Month: June 2002

Treasurer Ted Quinlan’s first Budget yesterday was a slow-and-steady affair. That was probably just as well. Now is not the time for grand fiscal adventures. Interest rates are on the rise. Tourism is having a tough time following September 11 and the collapse of Ansett and the Federal Government is not in an expansive mood. Rather there has been a contraction in Federal spending in Canberra because of the electoral period last year.

Mr Quinlan scrapped into surplus. He bemoaned the legacy of the Liberal Government, but for every negative he mentioned – the Totalcare quarry venture, the V8 race and Stadium loses – there was the overall positive of the Liberal years of turning the fiscal direction of the ACT around for deficit and debt to surplus and debt reduction.

There are some welcome things about this Budget. There is no new debt. There has been a marked concentration on health and education – particularly the main public hospital, the medical school and public education — and police. These are core matters of government.
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The statement by Democrat MLA Roslyn Dundas about the funding the Rental Bonds Board makes alarming reading. Before the board was established bonds were kept by real-estate agents in trust accounts or by landlords themselves. It was an unsatisfactory arrangement. After all, it was tenants’ money and the interest on it should be used in the tenants’ interests. Moreover, there were instances of abuse by landlords. The idea behind the board is a good one. Landlords are required to lodge all bonds with it. The board pays bonds back to either tenant or landlord applicants after giving the other party notice and ensuring there is no dispute. Disputes are sorted out between the parties or failing that by the Residential Tenancy Tribunal. The board provides information and help top landlords and tenants. The board is funded by the interest on bond money.

Ms Dundas says that $16.6 million in bonds was in the fund at June 30, 2001. Bonds had earned $1.3 million in 2000-01. Of that only $144,000 went to the Tenants’ Advice Service. $600,000 went to the board’s administrative costs and $370,000 went to the Residential Tenancy Tribunal. A further $176,000 was collected by the tribunal in user-pays fees. This left about $380,000 unaccounted for – presumably the money has gone into government coffers. It warrants an investigation.
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The proposition by some university vice-chancellors for universities to be allowed to charge extra fees could easily back-fire on them. The Minister for Education, Brendan Nelson, rejects the idea of a funds crisis. The vice-chancellors disagree. Dr Nelson can point to increases in funding over the years of the Howard Government, but those increases might not be enough in an increasingly competitive world.

Much is spoken about the knowledge nation. It is widely recognised that manufacturing jobs are disappearing to cheaper labor markets overseas and that for Australia to maintain its relative standard of living we will have to use our brains, not our brawn. The trouble is, there is less recognition of the need to pay for the knowledge nation – in funding schools, universities and on-the-job training. Governments seem reluctant to pour more money into education because – unfortunately — it is not what the voters seem to want. At the last election Labor promises more spending on higher education, whereas the Coalition spent the surpluses on ad-hoc bribes to voters on whatever hip-pocket nerve issue arose at the time, like petrol prices and border protection. The Coalition got re-elected. The message was as clear as it was sad for the long-term interests of Australia – let’s talk about education and the knowledge nation, but let’s not spend any money on it. Until the lead-up to the last election, the Howard Government had a good record of economic management. Up to a point it still does. But it is not showing the necessary commitment to education, research and training that will lead to greater wealth generation in the future.

The trends are worrying. In 1981, 90 per cent of university funding came from government. A decade later it was below 70 per cent and a decade after that it was less than 50 per cent. Now universities get more than a third of their income from fees – including the Higher Education Contribution Scheme and 17 per cent from their own commercial and other activity.
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The announcements by some major banks that they have agreed with key parts of the Reserve Bank’s credit-card agenda will be good news for some consumers, but for others it will mean an end to subsidised loyalty programs.

There are several pernicious elements to the present scheme. At present, retailers are not permitted to charge extra to those people who pay with credit cards, despite the fact that retailers are charged usually between 1 and 2 per cent. When money is paid by the card-issuing bank to the bank of the retailer, the banks charge each other interchange fees of about 1 per cent – which amounts to about $1 billion a year. The interchange fee covers the costs of loyalty schemes under which card holders get points towards free flights and other goods. These fees are not disclosed at the time of transactions and are not well known in the community.
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This week the Senate will consider several critical issues, and it is likely it will frustrate the Government’s will with some or all of them: increases to the pharmaceutical benefits scheme co-payments; changes to the superannuation tax surcharge; changes to the disability pension and the question of excising northern off-shore islands from the migration zone. The first three are budgetary measures and the Opposition is on very weak ground for opposing them. The last is a question of overriding the exercise of regulatory power by the Minister for Immigration, Philip Ruddock. Labor, the Democrats and the Greens are on better ground here.

On Budgetary measures it is so easy for an Opposition to pick on some unpopular revenue measure and oppose it. In the case of an Opposition which can get a majority in the Senate with minor party support, it is a recipe for irresponsibility. The costs of the Pharmaceutical Benefits Scheme are blowing out – perhaps not by the amount asserted by the Government which is based on the most recent couple of years’ figures which had some unusual increases through a couple of very expensive drugs. Nonetheless the scheme’s cost is rising fast than inflation and it seems reasonable to increase the payment made by patients. The Democrats have suggested means testing the insurance rebate as a way of making up the money. That is all very well, but the time to argue broad policy issues is election time. Last election both major parties went into the campaign supporting the rebate. It is a foolish diversion of health resources, but that is beside the point on the issue of increasing the PBS payments. Labor and Democrats should allow the increase through and fight policy questions at the election.

On the disability pension, the Government has said it will look at an amendment to its proposals highlighted by the Democrats and Labor who have pointed out some unintended consequences of the Government’s original plan.
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The first results from the 2001 census were published yesterday. At first blush they confirm some well known trends: incomes are rising; the population is aging; more people are identifying themselves as of Aboriginal descent; Catholicism is the largest religion; more people are living alone; more people are using computers; and Queensland has the highest population growth and Tasmania’s population is declining.

The importance of the census, though, is that it is definitive and that it quantifies the trends. And on that basis, government policy and private-sector decisions can be based. For example, this census included questions on computer usage for the first time. Half of Australian households had a computer and a third of the population used the internet in the week before the census. It suggests that the internet is a fairly good and improving method of information dissemination, but the majority of Australians get their information in other ways. Governments will have to address this information divide. Another example is the 16 per cent increase in the number of people identifying themselves as of Aboriginal or Torres Strait Islander descent since the previous census 5 years ago. Only 12 percentage points of that were natural growth; the rest was change of identity. Governments and indigenous groups will have to address that. Are some misidentifying themselves and therefore taking resources from more deserving or influencing the definition of Aboriginal culture? The census is proof of indigenous disadvantage that is not open to the sort of attacks directed at sampling techniques.
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Prime Minister John Howard promised before the last election that Australia would ratify the treaty establishing the International Criminal Court. It is alarming, therefore, that on his visit to the United States he emerged from a briefing by US officials on the US position on the treaty to say that the US arguments against it were “”very powerful”. If he bends to the US will it indicates sickening sychophancy and an incapacity by Mr Howard to make up his own mind on the merits. Presumably, when ratification of the treaty became Liberal policy before the election, Mr Howard had decided the issue on its merits. His Foreign Minister, Alexander Downer, obviously thought so, calling the ratification of the treaty one of the Government’s “”key human rights objectives.” Now, it seems, just because the US does not like the treaty, Mr Howard is impressed by the US view and Australia could well follow the US lead, just as it has done with the Kyoto treaty on climate change. It is almost as if Australia is reverting to the days before World War II when it did not have a foreign policy of its own, but merely followed British policy. Now, it seems, we are about to blindly follow the US. Australia will not get any respect that way. It is demeaning.

If Mr Howard follows the US lead and overrides those in his party room who want to go ahead with the treaty, Mr Downer would have not option but to resign. After promoting the treaty to heavily and stating it as a key objective, he could hardly hold his head up in foreign capitals if the Government refuses to ratify the treaty. No foreign government could treat him seriously again.
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Ultimately, the general thrust of the report of commissioner Paul Baxter of the Independent Competition and Regulatory Commission is right. The taxi industry – at the economic level — must be deregulated. It was the same with the milk industry. But the lessons of the deregulation of the milk industry must be learnt and the same mistakes not be made as the taxi industry is deregulated.

Fundamentally, milk and taxi serices are no different from the retailing of meat or petrol or the provision of dental or optical services. There is no need for the government to determine how many providers there should be. There is no need for the Government to limit the number the providers with a monopoly licensing system. And there is no justification for the Government to charge a huge sum (whether by auction or otherwise) for permission to enter the market. Market forces driven by public demand should be the determinant of how many providers there are in the taxi industry. The Government should concern itself only with safety and competence. Once a person has proven the safety of the driver and the vehicle and the competence of the driver to drive it and to navigate it, they should be granted the licence to ply the taxi trade. In the building trade, for example, the Government does not limit the number of builders. Anyone who can demonstrate the competence to be a builder, electrician, plumber or whatever gets a licence and is beholden to an authority to work competently. There is no “”plate” system under which the Government limits the numbner of practitioners. In an ideal world anyone who can prove competence and safety should as of right get a licence to run a taxi – just like the surveying, architecture, surveying or any one of a dozen other activities.
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The V8 car race has caused yet another surge of passion in the Canberra community. Proponents and opponents of the race have trade arguments and insults through the letters pages and the air waves. Perhaps the main reason for there being more heat than light in the debate is that we do not know the facts on the financing of the race. Ordinarily, the financing of a commercial event would not be the public’s business. If the race were being held on private land with commercial sponsorship and entry fees paying the costs, it would not be public business – expect perhaps for the concern about glorifying speed on the road.

But the V8 race in Canberra is different. It obtains a subsidy and an underwriting guarantee from the ACT Government – money that could be used on others things or money that need not be raised from the populace at large. Further, the organisers of the race justify this public spending on the basis that it is beneficial overall for the Canberra economy. A further public element to the debate is the fact that the race is run in the Parliamentary Triangle, right in the centre of the city thereby causing unsightliness in the lead-up to the race and in its aftermath while the circuit and spectator facilities are prepared and disruption in the week before the race and the weekend of the race itself due to road closures that delay people going to work and hinder people going to attractions in the triangle.

The debate about when and where the race should run and how much taxpayer money should go into it is therefore a very public matter. It would help, therefore, if the public could know a little more about the finances behind it. It should, indeed, help the organisers of the race to stare down opponents if more of the finances could be made public.
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The Speaker of the House of Representatives is probably right when he says that it is unrealistic to expect Ministers to actually answer questions in Question Time. He was speaking after last week’s especially unruly sittings of the Parliament. The week saw MPs ejected from the Parliament, unruly behaviour at Question Time on both sides of the House, the Opposition taking innumerable points of order and Government backbenchers asking Ministers Dorothy Dixer questions to which Ministers replied at inordinate length. The voters – or at least those few who have bothered to continue to take an active interest in the doings of Parliament – have been aghast.

Obviously, Ministers are not going to answer embarrassing questions directly or make admissions of folly or inconsistency. Nor should the Speaker force them. The evasiveness of a Minister can be damning enough and if Opposition questions causes that level of discomfort it has done its job. The resulting media reports and follow-ups will enable voters t make their judgment.

However, Mr Andrew appears confused about what the Minister’s role is at Questions Time. Mr Andrew said, “”The obligation is that a minister has to be as fulsome as he can in his answer.” Fulsome means cloyingly insincere or offending by excess. Mr Andrew probably meant “”full”. Even so, it is the “”full” answer which is causing much of the problem with Question Time. Too often Ministers arrange for a government backbencher to ask the classic Dorothy Dixer in the form: “Can the Minister outline to the House what the Government is doing about XYZ and is the Minister aware of any alternative approaches to dealing with XYZ”. This gives the Minister the opportunity to extol the virtues of government policy and attack Opposition policy, adding exactly nothing to the sum total of human knowledge, but having the effect of burning up precious time in Question Time during which the Opposition would otherwise ask more penetrating questions.
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