Crispin Hull

Armed air marshals could be aboard domestic flights this week. The first 22 graduates of a training program which began four weeks ago are ready to take to the air. The Federal Attorney-General, Daryl Williams, has confirmed the readiness of the marshals. The marshals come from the Australian Protective Service. This has given rise to objections from the Police Federation. The federation’s chief executive, Mark Burgess, said the positions should be filled by properly trained police.

The spat between Australian Protective Services and the police is of little moment compared to the broader question of whether we need a service at all. After all, the record of police services in Australia in subduing people who might pose a threat to security is rather mixed. The propensity to shoot, and inadvertently kill or unnecessarily injure seems too high. Transposing that record to an aircraft in the sky invites alarm.

But the whole idea of putting air marshals aboard domestic flights is deeply flawed. It seems as if it has come about because authorities and airlines felt that they had to do something after the September 11 attacks. It would have been better for them to stand there rather than just doing something.
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SOME very encouraging research was published by the Australia Institute at the weekend that debunks some of the myths about the ageing population.

The fear of policy-makers in Australia and other developed countries is that with declining fertility rates, the average age of the population will increase and that this will result in more dependent people in the community who require more income support, home help, aged accommodation and draw more on health services.

The Australia Institute research suggests that this will not be the case and that we need not fear a society that cannot afford to support its old people.
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The reserve Bank of Australia is on the right track in calling for reform of the credit-card system. the system is shrouded in secrecy, ridden with unfairness and lacking in the competitive forces that help consumers.

The four major banks are taking perhaps as much as $500 million a year in credit-card transaction fees. It is a hugely profitable system for the banks at the cost of consumers, particularly those who cannot manage to pay off their bill each month.

At present merchants are paying 1.2 per cent commission on credit card transactions. Surely, the processing costs to the banks are not related to the amount of the transaction, but the number of transactions. In any event the amount is too high. Merchants are also prohibited from charging the 1.5 per cent to customers who use the cards, or even a flat fee, though anecdotally some bargaining goes on. The upshot is that the cost charged to merchants is shared by all consumers, including those who do not use cards, because costs are passed on in uniform prices whether one uses a card or not. This is quite unfair.
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There may well be lies, damn lies and statistics. All that means is that some people can misuse statistics. Statistics can also be used for great good. The Australian Bureau of Statistics gathers large amounts of data, collates it and then publishes in a form that tells us something about ourselves. The more we know about ourselves the better chance we have of working at changing what is bad and enhancing what is good.

Last week the bureau published a series on causes of death and life expectancy. Typically, the bureau splits it statistics into states and territories. It is a convenient way of doing things because each of the legal and administrative authorities in each jurisdiction collects data for its own jurisdiction. This is mere happenstance, but it is very informative happenstance.

Often the ACT stands out like a sore thumb. Usually, that is used to bait the national capital as being the odd place out. The Northern Territory is often the other extreme.
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The United States is behaving with blatant hypocrisy when it comes to farms subsidies. It trumpets the virtues of free trade when it comes to getting its products into foreign markets and takes other nations to the World Trade Organisation seeking penalties if other nations subsidise their trade products or attempt to exclude US products on the grounds of health or safety. The US acts tough on enforcement of pharmaceutical patents when another nation attempts to make generic drugs to meet national emergencies (such as AIDS in southern Africa immediately threatening millions of lives), yet as soon as the US has a national emergency (such as anthrax posing a remote threat) it starts talking about breaching patents so it can make generic drugs.

And so it was this week that the US ignored pleas from Australia and others and continued with its plan to massively subsidise US farmers. The US support package to farmers will run to the equivalent of $A340 billion. It will mean that Australia’s unsubsidised farmers will have little chance to compete in the US market.

Australian Trade Minister Warren Truss points out that US farmers – once the most efficient in the world – are now dependent on the taxpayers for half their income.
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The new ACT Government should be very careful on the fiscal front. But it does not appear as if it will be.

Labor may argue over the detail of the figures, but the fact remains that when the Liberals came into office under Kate Carnell in 1995, ACT finances were in a pretty parlous state. Having been handed an almost debt-free territory at self-government in 1989, the Follett Labor Government and the Liberal-led Alliance Government under Trevor Kaine indulged in a spending spree. That was bad enough, but it was no matched by increased revenue.

The Carnell Government – for all its other faults – put the territory into the black and redefined public finance under the accrual accounting system to make public finance more transparent.

Now, within a short time of being sworn into office, the new Labor Government is already squandering the legacy. Treasurer Ted Quinlan is suggesting that return on investments might not be as high as earlier thought and therefore a deficit might be inevitable. The commitment to not running a deficit has now been watered down. In the lead up to the election here was no suggestion of “”reviewing” revenue – with its implication of raising taxes.
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A survey by the insurance company AAMI has shown some worrying attitudes among young drivers. The survey was not based on actual road behaviour or accident statistics. Rather it was a survey of what young drivers are thinking and what older drivers think of younger drivers. What older drivers think of younger drivers is of little moment. The alarming thing about the survey was what young Canberra drivers thought of themselves.

Nine per cent of drivers under 25 thought is was okay to drive after using “‘a little bit of recreational drugs”; 74 per cent admitted they got mad at other drivers cutting in, compared to 64 per cent of other drivers; 29 per cent admitted impatience compared with 12 per cent of others; and 30 per cent admitted to using rude gestures compared with 21 per cent of others. This is capped off by 80 per cent of the young people surveyed saying they are better drivers than anyone else.

An immediate response would be, “The arrogance of youth”.

Another immediate response is that of the Victorian Government – to propose that P-plate drivers loose more demerit points that others for the same offence.
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It seems some tidying up in the law and practice of bonds, suspended sentences and parole is in order.

Last week Chief Justice Jeffrey Miles criticised the system of setting dollar amounts on good behaviour bonds.

He said setting the amounts was useless because the money was never claimed by the court if the bond was breached. It made a mockery of the court process. He thought the law should be changed to get rid of this useless element of the system.

“”What the court ought to do really is require sureties, but there is no point in that either because no-one would take any action to ensure the sureties,” he said.
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The Governor of the Reserve bank, Ian Macfarlane, expressed concern last week that major Australian companies might react in a knee-jerk way to any signs of a downturn in the economy. He warned them against wielding the scalpel to workforces if profits looked like falling. He said chief executives might think that being tough with lay-offs would protect share prices because the market would think well of such conduct. It might be true if only one company did it, but if a lot of major companies did it, it would be an error. Earnings were meant to fall off in economic circumstances like those at present, but the more jobs were cut the deeper the downward cycle would be. There would be fewer people out there spending.

It was all standard economics. Indeed, similar words are used by economic historians to describe the lead into the Great Depression. But there are differences. We have better economic information gathering these days, so we are in a position to take pre-emptive action. And this is precisely what Mr Macfarlane has done. Last week the Reserve Bank reduced interest rates by a quarter of one per cent, and indicated another cut was possible early in the new year. That should encourage companies to accept that earning can fall in the short term without needing to cut jobs. However, in a fairly ruthless, market-driven world, we cannot expect individual boardrooms to act in the broad community interest, despite the urgings of the Reserve Bank Governor.

It is a classic of market failure. It is best dealt with by the incremental approach that the Reserve has taken over interest rates. It is not well dealt with by classic Keynesian responses of increasing government spending when a downturn looms. The trouble with government spending is that the stimulus is artificial. It creates debt which has to be repaid. It is often inefficient or spent on things which do little to help sustainable economic activity. Further, in a climate of general corporate fear, boosting government spending just adds to the insecurity.
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There is the very good news, and the not so good news. Last week, ACT schools were rated as the best in the world. The Organisation for Economic Cooperation and Development’s Program for International Student Assessment rated reading, mathematics and science skills of 265,000 15-year-olds across 32 nations in the developed world.

Australia was up with the best and the ACT was the best jurisdiction in Australia. Overall, it meant that the ACT was doing best.

In national comparisons, only Finland had significantly better reading literacy than Australia; only Japan had significantly better mathematical literacy and only Japan and Korea had significantly better scientific literacy. The ACT on its own outranked Finland in reading, Japan in mathematical literacy and both Japan and Korea in scientific literacy – putting it on top of the world.
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