Public sector wage growth comes at the expense of taxpayers

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Analysis by The Weekend Australian reveals that while private sector wage growth has stalled, there has been rapid growth in public sector jobs and wages, which is making the national debt and deficit situation much worse ($):

An analysis of jobs data by The Weekend Australian shows that the rapid expansion in public-­sector employment and wages comes as workers in the private sector face increased job insecurity and record-low salary rises.

… Australian Bureau of Statistics wages data for the June quarter show the public sector is out-­competing the private sector for jobs. While the overall wages growth was the lowest on record, at just 2.1 per cent for the year, public-sector wages grew by 2.4 per cent.

Wages in the retail sector, Australia’s biggest employer, rose by just 0.1 per cent in the quarter compared with 0.6 per cent in the public sector. As secure work in the public sector expands, workers in retail and hospitality face demands by employers to cut ­penalty rates and hire more casual and junior workers.

Private-sector wage growth has stalled amid warnings that Australia’s debt could blow out by more than $100 billion if the budget is wrong in its prediction that the economy will return to pre-crisis growth and if the Turnbull government is unable to win ­Senate support for all of its outstanding savings measures.

Deloitte Access Economics ­director Chris Richardson said part of the windfall gains from the China boom had been spent on more public-sector employees last decade, but these elevated numbers had been maintained after the boom ended.

Prior to 2002, the share of the labour force attributable to core public-administration jobs was about 5.8 per cent. After 2002, when revenue from the China boom began to feed into the budget, it moved to more than 6 per cent of the economy, “and has been on a mild up trend for the last decade and a half”.

Mr Shepherd, a former Bus­iness Council of Australia president, said there was a “risk of squeezing out” the private ­sector because the public sector could offer well-paid and more ­secure employment. “This does not add much to our national prosperity,” he said.

ABS figures show that hours worked in the non-market economy have grown 1.9 per cent in the year to June, outstripping those in the market economy, which grew by 0.1 per cent. Since March 2008, before the global financial crisis, hours worked in non-market ­industries have grown by 24 per cent, ­compared with 4 per cent for the market sector. Excluding ­educa­tion and training, non-market hours worked grew by 29 per cent over the same period.

The ABS defines the non-­market economy as comprising education and training, public ­administration and safety, and healthcare and social assistance.

The growth in non-market hours worked comes as public-sector salary costs for health and education are rising sharply. Salar­ies paid to public-sector workers in education and training rose 43 per cent to $38bn over the same period, while salaries for health workers rose at the same rate to $35bn.

Wages paid to public-sector employees working in public ­administration and safety rose by 30 per cent to $45bn in the seven years to June 2015, even though the number of workers in this category was unchanged at 580,000.

The strongest growth in job numbers and wage bills has been in state government jobs. The number of state government ­employees grew by 10 per cent to 1.476 million in the seven years to June 2015, while federal public servant numbers were virtually unchanged.

Queensland’s Labor government came into office with a promise to increase public-service job numbers, which have grown by 4000 in the year to March. In Victoria, the Labor government has budgeted for a $3.5bn ­increase in public-sector wage costs over the next four years. The Coalition government in NSW has also ­expanded its ­numbers, by 15,000, to 464,000 in the four years to June 2015. ABS data shows that almost one in three Australian workers is now employed part-time or as a casual, up from 21 per cent in the late 1980s.

Read the whole article here ($)

 

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IPA research: Red tape is pushing investors away

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Joe Kelly reports in The Australian today ($) on a new IPA paper showing the Coalition’s push to reduce red tape has failed to improve Australia as an international investment destination:

The IPA paper urges the government to do more in tackling ­labour market deregulation while also warning that more stringent thresholds triggering scrutiny of foreign investment will lead overseas interests to go elsewhere.

While the government trumpets $4.8 billion in regulatory compliance cost savings in its first term, the IPA questions whether this represents an overall reduction in red tape costs once the passage of legislation over the past three years is accounted for.

When Tony Abbott became prime minister in 2013 he introduced two red tape repeal days per year after declaring that Australia was “open for business” with more than 10,000 legislative instruments being repealed since March 2014.

The IPA paper, written by senior fellow Mikayla Novak, warns that Australia’s red tape performance has worsened over the past decade and notes that excessive regulation is costing the economy $176bn a year.

“The federal government has claimed that $4.8bn in regulatory compliance cost savings were made during its first term in office, exceeding its initial target of $3bn,” Dr Novak said.

“The savings are typically based upon a limited number of specific policy measures that ­either eliminate redundant regulation or amend clauses in existing legislation, identified as imposing onerous compliance costs.”

“However with new legislation constantly enacted by parliament, each containing fresh regulatory edicts, it is unclear that the aggregate compliance costs of federal regulation have fallen.”

Continue reading here ($).

 

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IBM says a hack of our census is “inevitable”

The ABS has a history of being hacked, and now The Australian is reporting that IBM says a hack of our census is “inevitable” ($):

An IBM Worldwide Security Solution Architect has waded into the census privacy debacle, declaring Australia’s sensitive census data will be “inevitably” hacked.

Philip Nye, a global security expert based on the Gold Coast, addressed Prime Minister Malcolm Turnbull and Trade Minister Steve Ciobo on Twitter, calling for mandatory breach laws to be implemented.

… “Data leaks continue to occur despite the best efforts of governments and organisations,” the organisation said in a statement.

“The safest way to avoid risk is to destroy the names and addresses immediately.

“In previous censuses, respondents were allowed to opt-in to having personally identifiable information retained, and it is the position of EFA that respondents to the 2016 Census should have the same privacy protections afforded to respondents of previous censuses, in line with community expectations.

As The Australian reported earlier, Malcolm Turnbull today moved to reassure Australians about their privacy.

“The Australian Bureau of Statistics in undertaking the census, always protects the people’s privacy and the security of their personal details is absolute. And that is protected by law and by practice, so that is a given,” the Prime Minister told reporters in Canberra.

Continue reading here ($)

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Nobody actually distressed? Just say it anyway!

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An Institute of Public Affairs freedom of information request has revealed that our universities are seeking to protect students from distress – even when it’s not clear anyone’s feelings have actually been hurt.

Back in April a furore erupted at the University of Melbourne after anti-Islam graffiti was sprawled on campus. The offensive writing included the phrases “Islam is not a race”, “Freedom of Speech”, and “Stop the Mosques”.

The graffiti was discovered before 7.30am, and immediately wiped off by students, as well as university cleaners.

Nevertheless, the little bit of chalk instigated frenzied activity within the highest echelons of the university, the IPA’s freedom of information request has discovered.

Just after midday a teleconference was convened with the chancellery, security, cleaning and media. The student union and the university co-ordinated statements.

For maximum effect the university put a statement on Facebook in the vice-chancellor’s name:

Many are aware a number of offensive slogans were written in chalk on the Parkville campus today. While the University community moved quickly to identify and remove offensive messages, they still have caused distress.

Interestingly, however, before putting out the statement the university leadership was informed by email that:

No students have come forward to UMSU (the student union) expressing personal distress arising from the chalkings and hopefully, given the very prompt cleaning… few people witnessed the slogans.

Despite no actual reports of personal distress and a quick cleaning process, the university felt the need to release a statement claiming the opposite.

The university simply assumed that somebody must have been distressed. And, as a communications strategy, published a statement accordingly.

In fact, it is likely the mass publicizing of the graffiti, giving it an audience far beyond that it was ever naturally going to achieve, may have helped establish distress that otherwise did not exist.

This series of events signals a worrying developing culture at our universities.

University administrators are being forced to spend hours of their day not on teaching and education, but rather responding to relatively minor cases of graffiti.

Meanwhile, Australian academics are using trigger warnings, seeking to protect students from emotional responses in class. It is no longer about resilience to challenging ideas, it’s about covering students with bubble wrap from the realities of life outside campus.

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Australian debt control worst in G20: report

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The Australian economics correspondent Adam Creighton has written that Australia has the worst debt control worst in G20 ($):

Australia has shown less control over spending than any advanced G20 nation since the global financial ­crisis eight years ago and has squandered the opportunity offered by superior economic growth to gain control over its budget deficit.

A damning study by the former head of the IMF’s budget division shows the deterioration in Australia’s debt almost matched that of Italy, one of the most troubled European economies, suffering a deep recession and a blowout in interest costs.

Nations that fail to control the growth in their debt are at risk of a crisis when interest rates eventually rise, warns the study published by the Peterson Institute for International Economics, a Washington DC think tank.

Australia’s debt-to-GDP ratio fell 9.8 percentage points in the eight years leading up to the financial crisis but surged 27.1 percentage points over the eight years since the end of 2007, which was only slightly less than the average increase across Japan, Britain, the US, France, Germany, Italy, Canada and South Korea.

In principle, a government that is trying to cut debt should be keeping spending growth to no more than the overall rate of inflation, while revenue should be rising in line with nominal economic growth (the GDP plus inflation). The faster the growth, the quicker debt gets paid off.

However, the study shows Australia had instead used the best growth rate among G20 advanced nations to finance additional spending.

It shows Canberra increased real spending more than any of eight other advanced G20 governments since the end of 2007 — and by almost by double the average increase.

 

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Electricity prices in South Australia reveal the folly of renewables

Judith Sloan had this to say in The Australian on Tuesday, on the folly of renewable energy after it was revealed that wholesale electricity prices in South Australia reached 30 times the prices recorded in the eastern states ($):

How could this happen? How could it go so wrong for South Australia? The short answer is, contrary to Roy and HG’s famous prognostication that too much is never enough, too much is too much when it comes to intermittent and unreliable renewable energy. South Australia is paying a heavy price for its misguided energy policy, potentially leading to the further deindustrialisation of the state while also reducing its citizens’ living standards. But the real tragedy is that this outcome was entirely foreseeable.

Let us not forget that South Australia continues to boast about its status as the wind power capital of the country and having the highest proportion of its electricity generated by renewable sources. Since 2003, the contribution of wind to South Australian electricity generation has grown to more than one-quarter of the total.

Late last year, the state government issued the Climate Change Strategy for South Australia, ­ignoring completely the problems that were already apparent in the system. The wholesale electricity price in the state has been consistently above the national average since early 2015.

The statement reads that “to realise the benefits, we need to be bold. That is why we have said that by 2050 our state will have net zero emissions. We want to send a clear signal to businesses around the world: if you want to innovate, if you want to perfect low carbon technologies necessary to halt global warming — come to South Australia.”

But last week the confidence of that statement had been forgotten. Koutsantonis hysterically blamed what he saw as failures in the ­national electricity market and inadequate electricity interconnection for his state’s high and volatile wholesale electricity prices.

He even pledged to “to smash the national electricity market into a thousand pieces and start again”. How he thought this suggestion would be helpful is anyone’s guess.

The main problem with electricity generated by renewable energy — in South Australia’s case, overwhelmingly by wind — is what is technically called the non-synchronous nature of this power source, because of its inability to match generation with demand.

When the power is needed, the wind isn’t necessarily blowing. Or if the wind is blowing too hard, the turbines must be switched off and again the demand has to be met from other sources — in South Australia’s case, mainly from electricity generated in Victoria from brown coal.

What is clear is that overdevelopment of variable generation using renewable resources is a recipe for higher prices and lower than expected reductions in emissions because of the increasing costs of ensuring system stability and reliability.

… Bill Shorten should take note and immediately ditch his fanciful target of 50 per cent renewable energy lest the South Australian experience befall the rest of the country.

Continue reading here ($).

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7 graphs that show we’re better off

As usual, the news is all doom and gloom. More terrorist attacks in France and police shootings in the United States. A failed military coup in Turkey empowers a tyrant. Meanwhile, household income in Australia is allegedly stagnant.

Despite all this bad news, in the history of humankind we are living extraordinarily successful lives.

It is important to sometimes sit back, and see the sunshine. Here are seven graphs from HumanProgress.org that show how far humanity has come.

Continue Reading →

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No end in sight to big government

The new Turnbull Ministry, announced this afternoon, includes 42 executive officeholders with a total of 53 portfolios.

With the possible exception of the onward march of Federal Government spending which has gone from $140 billion in 1997-98 to $445 billion in 2016-17, or gross debt which will pass $500 billion sometime in the next twelve months, there is little else that better demonstrates how the size of government and the red tape it creates and administers is out of control.

These numbers, while broadly in line with the first Turnbull Ministry of 2015, compare particularly unfavourably with the first Barton ministry and the first post-war Menzies ministry.

The Prime Minister’s own department now has nine different Ministers, “Assistant Ministers” and “Ministers Assisting” across ten portfolios, including Indigenous Affairs, Women, Cyber Security and Counter-Terrorism.

The Whitlam-era federal involvement in the design of cities, which was resurrected last year, now appears to have two Ministers, with Angus Taylor the Assistant Minister for Cities and Digital Transformation (reporting to the PM) and Paul Fletcher the Minister for Urban Infrastructure (reporting to the Minister for Infrastructure and Transport).

Social Security has four ministers, there is a still a Minister for Sport and for the Arts and there is a Minister for Rural Communications separate to the Minister for Communications.

Even in Defence, where there was once a single Minister, there are now three defence officeholders with five portfolios – Defence, Defence Industry, Veterans’ Affairs, Defence Personnel and the Minister Assisting the Prime Minister for the Centenary of ANZAC.

While Josh Frydenberg’s appointment as Minister for the Environment and Energy is a welcome portfolio consolidation, it looks like that is it.

The more people that are appointed to office, the more legislation and regulations they try to pass, so they look like they are doing something. Small government is not coming to Australia any time soon.

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Waleed Aly does not deserve a free speech prize

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Liberty Victoria have just announced that broadcaster Waleed Aly will receive their annual free speech award, the Voltaire Award.

Notably, he was not awarded the prize for actually supporting free speech, but rather his “contributions to many areas crucial to public life,” including on the topics of terrorism and treatment of refugees.

Aly is not being awarded for his views on free speech because he doesn’t actually support Voltaire’s axiom: I do not agree with what you have to say, but I’ll defend to the death your right to say it.

In a 2013 lecture, after giving the cursory statements in favour of free expression, he argued for retaining section 18C of the Racial Discrimination Act.

He used the metaphor of the free market to argue against free speech, misusing the idea of ‘market power’ to silence voices he considers powerful:

If free speech is meant to be analogous to the free market, if bad ideas are to be vanquished by good ones in the contest of ideas, then what happens where that contest scarcely exists? Really, it’s like an abuse of market power: a kind of market distortion. There is at the very least a case to be made for regulating speech in these circumstances to ensure that the discourse of the socially empowered is held accountable in some way.

He, of course, seems to miss the point that government intervention in the free speech ‘market’ is an exercise of social power by the powerful, silencing ideas one group happens to find distasteful.

Aly went on to say that society should regulate the tone of inflammatory ideas:

We can also require that, particularly in the case of dangerously inflammatory ideas, that they are conducted with a certain tone that reduces the likelihood of some manner of social explosion.

Liberty Victoria’s decision to award a free speech prize to someone who does not support free speech makes a mockery of the supposedly prestigious prize.

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Maurice Newman on the arrogance of the political elites

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Maurice Newman has an important piece in The Australian this morning argues that voters are fed up with a arrogant political elite ($):

Judged by their on-air performances today’s political elites, like the PM, are captive to a narrow, self-indulgent, outdated, Labor-Liberal paradigm. In their splendid isolation, they are convinced only the extreme, or the uneducated, vote for Pauline Hanson, Jacqui Lambie, Derryn Hinch, Nick Xenophon or other minor parties.

They can’t accept that “smart” voters think differently to them or are tired of what they recognise as a cartelised ruling establishment. So disconnected are they that they believe the masses fall for vague messages of compassion, fairness, jobs and growth. They think slogans that ooze condescension and promote cargo-cult dependency rather than advocate sound financial management and self-reliance fool the majority. In reality, when the people lose trust in their leaders and the system, they pursue narrow self-interest.

Why not? They see unions they never voted for exerting extraordinary influence on public policy. They watch big business win favours from big government at the cost of small business. They know Marxists are indoctrinating their children without their consent and feel powerless to stop it. Without consultation, their freedom to speak is constantly eroded. They feel marginalised.

Meanwhile, the major parties preach brand differentiation. The Liberals boast a broad church but welcome ever fewer conservatives and libertarians. The Labor Party presents as progressive, yet its links to the union movement are medieval and its ever-conscious need to distance itself from the Greens regularly throws up inherent contradictions. Today the brands are as different as Coles is to Woolworths or Ford is to Holden.

For political pundits, support for minor parties can be hard to read, let alone understand. Are the voters genuinely interested in a single issue, are they parking their vote until after the election or, as pollster Mark Textor says, are they sending a message as a pre-election “tickle up” to the parties?

Polling cannot answer these questions. Certainly, tribal loyalty is fading and poll gaming is on the rise. Voters see approaching elections as an opportunity to use polls to leverage the main parties and, in close elections, minor parties can be strategically rewarding.

Inevitably, volatile electorates are diminishing the predictive value of polls. We have seen Brexit, the unchanged New Zealand flag, David Cameron’s unexpected second term and the comfortable win for the Coalition that wasn’t. These results provide evidence that the political class is prone to groupthink and prefers to watch polls than listen to the electorate.

If the voters are gaming the establishment, the political class is using polls to game the people. Recently, a Reuters poll and an American ABC News/Washington Postpoll were exposed as favouring Democratic respondents to flatter Hillary Clinton’s standing.

Whether or not poll manipulation occurs in Australia (was the one before the election, demeaning Tony Abbott and flattering Turnbull, a case?), the people are aware politics is a murky business. They know how unions, crony capitalists and other rent-seekers repay patronage and privilege to the major parties in kind and often with recycled taxpayer funds.

No wonder they have become cynical and mercenary. They are fed up with a system they see as corrupt and self-serving and that treats them as uneducated serfs. They want respect and a government that is culturally confident and economically consistent.

Read the whole article here ($).

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