Month: October 2000

It is difficult to see how 1550 Australian soldiers, four fighter aircraft, two refuellers and two maritime surveillance aircraft will make much difference in the mission by the United States to capture or kill those responsible for the September 11 attack on New York and Washington by suicide terrorists in hijacked aircraft. It is an act of symbolism to say that we are an ally of the United States.

Prime Minister John Howard was coy about where the ships and soldiers would be used. He said this was for security reasons. But it may be that they are not really needed at all, in a military sense, so there is no clear role for them in a specific place. At present the activity in chasing the perpetrators consists of intelligence work and some bombing in Afghanistan which appears to date to have been singularly unsuccessful in either killing Osama bin Laden, the man the US accuses of being responsible for the September 11 attack, or killing those the US accuses of harbouring him, the Taliban leadership in the Government of Afghanistan. Australia is already contributing whatever it can on the intelligence front, so we are now going to war to join the US in bombing Afghanistan and perhaps help in a later ground invasion to capture Osama bin Laden. We are not really needed militarily. We are just giving moral support.

It is unlikely the main objective can be achieved. Winter is coming on in Afghanistan. Any action by ground forces will be fraught with logistic difficulty, even if air strikes have weakened the opposition. It is likely that the mission will become protracted. It may be that the northern alliance which opposes the Taliban will seize the opportunity and help the US overthrow the Taliban regime. Aside from the fact that the northern alliance contains a large number of thugs and criminals, even that will not achieve the objective of capturing or killing Osama bin Laden.
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The ACT Labor Party has announced a range of planning changes to be introduced if it gains government. It contrasts with the Liberal Party’s position of continuing with present policies and initiatives already announced.

The Liberals are putting much store on improving the design and siting of new dwellings under a new ACT code to be introduced next year. It will continue with the present system of using the Administrative Appeals Tribunal to hear objections to planning decisions. It will restrict the ability of third parties to engage in the objection process, leaving it to directly affected neighbours.

Labor promises to appoint government building inspectors, a referendum to protect open space, householders to get rights to sunshine, the establishment of an ACT Planning and Land Management Authority, an interim limit on dual occupancies until a system of neighbourhood planning groups can be set up to determine appropriate land uses and more revisons to ACTCode2 which regulates design and siting of developments.
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Chief Minister Kate Carnell did the right thing yesterday by refusing to take up the possibility suggested by Independent Paul Osborne to change the Electoral Act to allow an early election to overcome the impasse cause by the Auditor-General’s report into the redevelopment of Bruce Stadium. That report caused Independent Dave Rugendyke to give notice that he would vote in favour of a no-confidence motion in Mrs Carnell. His was the critical number. It meant Mrs Carnell could not survive. Earlier, her Liberal colleagues said they would stand or fall with her. Yesterday, Mrs Carnell said she had rejected her colleagues’ pleas for her to stay, saying that would have resulted in a Labor Government. Rather, she thought Gary Humphries should take over the leadership and, presumably, the Chief Ministership until the scheduled election on the third Saturday in October next year.

That outcome is fairer than having a Labor Government, given that Labor got just 28 per cent of the vote last election. Labor needs more time to develop policies and its leader, Jon Stanhope, must gain more prominence. Also Labor, with just six seats, needs broader representation, including some women MLAs, before it can have a genuine claim to government. That test will properly come in next year’s election.

Mrs Carnell can be credited with doing much for Canberra. She transformed its public finances. She attracted business, particularly new technology, bringing virtually full employment to the city. But the same can-do style brought her undoing as she tried to ignore process and consultation.
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Opposition Kim Beazley won the debate against Prime Minister John Howard on Sunday night. This is according to the usual media commentator group, and, more importantly, according to a group of 80 uncommitted voters who were in a Channel Nine studio audience who voted Mr Beazley the victor 67-33.

The debate itself will probably not amount to much come election time in four weeks. However, it ahs changed the election dynamic in several important ways. First, a lot of the media will now see Mr Beazley and Labor in with a real chance having written them off a couple of weeks ago. These were the same people who wrote Mr Howard and the Liberals off several months ago. It will mean a more serious coverage of Labor’s policies because they have a prospect of being put into effect. It will have a flow down effect that there is a real contest here and generate some excitement into it.

Secondly, the debate gave Mr Beazley a chance to make it plain that he has no differences with the Liberal party on refugees and the war on terrorism. That goes some way to neutralising the “”leadership” question in relation to external security. On that point Mr Beazley did well to point out the flaw in Mr Howard’s argument that voters should stay with his Government in these insecure times. Mr Howard may not be there for the full term and key Ministers in his leadership team are retiring at the election (Defence, Finance and Health).

Thirdly, it made Mr Beazley look like the man of the future and Mr Howard as the man of the past. Mr Howard urged voters to stay with him for security and did not talk about the future, rather relying on his past record. Mr Beazley was more forward-looking.
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Federal Labor has placed a lot of store over the past three years in saying that it would roll-back the goods and services tax and make it simpler. It might have sounded like a good idea at the time – when business was screaming about extra paperwork, the complexity of the tax and the horror it presented for cash flow. But now businesses have settled into the system. As with any new system, the first time it is used it is difficult. But it gets easier as time goes on. Even those businesses which deal with a mixture of taxable and non-taxable items have now established systems and streamlined them. In fact, the imposition of the GST has forced many businesses to upgrade their accounting and computing systems so that they have a better idea of their cash flow.

Last week Labor proposed a fundamental change in the way that small businesses pay their GST. Instead of calculating it on every item they sold minus the GST they had already paid on inputs, they would be able to simply pay a set percentage of their turnover. The percentage would be set by the Tax Office according to past experience. But if a business wanted to, it could continue with the present method. The plan is flawed. Labor claims it will be revenue neutral, but it is likely that many businesses will just pick the method that yields the lowest tax. Many smart businesses will continue to do the accounting necessary to do a monthly or quarterly business activity statement anyway because it is good business practice and the accounting has to be done and the tax paid eventually anyway. If Labor gives them an option to pay less tax, they will snap it up. It may well be that a few small businesses will like the idea of postponing the detailed accounting until the end of the year. If so, they will be losing the valuable discipline of knowing how their business is travelling.

If Australia was to have a broad-based consumption tax it necessitated a transition of business practice. Perhaps the Government could have done it better at the time, but now it is established it would be folly to change significantly the way it is calculated and paid.
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The ACT is now facing an unnecessary election. It seems the Liberals, Michael Moore and the two Osborne Group Independents, Paul Osborne and Dave Rugendyke, will agree to change the Electoral Act to change the normal fixed-term election and bring forward the election set for the third Saturday in October to sometime before Christmas. They will do it to save Chief Minister Kate Carnell from a certain vote of no-confidence on Wednesday over her handling of the Bruce Stadium reconstruction. If they do so it will be a constitutional outrage. It will be a warping of the ACT’s normal constitutional framework for short-term political expediency. The Hare-Clark voting system and other electoral matters were entrenched in 1994 by referendum. True, the fixed term was not included in the entrenching provisions, but it was always understood to be part of the fundamental constitutional set-up. If anything, the proposal to change the Electoral Act by a simple majority of the Assembly highlights the need to entrench the fixed term. The whole aim of the fixed term was to take away from the Chief Minister the power to set the election date so there would be no short-term advantage-taking by the Executive with all that entails for engineering spending and vote-buying.

It became apparent Mrs Carnell would lose the no-confidence motion after Mr Rugendyke took his stand a week ago on the Auditor-General’s report on the Bruce Stadium. But the question now has gone beyond the stadium and the Auditor’s findings. It a way it is not a question of whether Mrs Carnell has done anything wrong. Maintaining the confidence of the Assembly is not a question of right or wrong. A no-confidence motion is not a trial or a judgment. It is a political statement. It may arise out of ministerial misconduct, but it might also arise out of just policy differences.

In political systems where majority governments are the norm, Mrs Carnell would have no difficulty.
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The ACT electorate has not embraced either of the major parties with any great enthusiasm, according the results from the latest Canberra Times Datacol poll. The poll revealed also a high number of undecided votes given the closeness of the election.

Perhaps it is excusable given the dominance of other events: the war on terrorism, the federal election and the refugee crisis.

It indicates that the people of the ACT should turn their minds in the next few days to local issues and who they think are best placed to deal with them. There is little excuse for not getting informed. The much-maligned media in the ACT has carried an extraordinary amount of material about the election, even if it has played second or third fiddle to other events.
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The results of the Canberra Times-Datacol poll reveal that the community is sharply divided on the questions of issuing heroin to addicts under medical supervision and on the trial of a safe injecting room for heroin users.

Originally, the ACT Government proposed to run a referendum on these very questions, but the proposal was abandoned. The proposal was flawed because government by referendum defeats the purpose of representative government. People elect a legislature which legislates and provides and executive government to govern. Referendums are a good device to settle big constitutional issues about the form and structure of government to apply in the future, but not to issues that arise from time to time. A referendum can destroy the flexibility that governments need to deal with complex issues. It can also lock a government into imposing the public’s mind-set at a particular time, rather than leading public opinion so that it ultimately changes for the better.

That is not to say that governments should not seek out public opinion and be responsive to it. But they should not be slaves to it. Members of legislatures – dealing with these issues full-time — often have broader knowledge and greater understanding than many referendum voters.
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The attacks early yesterday morning Australian time by the United States and Britain on Afghanistan mark the first salvo in their war against terrorism.

The leaders of the two nations, President George W. Bush and Prime Minister Tony Blair, justified the attacks by the killing of about 6000 people in New York and Washington by suicidal hijackers who forced passenger jetliners into the World trade Centre and the Pentagon. The attack in the US was horrific and it killed thousands of innocent people. The US and its allies are right to seek to bring to justice those who perpetrated the deed. No-one has admitted responsibility for it. The US says it has evidence that it was done by Osama bin Laden and his al-Qaeda terrorist network. It says that that network is supported by the Taliban government of Afghanistan.

In ordinary circumstances where a crime has been committed a nation can seek extradition of those allegedly responsible. That was not possible here. The US asked the Taliban to hand over bin Laden. They have refused. They have admitted that he is in their territory and it would obviously be in their power to do so.
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The Reserve Bank has sensibly keep its hand off the interest-rate lever, at least for the next month. It was sensible on several grounds. It indicated a refusal to be panicked by the fall in the Australian dollar. It showed that inflation and wages are more important indicators of whether interest rates should go up than either international factors or demand. The Reserve accepted that interest rates will not be very effective against an international mood against the currency that is based on more fundamental factors than a raw return on cash investment. The Reserve appears also to have accepted that raising interest rates is a very blunt and indiscriminate instrument indeed when it comes to dampening pent up demand. It hits business investment more quickly with harsher outcomes than it hits consumer spending. Consumers’ propensity to borrow is more a function of availability of loans than the interest rate paid. A further quarter per cent will not deter many consumers.

The international mood against the Australian currency is probably wrong and will self-correct in time as international investors seize otherwise lost opportunities. Moreover, the mood is as much for the US currency as against the Australian currency. The US is sucking in huge amounts of investment because high-technology stocks are still flavour of the month and the US is the place you go to invest in them. There is a perception that Australia is an old resource economy. But that is an ignorant currency-dealing-room cliché. It misunderstands the nature of the resource economy. The cliché perception is that you dig some raw material out of the ground or grow something and ship it overseas. The fact is that there is a huge amount of innovative high-technology involved in industries like mining, wine-making or even crop growing. It is trite to divide economies into “”new” and “”old” purely on the basis of WHAT is being produced (ore or microchips). It is more significant to ask HOW it is being produced (manual labour or robotics).

The Reserve and the Government should not concern itself too much with the falling currency. In some respects they should welcome it. It will result in imports costing consumers more so they will shy away from them. Price is a more effective weapon than interest rates in dampening consumer demand. True, higher import costs will also affect businesses that import raw materials, machinery, intellectual property and other business inputs, but at least exported outputs get a benefit. This is unlike the interest-rate weapon which has no redeeming features for business investment. The Reserve is right to be reluctant to raise interest rates. The lesson of the early 1990s must be that the danger of using interest rate rises can outweigh any benefit.
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