-12-24T19:09:00.000+11:00

by Stephen Lunn, The Australian December 24, 2010

In a piece on poverty, Steven Lunn quotes Dennis Glover, a Labor speechwriter and fellow at Per Capita, who says "Labor, in the public's mind at least, has lost the political high ground on this key social issue to the Greens and should be recasting itself in a bid to grab it back.

"Labor was founded to tackle poverty," Glover says. "But you have to remember that, 100 years ago, people, even with jobs, could spend their lives hungry, cold and with no education.

"That level of entrenched poverty is no longer with us. The grandparents of working people today wouldn't believe the lives of working-class people now. Their living standards have gone up more in the last few decades than in the last five centuries.

"This is an inescapable fact for people on the left of politics and only by accepting it can we do what we should be doing and zero in on those really in poverty: those who finished school early, the sick, the alcohol and drug-dependent, the homeless.

"People often think this is a marginal question for Labor but I think it's central. Much of the public now look to the Greens for this stuff, but it's where Labor can push into. Generally people want to help those worse off and it's a real political opportunity to impress Labor's base."

To read the whole article link here.

"Distributed Gas: One third cheaper, two thirds cleaner and ready now"

2010-12-20T08:11:00.000+11:00

Tom Foster and David Hetherington from the progressive think tank Per Capita examine the role of energy market design in Australia’s transition to a low-carbon economy. Link here to the study.

The research suggests enormous market design opportunity for Australia to reduce its total greenhouse gas emissions by 10% (~54 million tons of CO2-e) through distributed gas-fired power using private investment and existing off-the-shelf technology. Adopting distributed gas for new generation will significantly slow the growth in electricity prices, since distributed gas is almost a third cheaper than new coal-fired power.

The energy markets are distorted in favour of large-scale black and brown coal generators with hidden subsidies valued at over $5 billion annually, and incentives inhibiting new localised connections to the grid.

Per Capita Executive Director and report co-author David Hetherington says, “The Australian energy sector has a set of legacy distortions which artificially tilt the market in favour of coal-fired power. Intelligent market design removes these distortions, allowing us to slow the growth in electricity prices and rapidly cut our CO2 emissions.”

The key findings of the study are:
• Australian coal-fired power stations receive hidden subsidies of $5.3b p.a. with fuel and water purchased below market value.
• Once the impact of tri-generation is included, the cost for distributed gas-fired power falls to 6.6 cents per kWh, down from 9.8 cents per kWh fully costed including a carbon price of $20 per ton. This compares to 10.7 cents for black and brown coal, and 11.5 cents for large-scale combined-cycle gas turbine.
• Australia would reduce its greenhouse gas emissions by 10% if half the coal-fired power in the National Electricity Market were substituted with distributed gas-fired tri-generation. This would involve 8,050 new 1.5MW units and would cost approximately $14.1 billion, which could be paid for through private investment

The recommendations are:
• Level the ‘playing field’: Introduce a national carbon price covering the entire electricity sector, and price fuel and water inputs to coal-fired power stations at true market value.
• Offer incentives to distributed network service providers (transmission and distribution companies) for rapid connections to the grid and cap the percentage of connection applications the distributed network service providers are entitled to refuse.
• Roll out a national gross feed-in tariff scheme which does not discriminate between fuel sources or generation technologies.
• Install distributed gas-fired power generation in the 19,000 new social housing units currently under construction by the Federal Government.
• Establish a public/private energy aggregation company to pool savings from energy efficiency measures.
• Roll out smart meters on a national basis building on the Victorian model, and Introduce seasonal and time-of-day pricing variation.

Small gas engines cut costs of power

2010-12-20T06:55:00.002+11:00

Sid Maher in the Australian announces Per Capita energy report with "Small gas engines cut costs of power". http://bit.ly/gZfZ4V

iView replay

2010-12-15T17:21:00.002+11:00

Watch David Hetherington appearance on ABC24 The Drum (iView) http://bit.ly/ibABd0 (until 12/24/10)

David Hetherington to appear on ABC24 The Drum 13/12/10

2010-12-13T07:53:00.002+11:00

Watch David Hetherington, executive director of progressive think-tank Per Capita, appear on The Drum today at 6pm on ABC24.

A public role for intellectuals

2010-12-08T12:17:00.002+11:00

'Academic talent seldom plays a role in Australian politics or business, but that could change' by Lindsay Tanner in today's Australian #auspol http://bit.ly/gO7KuC

Per Capita on Radio National's Life Matters - December 7

2010-12-06T19:57:00.003+11:00

Per Capita's David Hetherington will be on with Richard Aedy, Life Matters, ABC Radio National, Tuesday 7 December at 9am. Tune in.

Don't step back or to the Right.

2010-12-03T15:30:00.000+11:00

Dennis Glover notes in todays Australian: PROPOSALS for ALP reform have mistaken past agendas for tomorrow's solutions. http://bit.ly/h20cun

Concerns about distributed gas generation

2010-11-13T06:48:00.001+11:00

by David Hetherington

Two curious articles raising concerns about distributed gas generation by Drew Warne-Smith in the Australian over the last couple of days. One queries the capacity of the gas network to supply fuel for tri-generation and the other suggests health risks as a result of nitrous oxide emissions.

Both articles set up straw men. Of course, it will require more gas to be transported into CBD areas as fuel, but this is hardly rocket science. The Netherlands get 30% of their total electricity production from distributed gas and manage to supply far more people at a higher density than we’ll have to here in Australia. And the distribution economics seem to stack up there.

The nitrous oxide (NOx) story is even more of a beat-up when put in the context of vehicle emissions. Let’s say there are 2 million cars in Sydney (and probably more). Each consumes 1kW per day so we’re talking 2,000 mW of energy generation, with gasoline producing far more NOx and particulates than distributed gas. And that’s before you start including trucks.

The observation in the first article by Matthew Wright of Beyond Zero Emissions that the costs of gas is uncertain is something of a non-sequiter. Show me a fuel source whose costs are certain. Surely that’s not a reason to avoid a proven technology which can demonstrably reduce CO2 emissions tomorrow?

'All That's Left: What Labor Should Stand For' receives strong launch press

2010-11-03T06:54:00.000+11:00

Michelle Grattan writes in The Age "FEDERAL cabinet minister Greg Combet has warned Labor not to subordinate good policy to focus group research and declared Labor must rebuild its reputation as ''the party of progress''. ...He said focus groups and polling had a role to play, noting they were crucial to the success of the union campaign against WorkChoices, which he spearheaded before the 2007 election.
''However, they cannot have primacy - they simply inform strategy and how to promote policies and win support for them. They cannot compel the party to abandon its values,'' he said, launching All That's Left: What Labor Should Stand For, by Nick Dyrenfurth and Tim Soutphommasane." To read the full article, link here.

GREG Combet has declared Labor failed to articulate its values and what differentiates the party and must "rebuild its standing", Partricia Karvelas writes in The Australian. Launching All That's Left, edited by Tim Soutphommasane and Nick Dyrenfurth, the left-wing minister conceded yesterday that the dumping of the Carbon Pollution Reduction Scheme badly damaged Labor's left-wing vote at the August 21 election." For the full article link here.

All that’s Left: What Labor Should Stand For to be launched by the Hon Greg Combet

2010-11-01T11:57:00.001+11:00

On Tuesday 2 November, All that’s Left: What Labor Should Stand For edited by Nick Dyrenfurth and Tim Soutphommasane, Senior Project Leader, Per Capita will be launched by the Hon Greg Combet, Minister for Climate Change.

The edition has chapter contributions by Tim on social justice, by David Hetherington on progressive economics and by Dr Dennis Glover, Per Capita Research Fellow, on the potential for a Red-Green Coalition. It has recently been positively reviewed in the Sydney Morning Herald, and will be shortly reviewed in the Australian.

For details click here.

David Hetherington to appear on Radio National, Tuesday 2/11/10 9am

2010-11-01T11:52:00.000+11:00

David Hetherington will be a guest on Richard Aedy, Life Matters, ABC National Radio, on Tuesday 2 November at 9am.

David will be discussing the implications of an emerging gulf between the buoyant Australian economy and the sluggish economies of our major peers, as well as the Joe Hockey proposals on banking reform.

Economic credibility key to social democratic success

2010-10-23T07:52:00.000+11:00

THE gap between policy intention and execution is usually far wider than anticipated.

IT'S in the nature of politics to generate friends and enemies by drawing borders and declaring hostilities.

Of all the many criss-crossed trench lines traversing our contemporary political battlescape, none is more enduring or more deeply dug than the one than defines Right and Left according to calculations of the size and ambition of government. For many commentators the global financial crisis proves the point.

Now, on the face of it you might think that the percentage of gross domestic product allocated to public as opposed to private expenditure might give only a limited perspective on the general health, happiness and wellbeing of citizens.

After all, many conservative governments spend more and save less well than their social-democratic rivals, if only because their favoured constituencies are sometimes more expensive to woo.

read the whole article in Today's Australian.

Edited extract from All That's Left: What Labor Should Stand For, edited by Nick Dyrenfurth and Tim Soutphommasane (New South Books, $29.95).

Unsung servants of Labor ideals

2010-10-22T12:57:00.000+11:00

THE party's advisers bear little resemblance to the cynical pragmatists of popular myth.

In today's Australian, Dennis Glover writes "AS the ALP begins its official investigation into the causes of its recent near catastrophe, one group inevitably will be singled out for blame: political advisers. This is unjust, it is wrong and it's time someone said so. So I'm going to do something rare: write in defence of the political adviser."

To read the interesting argument, link here.

Excessive market power in banking

2010-10-22T12:45:00.000+11:00

Excellent ABC Radio interview this morning on excessive market power in banking with Josh Fear of the Australia Institute. Josh makes a number of strong points about the power of the Big 4 banks to generate ‘super-normal’ profits. Specifically, they use movements in their cost of funding as an excuse to lift interest rates and fees when RBA analysis confirms that since the GFC increased funding costs have lagged interest rate rises.

A particular suggestion Josh mentioned was previously raised by Per Capita in our Memo to the Prime Minister – the use of existing government infrastructure to provide low-cost savings and transaction accounts. In today’s Fairfax papers, Elizabeth Knight, Katharine Murphy and Eric Johnston canvass a related idea of some merit, that Australia Post network could offer banking services, as the postal service does in New Zealand.

One point on which I’d disagree with Josh is his description of the current state of banking as a failure of market competition. I’d argue the opposite – that we need greater competition in banking to provide the public with more choice and ease of switching between banking providers.

WA ‘opt-out’ organ donation scheme

2010-10-18T13:25:00.000+11:00

Interesting to see today that the WA government has commissioned a proposal for an ‘opt out’ organ donation scheme, with a view to legislating such a scheme into law. This is exactly the kind of behavioural choice policy that governments should be pursuing. These policies recognize that people are not perfectly rational actors, that behaviour is predictably irrational and structures choices in a way that delivers outcomes without coercion.

Through its ‘Politics and the Brain‘ series, Per Capita has been exploring behavioural choice policy and has specifically highlighted potential for opt out organ donation, noting that countries with opt-out schemes have registered donor rates above 90%, while peer countries with opt-in schemes have donor rates below 10%.

Of course, the WA government could always go one step further and adopt the Israeli proposal that registered donors have priority access to organs over non-donors should they require one.

Left and right cross-dress to impress

2010-10-09T06:55:00.000+11:00

By David Hetherington

Political cross-dressing is something of a fashion of late. At the last election, Tony Abbott proposed the mother of all parental leave schemes - hardly a small government, free-market initiative. The Rudd/Gillard government has advanced an internet filter scheme to protect us from all that smut on the web - hardly the stuff of free-living, free-loving lefties. In Britain the conservative David Cameron talks of a Big Society, and seeks to distance himself from the choice and competition mantra of Tony Blair's New Labour.

What is going on? Well, the right is now wrestling with the same existential questions that have gripped the left in times past. It is travelling the same voyage of self-discovery recently trodden by its philosophical opponents. But is the right actually now where we've said the left has been for 30 years? Or, in shorthand form, has "right" become the new "left"?

To answer this, we need to recognise that both belief systems have experienced profound intellectual failures.

In the 1970s the limitations of the welfare state championed by the left became painfully clear as growth contracted and social unrest bit throughout the developed world. In 2008 the right had its own collision with reality when our 25-year experiment with ''let her rip'' free-market capitalism ended in the biggest market failure the world has ever seen.

Both movements were badly bruised by their brush with mortality. The reason the right appears to be soul-searching now is that its failure is so fresh. For an extended period, the Reagan-Thatcher approach seemed to deliver on its promise of low-inflation, stable growth, making the crash that much more stark.

A second reason why the right might seem like the new left is that the boundaries between the two have become blurred, as each side has cloaked itself in positions associated with the other, like some sort of retro fashion movement.

The interesting question is why has this happened. One reason is that the traditional support bases of left and right have splintered as class structures have broken down. Where tradies were once of the left, they now vote conservative - they're Howard's battlers. Where inner-city professionals were once reliably Liberal voters, they now vote Labor and, increasingly, Green.

Not only have the old support bases broken down, but the old debates have broken down, and the protagonists are struggling to define the contours of future debates. For decades, the intellectual battleground consisted of a set of well-worn contests. Market versus state. Bosses versus workers. Economy versus environment. These debates sustained the ideological warriors of left and right. But they have now been transcended, not because one side won or lost, but because economic and social change has made them redundant. The market and the state work best in tandem. Millions of workers are now their own bosses. Environmental adjustment provides economic opportunity.

What we need instead is to debate the real challenges facing the country. How to manage the dividends of our mining boom. How to transition to a low-carbon economy. How to improve our education system so that it delivers the skills, capabilities and resilience that will allow Australians to prosper in a dynamic, open society. These are the future battlegrounds of left and right.

So this borrowing of ideas, this cross-dressing we have seen from left and right, is really the product of three things. One, intellectual failures on each side, which have provoked great uncertainty among their adherents. Two, a fracturing of electoral support, which has led political leaders to chase new constituencies by borrowing ideas from the other side. And three, economic and social change that has left old debates redundant and forced the contestants to search for new points of difference. These are the reasons why the right might seem like the new left.

But the right is not the new left. Here's why. The right believes and will always believe in the primacy of the individual - this is its defining idea. Individual freedom, in particular, is the cornerstone on which most right-wing arguments are built: small government, free markets, Hayek's magic catallaxy. Add to this a deep distrust of the collective - as Margaret Thatcher famously said, there is no such thing as society.

Conversely, social justice, and the power of society to deliver it, is the defining idea of the left. The left believes that society is more powerful than the sum of its individual parts, that we create better lives by working together on common challenges and common endeavours.

The challenge for political parties is to integrate these defining beliefs into new policies tailored to a post-GFC world. For the progressive side of politics, this throws up the familiar old refrain of reconciling economic growth with social justice. But if the refrain is familiar, the answers must be different. They must go beyond the Third Way - the left's uncomfortable embrace of free markets and individual responsibility in welfare and justice.

Critically, the left must retain faith in the power of the state to advance fairness. The Henry Review contains many valuable proposals, but above all the government must heed its core proposition that progressive tax and transfers are the primary mechanism for fair income distribution. Equally, the state must be willing to recognise those instances where public provision is superior to private, as in the case of wholesale broadband. In these areas, the Third Way failed to deliver.

A new synthesis for the left would be built around ideas such as market design, human capital investment, behavioural choice policies and social innovation. Market design pre-empts market failures and prices social costs and benefits. Human capital investment lifts educational outcomes, stimulating growth and building individual resilience and life opportunities.

Behavioural choice policies, such as opt-out default super accounts and gambling self-exclusions, improve social outcomes without state coercion. And social innovation harnesses the power of community partnerships to develop local solutions to local problems.

These ideas will define the contours of the policy debate. Their embrace by the Gillard government would demonstrate that, for all the cross-dressing, right is not the new left.

This story was found in The Age, SMH, Brisbane Times and WA Today. Link here: http://bit.ly/bJpyTg. It is an excerpt of David Hetherington's speech at the 2010 Festival of Dangerous Ideas at the Sydney Opera House.

United front: the war against welfare excess

2010-10-02T11:27:00.000+10:00

Tim Dusevic references Per Capita in his article in today's Australian. http://bit.ly/djsPqw

The Festival of Dangerous Ideas

2010-10-01T15:37:00.002+10:00

Per Capita's David Hetherington will speak at the Festival of Dangerous Ideas in Sydney at the Opera House on 2/10/10. Check it out at http://bit.ly/cmYgdi

Low-fee savings accounts essential to combat excessive banking fees

2010-09-28T16:03:00.000+10:00

Progressive think-tank Per Capita has called on Julia Gillard to make low-cost no-frills savings and transactions accounts available through the Reserve Bank.

In a letter to the Prime Minister, Per Capita urges the Government to reduce the high fee burden placed on many Australians by their financial institution.

Per Capita executive director David Hetherington says “In the same way that a low cost default superannuation account would raise the average retirement savings of Australians by around $40,000, a low-cost savings account could further increase valuable savings, instead of passing hard earned dollars to already very profitable banking institutions.”

Australia still has some way to go when compared to the UK and US, where most consumers would not expect to pay for account keeping,

The low-cost no-frills account proposal is part of a series of market design recommendations put to the Prime Minister to strengthen Australia and its future.

To read the whole letter to the PM, click here.

Dear PM: risks are worth it in reform

2010-09-18T07:31:00.000+10:00

by David Hetherington and Tim Soutphommasane
Appeared in The Australian September 18, 2010

HAVING secured government, Julia Gillard faces her greatest challenge yet. The task of holding together a minority government is enormous. The risk that this parliament will fail to produce a reforming government is real.

Although survival will be a preoccupation, the Gillard government cannot ignore the long-term policy challenges facing the country.

There are three in particular: addressing our long-term economic vulnerabilities; delivering a coherent population and infrastructure policy; and fixing our broken climate change debate. In each lies opportunity.

This is the real test for this government: Can it marry policy reform with political survival?
The economy: Australia's strong economic performance masks serious vulnerabilities. Our consumption is underpinned by sustained house price rises. Yet house prices are out of alignment with historical price-to-rent ratios. The Economist's fair value housing index rates Australian property as the most overvalued of any of the 20 markets it tracks, with a 60 per cent overvaluation. Any correction will be traumatic.

This is compounded by our low levels of household saving. Australia's household savings rate has dropped markedly in the past 30 years. This leaves households without any buffer to deal with another global slowdown, which remains a possibility.

A global double-dip recession would constrain Australia's access to foreign capital, restrict business investment, drive up interest rates and increase loan defaults.

We're also highly exposed to the volatile nature of the global commodities cycle. If China's demand for resources, in particular, flags, our national income would contract markedly.
Even if the resources boom runs its natural course, we will face enormous restructuring challenges when it eventually ends. The key lies in restarting Australia's productivity growth, which has lagged over the past decade.

Population and infrastructure: An explicit national population strategy is needed to provide greater clarity. Any strategy must take into account the imperatives of economic prosperity, demographic balance, environmental sustainability, urban and regional development, social cohesion and quality of life.

A long-term strategy should be guided by one of three population trajectories: high growth (to 40 million-plus by 2050), moderate growth (30-40 million) and reduced growth (20-30 million).
Short of accepting a lower standard of living or achieving a viable economic model of prosperity without growth, moderate population growth seems appropriate.

Indeed, the structural characteristics of Australian demography and economic development suggest increasing demand for labour in the future. Today there are five people of working age for every person aged 65 and over, but by 2050 the number is projected to decline to 2.7.

It isn't realistic to expect an increased population can be accommodated without placing extra demands on social and physical infrastructure. But much of the ongoing debate has assumed population growth and quality of life are incompatible.

This ignores the fact a higher urban density can have benefits, especially in the context of an ageing population: it can enhance economic dynamism by reducing the costs of production and consumption; it can enrich cultural vibrancy by facilitating an easier spread of ideas; and it can promote more efficient public transport networks in cities.

Climate change: Human-caused climate change is real and the necessary responses are well understood: a price on carbon, a shift to renewable energy sources, and more efficiency in energy use.
But definitive reform remains elusive. Public consensus on the necessity of climate change action has broken down. Rebuilding the consensus requires public recognition of the costs of carbon emissions mitigation.

Mitigation of climate change would cost Australia $12 billion to $13bn a year at the outset, falling to between $1bn and $2bn a year until mid-century. However, any costs of mitigation are much lower than the costs of business as usual. The Garnaut report to the Rudd government in 2008 found unmitigated climate change would cause domestic real wages to be 12 per cent lower by the end of the century than they would otherwise have been.

It is clear that relying on the moral urgency of climate change mitigation is not enough. Progress on climate change policy demands positive, practical argument about the benefits of reform.
Policy responses: The response to these challenges should be multifaceted; the solutions can't be found in templates. Among other things, two dimensions of public policy warrant special attention: market design and nation building.

Market design is the progressive response to the role of state in the modern economy. The government's design task is to set the rules of the market interaction to prevent market failures.

Sometimes this will involve introducing market mechanisms in areas of public provision: water, electricity, health and education. On other occasions, it will require the redress of failures in existing private markets: greenhouse emissions in energy, information overload in financial services, undersupply in housing, market power in telecoms.

Design reforms have already been embraced, ranging from reforms in our telecommunications market and water buybacks in the Murray-Darling to income-contingent loans for vocational training and inter- governmental financial arrangements.

But new design opportunities exist. In health, increased co-payments in line with income would allow for self-insurance of health expenses. In the same way they now manage personal pension funds, individuals could build and manage insurance accounts dedicated to health coverage.

In education, the removal of barriers of entry to the teaching profession -- namely, entry by capable, experienced tertiary-educated professionals wishing to change careers -- is to be welcomed. In addition, merit pay for teachers would help retain high-quality teachers within the profession. The best approach would be to trial a pilot scheme in a small number of public schools in which teachers receive bonus pay for delivering improvements in gains in students' test scores from one year to the next.

In energy, an emissions trading scheme remains the most important market design reform available; short of that, a carbon tax is a second-best option.

Additionally, market design can encourage the spread of distributed power generation in government-owned facilities and other medium-sized buildings such as apartments, hospitals and universities. This requires comprehensive feed-in tariffs and streamlined access to the grid.

The natural fuel for this distributed generation is gas: it is abundant, already networked and far less carbon- intensive than our existing coal-fired electricity.

In taxation, a mineral resources rent tax remains critical because it allows us to quarantine the windfall from our natural resources for investment in national infrastructure. The specific form of the investment vehicle might be a conventional sovereign wealth fund. Alternatively, the proceeds from the tax might be paid into individual superannuation accounts.

Under this arrangement, the tax could fund infrastructure investment in the medium term and provide a long- term buffer against the costs of supporting the ageing population.

In financial services, Jeremy Cooper's review of superannuation for the government has made a sensible proposal for low-cost default accounts for all workers. This measure would raise average retirement savings by about $40,000. There is no reason why the Reserve Bank could not offer low-cost savings accounts on a similar basis.

The task of reform can also be understood as one of nation building. At the outset, a clarification is in order. As it has been invoked over the past three years, nation building has served as a shorthand for indiscriminate government spending.

Properly understood, however, nation building refers to strategic state action to reshape institutions in the economy, society and culture. It can involve both soft and hard elements: the soft referring to the cultural cultivation of citizenship and community; the hard to the physical building of economic and social infrastructure.

On population, a nation-building approach would restore much needed balance to our debate, which has focused almost exclusively on our cities, for instance on population density and urban congestion. But regional development is also important, as the rural independents have highlighted. It would be an error to ignore the prospect of directing population movements and growth into regional centres. There are good reasons to consider centres such as Coffs Harbour and Cairns as sites of planned population growth, not least the effect on national housing supply.

It is also important that climate change action is understood as an opportunity for structural economic reform and for building long-term economic prosperity.

Many presume that making the transformation to a low-carbon economy will incur an unjustifiably large cost: lower economic growth, loss of employment, reduced living standards. Yet there is an advantage in acting sooner rather than later.

Early action delivers first-mover advantage and reduces the risk of economic exclusion in carbon-intensive industries when the transition to a lower carbon economy eventually takes place.
In the spirit of the Prices and Incomes Accord struck during the 1980s, which underpinned the Hawke- Keating structural economic reforms, a new coalition is required today to deliver the support of key interest groups for a universal carbon price. Brokered by government, this coalition would bring together leaders from the business, union and community sectors including, critically, mining and agricultural interests.

Such a coalition could provide the necessary institutional backing as well as the grassroots campaigning capacity required to cement public support. It would negotiate adjustment funds payable to displaced workers, affected companies and low-income households.

The long term: The reforms of the 80s and 90s have worked their way through our economy and our society. We have enjoyed their benefits, but the improvement in the standard of living they enabled has faded from memory. This has been replaced by a dangerous complacency, a belief that the task of economic reform is over.

Few governments have delivered on a comprehensive agenda in a single term. It would be naive to expect a minority government would have an easy task. But if this government is able to kickstart productivity, boost infrastructure investment and put a price on carbon, Gillard will have earned her place in the pantheon of reforming prime ministers.

David Hetherington is executive director and Tim Soutphommasane is senior project leader at Per Capita, a progressive think tank. This is an edited extract from their Memo to the Prime Minister, published recently. For the full letter, link here.

Independents asked to base their decision on arbitrary metric of the day

2010-09-06T20:13:00.000+10:00

A curious feature of our current democratic gridlock is the repeated assertion that the three Independents are obliged to base their decision on some arbitrary metric of the day. Inevitably this metric supports the desired outcome of its proponent.

You’d expect this from the party leaders, who’ve variously embraced the greatest number of seats, of primary votes and of two-party preferred votes as the binding factor, depending on whether it suits their position. Frustratingly for both leaders, these metrics have fluctuated constantly, making them near useless for political point-scoring.

More amusing have been the rationales offered by conservative commentators to explain why the Independents ‘must’ support the Coalition. In today’s Australian, Kenneth Wiltshire argues the trio should back Tony Abbott based on their consciences, the national interest and the wishes of their constituents. On Saturday, Christopher Pearson claimed historians will judge the Independents to have failed Australia if they don’t support the Coalition. In the SMH, Paul Sheehan has twice claimed in recent weeks (here and here ) that the Coalition’s superior vote in the Independents’ own electorates means they cannot support Labor: “These men have been given no mandate whatsoever to form a government with the party their electorates so comprehensively dismissed.”

Fluff, every word. The Independents were elected to use their judgment on the floor of the House, including over whom to support in matters of confidence and supply. They have complete freedom in these judgments and, barring illegal behaviour, are answerable only to their constituents at the next poll. Their constituents elected them because they trusted that judgment. If these electorates had wanted a Coalition government so badly, they would have voted for the Coalition candidates. They didn’t.

In the interest of balance, I’ve tried unsuccessfully to find progressive commentators claiming that the Independents are obliged to back Julia Gillard. Conservatives would argue this is because any such claim is hollow. They’re right – in both directions.

Politicians confound classical theory that competition leads to greater choice

2010-08-31T11:53:00.000+10:00

by Ross Gittins - Sydney Morning Herald, 30/08/10

SIMPLE economic theory tells us competition leads to increased choice. But as the election campaign showed, competition between the two major parties seems to be reducing the choice we're offered.

Click here to read the article - http://bit.ly/a4PorD

Independents may hold key to policy reform

2010-08-30T05:51:00.000+10:00

by David Hetherington. Appeared in The Australian 30 August 2010. Link: http://bit.ly/bLFzug

FOR five long weeks, it seemed the big loser of the election campaign was policy reform.

Neither side took a convincing policy agenda to the electorate, instead choosing to play to the findings of their focus group research.

Paradoxically, the election result means policy reform may now be the big winner: the independents have stated clearly that, alongside parliamentary reform, policy delivery will be the price of their support.

The paradox has two parts. First, why were the two main parties unwilling to take big ideas to the electorate?

Apologists will point to the national broadband network on the Labor side and Tony Abbott's paid parental leave scheme, but neither of these was part of a comprehensive reform package.

The former was the lone untarnished survivor of the stimulus program, while the latter was Abbott's attempt to woo the female vote and shed ideological baggage.

The truth is that this campaign lacked policy substance. Progressive voices called for commitments on a carbon price and integrated tax reform including a mining tax. Conservatives hoped for detailed proposals on smaller government and industrial relations reform. The sad fact is we got none of these proposals and no ensuing debate on their merits.

Given the result, there will be deserved criticism of the Labor machine, but the Coalition is equally culpable. Its four-line slogan was a study in negativity.

The main parties deliberately shied away from positive ideas because they believe elections are won by mirroring the views of swinging voters in marginal seats with catchy slogans about boats and waste.

They all know boat arrivals are a non-issue in policy terms, but they think voters will reward them for listening.

This belief is mistaken. Rebecca Huntley of Ipsos Mackay explained on Four Corners last week how political parties miss the key message from focus groups. The message Huntley hears consistently is: "This is what we think, but what do we know? We're not running the country. We're not experts. We're not seeing all the information. We want people to convince us otherwise."

What exacerbates this problem for the main parties is that voters now see through the spin. Even positive announcements are treated with disdain. Liberal candidate John Alexander claims Labor's re-announcement of the Epping-Parramatta rail link is one of the reasons for his win in the Sydney seat of Bennelong. This cynicism also helps explain the rise of the Greens.

They have positioned themselves as the party that refuses to betray core convictions for political expediency and voters have believed them.

Imagine, for example, that any of the party leaders had chosen to rise above the false link between migration and infrastructure bottlenecks. Infrastructure is poor due to chronic underinvestment and an inability to access our superannuation pool creatively to fund it.

Migration remains critical to our future economic success and parts of regional Australia are crying out for population inflows.

Policy leadership involves explaining the trade-offs between the long-term benefits and short-term costs, yet the political orthodoxy says voters can't grasp complexity of this kind. So instead of defending migration and tackling infrastructure, the party leaders are content to blame the one on the other.

Here we reach the second part of our paradox. The one group that has been crying out for policy delivery has been the independents, whose need to serve their constituents is not hampered by the constraints of party messaging.

The independents rightly observe that in the fight for swinging voters in marginal seats, their constituents are taken for granted. The two main parties don't bother to compete against incumbents whose two-party preferred votes are all above 60 per cent. The weakness of the Nationals within the Coalition means they cannot convincingly promise rural and regional policy.

So the independents represent voters who feel ignored and will reward local outcomes. They are not policy mugs, either.

Tony Windsor introduced the first substantial climate change bill into the last parliament. Rob Oakeshott has highlighted the importance of broadband and the need to act on the Henry and Garnaut reviews. Bob Katter has advanced well-developed proposals for a clean energy corridor in northern Australia.

Armed with these policy agendas, it's just possible the independents can provide Julia Gillard or Abbott with the freedom to move in areas off-limits to the party machines. We could end up with a real population debate, covering the needs of the economy, the balance between the cities and the regions, the delivery of infrastructure and the carrying capacity of our environment.

If such debates can happen, this year's election might yet deliver substantial policy reform.

Slogans no substitute for policy

2010-08-28T07:03:00.000+10:00

Small Business and Competition Policy minister Craig Emerson points to 'market design' noting: "As the Prime Minister explained in a campaign National Press Club address, in our mixed economy, where private health and education services co-exist and interact, market design work will increase the incentives for productivity gains." http://bit.ly/d7vxms

The true believers must now rally to save Labor's languishing soul.

2010-08-25T12:47:00.000+10:00

Tim Soutphommasane writes in the Australian today "THREE years ago, the election of a Labor government raised progressive hopes of a reforming golden age. They have been disappointed." Read the full article.

Blame New South Wales

2010-08-24T09:57:00.000+10:00

By Tony Kitchener

We all agree the faceless men of NSW are to blame. Lets forget the faceless men, lets just blame NSW.

Why do we let them dominate our party? Our country? It seems to me the main problem is that we are stuck on this democracy shtick.

Australia has 150 federal seats.

48 yes .....fully 1/3 are in NSW. More astonishingly Sydney and its surroundings have 34. Nearly 1/4.

Or looked at another way, Sydney itself has as many seats as WA, SA, Tas and the Territories combined. So if we stick to some form of democracy then Sydney is always going to dominate.

So why are NSW pollies so carnal, base and corrupt? Not just Labor, Think of Askin, Alan Jones, The Golden Tonsil, Mac Bank and so on...

If we accept literature and music are cultural barometers then we must agree political practice has some substantial cultural component as well. What if NSW political practice, of any party, is just a representation of the Sydney cultural zeitgeist?

What if you can only get better political practice by first reforming a culture that had rum as its first currency? That today believes a huge boat, a face job, and a harbour view are the sine non qua of achievement?

If this thesis is right, and reforming Sydney culture is the only way to reform NSW Labor, it is a century long project. Consequently, in the meantime, simply by the iron law of numbers, Sydney will continue to dominate the Labor party.

Perhaps one solution is to let all NSW delegates get 1/2 a vote.

In many US corporations (like News Corp) there are 2 or more classes of voting rights......Rupert controls News Corp with only 29% of the shares........If it good enough for ol' Rupe.

If you cant bear the thought of different voting classes, you have maybe two alternatives, firstly, put up with it and stop whingeing... Or finally Qld (30) and Victoria (37) have to vote as state blocks and put the suppression of Sydney above factional concerns...

Divisions of the Australian House of Representatives

Australian electoral boundaries map:

Australia: Labor's wasted opportunities

2010-08-23T10:34:00.002+10:00

The election result says little about the right's negative campaign and volumes about the Labor party's recent self-destruction, argues Tim Soutphommasane in the Guardian.http://bit.ly/b1oiRF

Tim Soutphommasane appears on ABC24's THE DRUM

2010-08-17T12:33:00.000+10:00

If you missed Tim Soutphommasane on Monday on THE DRUM on ABC24, you can see what he said about Mark Latham and more, by clicking here: http://bit.ly/ci5qv6

Clean Coal, Not.

2010-08-15T18:33:00.007+10:00

By Tony Kitchener

Last week President Obama’s Interagency Task Force on carbon capture and storage, co-chaired by the US Environmental Protection Agency and the Department of Energy, delivered a series of recommendations to the President on overcoming barriers to the widespread, cost-effective deployment of carbon capture and storage within 10 years.

The report concludes that while carbon capture and storage can play an important role in the reduction of domestic greenhouse gas emissions reductions, thereby preserving the option of using coal and other abundant fossil energy resources, it faces a key barrier in the lack of a price on carbon.

What is cheering in the report is that utterly huge amounts of CO2 can be sequestered. The report concludes in the US that there is no big cost, or danger, or difficulty, in sequestering all the CO2 they produce for centuries. The problem is the technical challenge of capturing it from the smokestacks of the power stations.

More confronting still, is how high are the task force's estimated costs for the ’capture’ in carbon capture and storage. See the graph from the task force below.

Whilst all the numbers are $US they will be comparable or even conservative for Australia where brown coal produced CO2 is even harder to capture.

They estimate the cost of plain vanilla black coal electricity with no capture is around $27/MW hr (2.7c/kw hr). This is roughly in line with Australian experience.

To retrofit an exiting power station to capture 90% of the CO2 costs a staggering extra $89/MW hr (8.9 cents / kw hr). This means the CO2 tax would have to be in the order of $103 / ton to make it viable for the power station owners to invest in carbon capture and storage equipment.

The great white hope of the coal industry (and Victoria's HRC for clean brown coal) is the Integrated Gasification Combined Cycle IGCC. But this costs like sin and although the extra cost to capture the CO2 emissions is lowest ($60/ton), the base plant is the most expensive, and so makes the most pricey power ($150/MW hr). A good news, bad news, story if there ever was one.

As we all know there isn't going to be any substantial carbon tax any time soon in OZ or most probably the US. And it will be a long long time till it gets to $60 / ton let alone $100 / ton.

Consequently we are left with 2 possibilities. One, the government will subsidise the cost of CO2 emissions so owners will install carbon capture and storage or secondly, do nothing.

As the US emissions of CO2 from power generation are around 2.5 billion tons per year an enabling subsidy of $100/ ton would cost $250 billion/year. No need to be too accurate here in the calculations as this is not anything a broke US can afford.

Going Nuclear (Remote or Local)
What is amazing about these carbon capture and storage figures is it appears that the costs are such, if they don't improve, then large-scale solar thermal plants (concentrated solar thermal) will be viable before carbon capture and storage becomes economic. Concentrated solar thermal promoters are claiming they can make power for 7-10 cents / kw hr. On this basis it is cheaper to build a new concentrated solar thermal plant than retrofit an existing power station with carbon capture and storage.

As has been observed by better minds than mine, solar energy comes from a very big nuclear reactor in space called… the sun.

If you are prepared to tolerate a nuclear reactor closer than the sun (the French don't seem to mind, and the Chinese are building 22 to be running by the end of this year and have 132 planned) the costs are extraordinarily lower than carbon capture and storage.

The Chinese are claiming they can build new reactors for around $1300 to $1500/ kw. When you think about it for 5 minutes it is not so surprising. Reactors in the west have cost $3000 to $5000 / kw. As with other products, Chinese nuclear reactors are very likely to be a third of the western price. Why wouldn't Chinese reactors be cheaper, just like Chinese refrigerators?

Most of the cost of nuclear power is capital. The fuel is cheap. If you can build nuclear reactors for $1500 / kw in 3 or 4 years, the power costs around $22 to $25/MW hr (2.2 to 2.5c/kw hr). Yes, that is not a typo. Nuclear power in China costs less than plain vanilla coal plants in the US and OZ, and it do not have coal’s huge CO2 emissions.

The simple fact is near zero carbon Chinese nuclear electricity will be much cheaper than US power, even without carbon capture and storage. With the costs of carbon capture and storage, the comparisons become ludicrous. This will further cement China's comparative advantage over the US (and OZ).

Which leads me to one last question.

If you were Chinese why would you be buying US treasury bonds (that yield only 3.5% and are subject to massive currency risk) when you could invest in your own domestic nuclear power plants that will produce zero carbon electricity for 40 years whilst giving a much better return?

HOCKEY BORROWS THINK TANK TAX POLICY

2010-08-12T13:47:00.001+10:00

by David Hetherington

Progressive think tank Per Capita is gratified to see that Joe Hockey, the Shadow Treasurer, has incorporated one of its policy recommendations as a major feature of Coalition tax policy, announced today.  As part of its Tax Survey published in January 2010, Per Capita recommended that the Australian Taxation Office provide taxpayers with a breakdown of the use of their personal tax income by policy area.

The Per Capita Survey Report found that:  “…People have a poor understanding of the balance between personal and company tax, and of the relative expenditures allocated to various policy areas…. This lack of awareness suggests a need for better provision of information about the tax system. Given that the ATO has an individual relationship with each taxpayer and a complete picture of both their individual tax position and the nation’s tax system as a whole, it might provide taxpayers with customized information such as:

Position on the national income distribution
Average total tax rate compared with national average
A breakdown of national spending by individual policy area
An estimated breakdown of the use of personal tax contributions by individual policy area.”

Mr Hockey today announced that a Coalition government would issue every taxpayer a receipt detailing where their taxes have been spent according to particular policy portfolios. The Coalition has released the following graphic to illustrate its plan: 

While Per Capita welcomes the appropriation of its policy recommendation by the Coalition, it also draws Mr Hockey’s attention to the other key findings of the Survey. These include:

Australians want a more progressive tax system
Australians want governments to spend more on public services, especially health
Australians support the use of a deficit during an economic downturn
Australians would prefer to see their tax system simplified
There is considerable lack of awareness about patterns of taxation and expenditure
A public dissonance for increased spending but lower taxes still exists

“The Coalition has repudiated the use of debt to fund a deficit and has called for a flatter tax system with reduced public spending. This ignores an important groundswell of opinion amongst the Australian public. Despite this, Per Capita welcomes Mr Hockey’s announcement and will happily acknowledge the debt,” said Per Capita’s Executive Director, David Hetherington.

“Per Capita calls on Mr Hockey to ensure that Coalition policy is one that is in touch with Australians’ aspirations for a simpler, smarter and more progressive tax system.” 

The full survey report can be downloaded by clicking here.

The truth about the mining Super Profits tax

2010-08-11T10:04:00.000+10:00

By David Hetherington

Great piece by John Garnaut in yesterday's Fairfax papers which sheds an interesting light on the recent mining tax debate. Garnaut explores the mining boom from the perspective of Chinese mini-miners – one-man bands who collect and sell iron ore by hand, and can make a living once the price hits $120/ton.

As Garnaut points out, the economics of their business make an interesting contrast with Australian suppliers. Two arguments from the RSPT debate resonate.

The first concerns ‘super profits’, those profits above a reasonable rate of return on capital which justify a resource tax. As we know, the Government’s original plan was to levy the tax on profits above the long-term government bond rate, a ludicrously low level of profitability. The revised MRRT will kick in at a more reasonable level of the bond rate plus 7%. What’s interesting about Garnuat’s piece is that it shows that, at the current price of $160/t, Rio Tinto is making profits on its iron ore of 433%! Admittedly, this is based on cash costs so a capital charge should be added, but it leaves no doubt that super profits are alive and well.

The second argument debunked by Garnaut is the notion that miners would be forced to move offshore if the Australian government introduced a resource tax. Yet Garnaut shows that Chinese domestic suppliers are actually the swing suppliers in Chinese iron ore, while Australia sits right at the bottom of the cost curve. No reasonable level of resource tax is going to shift that pecking order, so there’s no question that the miners will turn their back on Australia.

This is just as true for coking and thermal coal as it is for iron ore. The big open cut mines in the Bowen Basin are the cheapest in the world, and no sensible resource tax will change that. It’s their golden goose as well as ours, and there was no way they were walking away from it.