‘Independent’ inquiries go up in smoke

ANOTHER week, another shift towards great inequality in Australia. Another week and another “independent” inquiry delivers precisely the recommendations that the government expected and wanted from the people it appointed to the inquiry. Former Reserve Bank board member Dick Warburton’s review of the Renewable Energy Target was a classic example of the political adage “never have an inquiry unless you know the result” and the best way to know the result is to pick the right person to head the inquiry.

ANOTHER week, another shift towards great inequality in Australia. Another week and another “independent” inquiry delivers precisely the recommendations that the government expected and wanted from the people it appointed to the inquiry. Former Reserve Bank board member Dick Warburton’s review of the Renewable Energy Target was a classic example of the political adage “never have an inquiry unless you know the result” and the best way to know the result is to pick the right person to head the inquiry.

So a man who has expressed scepticism about man-made climate change is inevitably going to condemn a scheme aimed at abating carbon dioxide emissions.

The reason Prime Minister Tony Abbott wants the Renewable Energy Target scrapped is because it will increase the short-term profits of the mining industry which has been a large backer of the Coalition parties both financially and in their public stand on many policy issues.

The broader public interest is of no moment.

Warburton’s review said there were cheaper ways to reduce carbon emissions than the RET’s cost of $35 to $68 a tonne . Was he thinking of the abolished carbon tax at $26 a tonne? Was he thinking of the carbon trading scheme it would have morphed into of $10? No he was apparently referring to the Coalition’s uncosted Direct Action scheme.

The review thought the RET subsidy of $1.4 billion a year over the next 20 years was a waste, but ignored the subsidy of $2.3 billion for the mining industry in fuel rebates.

The review also ignored the fact many renewable businesses have relied on the long-term commitment of both sides of politics to the RET since it was established by the Howard Government.

It also ignored the inevitable trade penalties other countries will impose on Australia if we do not pull our weight on dealing with climate change.

The RET is there for a purpose – to reduce the high carbon emissions from fossil fuels.

Ultimately, energy from renewables will be cheaper than burning fossil fuels. Modelling done for the Warburton review by ACIL Allen concluded that the RET might add a bit to electricity costs for consumers for the next six years, but after that it would result in constant falls in electricity prices. But Warburton ignored that modeling.

Abolishing the RET will give the coal industry about $8 billion in extra profits in the next 15 years and the give the gas industry about $2 billion, according to economics firm Jacobs.

So there you have it. Abbott’s climate sceptic mate concludes what Abbott wanted him to conclude. Axe a scheme that would ultimately help households with the electricity bills and at the same time hand extra profits to big mining.

Now we come to the NBN. Before the RET “independent” review we had an “independent” review of the National Broadband Network.

One of the four-member panel was Henry Ergas – a man who wrote countless articles in The Australian lambasting the scheme.

Unsurprisingly, the panel condemned the Labor model. Instead of fibre cable to the household we would get fibre to neighbourhood nodes and the copper-wire network and wireless would be used for the last bit.

If households wanted fibre from the node to the house, they would have to pay for it themselves.

Greater costs to households. Little extra cost to business which is usually close to central nodes.

The other great cost shift to inequality came with this week’s announcement that the increase in employers’ superannuation contribution will be delayed to help pay for the abolition of the mining tax.

The Coalition has always been against the scheme – delaying increments moving it to a target of 12 per cent whenever they think they can get away with it. They have never been able to reduce the levy, much as they would like to, because in Australia taking away an existing entitlement invites political backlash.

Coalition opposition to ordinary workers getting superannuation is in the Coalition’s DNA, just like their opposition to Medicare – chipping, chiseling and undermining.

So short-term benefits to big mining are put ahead of the long-term national interest in providing decent retirement incomes for an ageing population.

I suppose they couldn’t get anyone to do an “independent” review to come to that conclusion.

DOT DOT DOT

A few friends and relos doing their tax returns this year have noticed that the government (the previous one) has in effect stripped away all meaningful tax relief for medical expenses.

Not a squeak from the media. Not a plain-English media statement from anyone in government. Just an utterly underhand, unmerited change in the tax law to take away deductions for out-of-pocket medical expenses, including pharmacy and dental expenses.

It was underhand because it allows people who were able to claim last year to keep claiming, but the moment you have a year where you cannot claim, then you can never claim again. So the deductions were not abolished in a way to excite media attention – rather they have been retracted by stealth.

If a government had announced an end to all tax deductions for medical expenses the 20 second soundbites and five word headlines would have been politically explosive

So we are allowed full deductions for negatively geared property, but deductions for medical expenses are being trickled away to nothing for the vast majority of taxpayers.

We do not need an “independent” in quotes review of the tax system. We have already had several genuinely independent tax reviews, most recently by former treasury secretary Ken Henry.

Ah, but because it was genuinely independent and full of sensible, worthwhile reform full of complex detail, it has been ignored.
CRISPIN HULL
This article first appeared in The Canberra Times on 6 September 2014.

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