Crispin Hull

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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The office of Treasurer Peter Costello has taken up the role of consumer advocate by ringing the major banks asking them (read, pressuring them) when they would be passing on to consumers the cut in interest rates announced by the Reserve Bank on Wednesday. Mr Costello then chided the National Australia Bank for being the most tardy in passing on the cut, even suggesting that consumers take it into account when choosing which bank to go to when taking out a new loan. He praised Westpac for being the first off the mark.

The tactic of getting down to that level of details carries a certain amount of risk. The NAB is waiting a whole 12 days to pass on the cut. That equals $8.22 on a $100,000 loan. It is trivial, given that the difference in bank fees and value of other services could be many times that, particularly for people taking out new loans. In a competitive environment, banks present a variety of products with different interest rates and different fees for different services with varying flexibility and varying ranges of quality and flexibility of services. There is more to choosing a bank than judging them on the speed of passing on interest-rate cuts. Governments should not be in the business of advertising the wares of one bank over another. That is a matter for consumers and the market.

With an election just around the corner, the Treasurer clearly wants to be seen as the good guy – the man who delivered interest rate cuts right now. There was really no need to get down to that level. Despite its recent profligacy, the Government can still take a lot of credit for its economic management. It has delivered four surplus Budgets. It has repaid some $60 billion in government debt. It has created a much better climate for the Reserve Bank to contemplate interest rate cuts.
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The Federal Government’s responses to both the refugee problem and the terrorist attack on the US have some worrying elements for civil liberties, human rights and passenger safety. They are the more worrying because they have the backing of the Opposition.

Putting armed guards on aircraft will only add to the danger in the skies. The guard might be over-powered and then his or her weapon becomes a weapon for the hijacker. The guard might get in a shoot-out and any shooting in a pressurised aircraft could result in sudden depressurisation and perhaps a crash. So having a gun on board is of no use – particularly against a suicidal hijacker. Prime Minister John Howard’s reaction was the wrong one. He should have reacted in the way he did to the Port Arthur massacre – seek to reduce the number of guns abroad. The guards idea should be abandoned and greater effort put into securing the cockpit and screening passengers and their baggage more thoroughly.

The Government proposes new powers for the Australian Security and Intelligence Organisation. They would give ASIO agents the power to detain and question terrorist suspects for up to 48 hours on the warrant of a federal magistrate. At present ASIO has to make a recommendation to the Australian Federal Police to arrest a suspect. Giving ASIO officers the power is a flawed idea. It is essential for civil liberties that courts are capable of supervising arrest procedures and that those arrested can challenge unlawful arrest. It is difficult to see how this can be done if the arrest is made by an ASIO officer whose identity is to remain secret. Indeed, it is an offence to disclose the identity of an ASIO officer. So under the Howard plan, either civil liberties or security must necessarily be compromised. And the idea of compelling people to answer questions (even self-incriminating ones) on pain of five years jail threatens the very free society that these measures are supposed to be protecting. Like the famous village in the Vietnam war which had to be destroyed in order to save it, we are at risk of destroying liberty in order to save it.
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Australia’s superannuation industry could have either of two proverbs applied to it. The first is that if it ain’t broke don’t fix it. The other is that will be no good closing the stable door after the horse has bolted.

Yesterday the Minister for Financial Services and Regulation, Joe Hockey, published an issues paper on the industry calling for public comment on what, if anything, should be done about changing the regulatory regime that applies to it. By and large the industry has been running reasonably well. But it would be dangerous to be complacent for several reasons. There have been some failures in the industry, including ones of major trustees, which have resulted in significant losses to funds and members. There have been some spectacular crashes in related prudential industries, notably insurance, which indicate that all is not well with the regulatory environment. No regulatory regime can prevent all failures, crashes and losses, but they can help prevent some. Nor should a regulatory regime aim to prevent all market losses. However, the spectacular nature of the HIH case indicates that perhaps the move to deregulation, self-regulation and market forces has gone far enough.

The argument in favour of some greater regulation of the superannuation industry also arises out the nature of superannuation itself. It is quite different from usual commodity markets. Superannuation has a high social element; the law requires people to put money in a fund; there is little choice about the fund for many people; the fund is tied up for a long time; there are taxation concessions so the Government has a stake; many funds put invitations out to the public; and there is great disparity of knowledge between those doing the investing and those whose funds are invested.
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What has the Federal government got to hide? Reporters, camera crews and photographers have not been allowed to get within a reasonable distance to cover what is happening to refugees being dealt with by Australian troops off the coast of Nauru. There cannot possibly be any security reasons for the lack of access. No-one is doing any shooting. The events are of immense public importance. It seems that six asylum seekers were forcibly removed by 12 soldiers in full battledress from the HMAS Manoora on to Nauru for immigration processing in Nauru. In the absence of access to events by journalists to report to the public, Australians have every right to assume the worst: that the Government has ordered troops to use force to remove the asylum seekers. They certainly should treat any statement from Defence Minister Reith’s office and the defence forces with a great deal of scepticism. Keeping the media away is the first sign that they have something to hide.

It seems that the Government refugee policy — which took a further turn for the worse with the arrival of the Tampa with more than 400 rescued asylum seekers in August — is slowly unravelling. The Government’s new policy is to attempt to prevent these people from landing on Australian soil through the intervention of Navy vessels which then take them to islands in the Pacific for processing under UN rules without access to the Australian courts. With Opposition support, it also removed Christmas Island and Ashmore Reef from the Australian migration zone to prevent refugees landing there from obtaining access to the Australian courts. However, the boats are still slowly tricking through, and instead of having an orderly processing in Australia of the few thousand people a year who escape the hellish Taliban regime, we have a vastly more expensive process of using Australian naval ships to take people to camps on Pacific islands. The camps have cost Australia more than accommodating the refugees in Australia. The cost of the naval ships is unfortunately anyone’s guess. The Government will not provide costings. It only says that Labor’s costing of $20 million a week for the naval picket in the northwest is wrong. The Government should issuing costings on the whole exercise – including the money it has offered the Nauru Government to take the refugees. That money is little short of crude bribe.

Nauru has agreed to the processing of 262 more refugees who were picked by HMAS Tobruk last weekend. But the UN has not agreed to process them there, so the job might have to be done by Australian immigration officials who would have to be taken to Nauru at great cost.
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It is now obvious that there is no difference between the major parties on the question of international security. Whatever one thinks of the policies on refugees and the war in Afghanistan, and this newspaper has expressed grave reservations, both major parties are at one. So the issues that should decide the election are domestic ones. It is on domestic issues that voters should make up their minds.

Yesterday, Labor Leader Kim Beazley officially launched his campaign. Mr Beazley gave significant attention to health, education and jobs. He paid welcome attention to higher education and research. The 200 per cent research tax concession will get industry involved more. The national institute for mathematics and the extra money for CSIRO, although not huge amounts, are a recognition of the importance of pure research and the fact that in a country the size of Australia, government has to do the lion’s share of funding pure research. With significant extra funding, Australia will fall out of the international research-sharing loop as a nation not having a significant enough contribution to make sharing worthwhile.

There has been a growing and diverse group of people warning about the danger of Australia slipping into world irrelevancy.
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It is now likely the no-confidence motion against Kate Carnell will succeed now Independent Dave Rugendyke has said he will support it. But there is no guarantee Labor’s Jon Stanhope will become Chief Minister. Stanhope himself admits as much. But that is the most likely outcome.

Also, there is virtually no chance of an early election.

There are several possibilities.

Under the ACT Self-Government Act, the Federal Act of Parliament which is in effect the ACT’s Constitution, a successful motion of no-confidence in the Chief Minister must be followed by the election by secret ballot in the Assembly of a new one. The Act does not specify a time for the vote, but it must be within 30 days, or the Federal Minister could step in and call an early election, something all MLAs will surely work to avoid.
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The count of yesterday’s paper ballots will be computer assisted.

Gone are the days of ACT Electoral Commission staff counting ballot papers by putting them in piles under each candidate’s name and then distributing preferences also by physically moving ballot papers from pile to pile – a very time consuming process.

(In the first ACT election in 1989 – run by the Federal Australian Electoral Commission – it took several weeks for the count to be finished.)
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