Public versus private wage growth is the latest budget blow

Recent data from the Australian Bureau of Statistics points to some economic developments that will make a return to balanced government budgets even more difficult.

In the three months to September 2015, private sector wage growth has grown at 0.5 per cent (or 2.1 per cent over the previous year), making it the slowest rate of growth in 17 years.

Slowing wage growth – a significant cost of employment – could encourage business to hire additional staff. But a persistent trend could hit government budgets on the revenue side (as well as adverse terms of trade effects).

Of at least equal concern is that public sector wages keep growing despite a subdued Australian economy. The ABS wage index shows public sector wages increasingly a little more rapidly, at 0.7 per cent over the last three months (2.7 per cent), adding pressure to government budgets on the spending side.


The main culprits for the rising public sector wages bill appears to be the state and local governments. During 2014‑15 the federal government cut its wages bill by $462 million compared with the previous financial year, whereas states and councils increased their wages bill by $2 billion and $458 million, respectively.

Putting the three levels of government together, we find the total wage bill to have hit a record $141 billion in 2014‑15, up from $139 billion in 2013‑14.

Since the 2013 election the federal government has done its bit to reduce its bureaucracy and wage costs, albeit too slowly, but we also need to keep a closer eye on profligate states and local governments.


Email: Freedom of speech under attack

The latest attack on free speech – this time in Tasmania

Freedom of speech is under attack in Tasmania after the state Anti-Discrimination Commissioner decided on 13 November that a complaint against Catholic Archbishop Julian Porteous should proceed to a hearing.

In particular, the Commissioner has decided the Catholic Church has a case to answer in relation to a complaint made regarding a booklet outlining the Catholic teachings on marriage distributed to parents of students enrolled at Catholic high schools across Australia.

The IPA’s Chris Berg wrote in the Sunday Age yesterday:

To be offended by the booklet is to be offended by what was, until very recently, the mainstream view on gay marriage, and one still shared by a large minority of the population… For this reason if nothing else, the complaint ought to have been dismissed as laughably frivolous.

It should never be an offence to offend a person. This is particularly chilling in light of the proposed plebiscite on the definition of marriage. As IPA Executive Director John Roskam stated in October:

A vote in a plebiscite or referendum, in which one side is not allowed to present its case, is not a legitimate vote. That’s why both supporters and opponents of same-sex marriage should be concerned by the complaint against Archbishop Porteous and the Catholic Church.

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EXCLUSIVE: LNP state council calls for free vote on section 18C reform

Well done to IPA members Martin Proctor and Jack Piggott of the Young LNP in Queensland who succeeded over the weekend in passing a resolution at the LNP State Council calling on the federal government to reverse its opposition to free speech reforms.

Proctor, who is also the IPA’s Campus Co-ordinator at the University of Queensland, moved the motion which read:

That this State Council of the LNP calls upon the Federal Government to:

a) reverse its decision to abandon reforms to section 18C of the Racial Discrimination  Act 1975 (Cth);

b) recognise the importance of these reforms which reaffirm our Party’s core philosophical belief in the freedom of speech; and

c) allow Coalition Members and Senators to exercise a free vote on any bill that proposes to remove the words  ‘offend’ or ‘insult’ from the current legislation.

Three of the six LNP senators representing Queensland are on the public record in support of section 18C reform, currently in the form of Family First senator Bob Day’s amendments. You can read the whole list of supporters in the Senate here.


When did dissent become discrimination?


In the Sunday Age today, Chris Berg looks at the Tasmanian anti-discrimination case against Archbishop Porteous, and the chilling effect of such laws on free speech:

[The Tasmanian anti-discrimination laws are] symptomatic of the spread of no-go areas in Australian public discourse. Governments increasingly believe that protecting us from being offended – on whatever spurious grounds – is more important than allowing us to speak our mind.

[There] is no caveat in the Tasmanian act that even purports to protect free expression… In a parliamentary debate in 2013, the Attorney-General dismissed concerns by insisting the bill “does not impinge on free speech; it provides protection from bullying”.  All words are cheap. The words of politicians – even when they’re interpreting their own legislation – are junk.Both supporters and opponents of gay marriage should be very unhappy with the Tasmanian case. Even if the Catholic Church successfully defends against the anti-discrimination complaint, damage has been done. Free-speech theorists talk about the “chilling effect” when the cost of defending oneself against baseless claims hampers the open expression of views.

Continue reading here.


Top 3 articles from this week you must read


Niall Ferguson

1. There is a crisis in Western universities: Read Ross Douthat’s article in the New York Times last Saturday on how academia have brought it on themselves

2. In the Boston Globe on Monday, Niall Ferguson drew a compelling parallel between contemporary Europe and the 5th century Fall of Rome

3. And in the Weekend Australian last Saturday ($), former Hawke/Keating government minister Peter Baldwin slammed academia’s obsession with race and political correctness.


Global survey shows Australia ranks 7th out of 38 countries in support for free expression


global survey published by the American Pew Research Center on Wednesday should give supporters of free speech some hope, after it showed Australians exhibit above average support of freedom of expression.

The results are based on responses to various questions relating to individual and media liberty. Broken down by question relating to individual liberty, it looks like this:

Freedo_Pew_Graph 1

One interesting aspect of this is that, according to the survey, the majority of Australian support people being free to make statements that are “offensive” to minority groups.

This is significant, as it suggests the suggests the 14 senators who have pledged to cross the floor in support of Family First senator Bob Day’s section 18C reforms – which propose to remove the words ‘offend’ and ‘insult’ from the Racial Discrimination Act – are not out of step with the Australian people.

All of the data used in the graphs in this post is from the data given in the Pew Research Center’s global survey “Global support for principle of free expression, but opposition to some forms of speech”, which can be found here.


UK government picks gas and nuclear over wind


UK Energy Secretary Amber Rudd on Wednesday announced a reset of British energy policy, prioritising gas and nuclear power stations after acknowledging that the obsession with so-called green energy has gone too far.

Interestingly Ms Rudd has also said that wind and solar farms will be expected to pay for the extra costs they impose on the system due to their intermittency.

UK renewable energy subsidies currently total £68 per household per year and are expected to rise to £141 by 2020 and £226 by 2030. Economy-wide these subsidies will add up to £9.1 billion per year by 2020. But renewables still can’t provide reliable electricity.

However, proving that politicians like to walk both sides of the same street, the Minister also wants to phase-out coal-fired power stations by 2025. Mandating the end of coal when it is responsible for 29 per cent of the United Kingdom’s electricity and proposed new gas and nuclear plants are way behind schedule, is a bold call.

The problem is not coal – the problem is that government policies have discouraged the private sector from investing in modern coal power plants.

Governments should not be in the business of mandating which sources of energy are allowed to compete in the marketplace.


Hodgman flags review of state’s anti-discrimination laws


Good to see the Tasmanian premier at least recognises a problem. The Australian reports:

Tasmania is poised to wind back elements of its anti-discrimin­ation laws to ensure opponents of gay marriage are not silenced in the national debate on the issue.

Premier Will Hodgman, who supports same-sex marriage, yesterday flagged a review of the state’s Anti-Discrimination Act following a recent ruling that a booklet explaining Catholic opposition to the concept was a “possible breach” of the law.

“There is concern that it could become a landmark case and compromise some people’s ability to participate in the national debate as we head towards the plebiscite (on same-sex ­marriage),” Mr Hodgman said yesterday. “That is why we believe it is appropriate to look at these matters and assure ourselves the ­balance is right.”

What the premier should also realise is that regardless of the outcome of any case or conciliation, the damage is already done. That a case like Archbishop Porteous’ can go this far has a chilling effect on free speech.


The Nanny State: A failure of regulation


On 11 September, I testified on the lack of evidence in favour of regulation at a public hearing of the Senate’s “Nanny State” Inquiry at Parliament House in Canberra. As the Hansard transcript reveals, that led to a lively and good-natured exchange on the nature of regulation with the Chair, Senator Dastyari.

My testimony was based on my submission to the Inquiry (number 237) titled, “Regulating choice: The need for evidence“. I concluded from reviews of the experimental evidence on the effects of regulation, that the Iron Law of Regulation applies.

The Iron Law has been stated as;

There is no form of market failure, however egregious, which is not eventually made worse by the political interventions intended to fix it.

An honest belief in the value of regulation is presumably grounded in a faith that a wise and well-intentioned regulator could in practice increase total net welfare.

That belief is not obviously plausible, as it depends on a sequence of assumptions or conditions that are highly unlikely to apply in practice. Can you think of any regulation where the regulator has met all of the ten necessary conditions for successful regulation described on page 3 of my paper with Scott Armstrong?

Our research has investigated the effects of government regulation of speech (by way of mandatory disclaimers in advertising), corporate social responsibility and of the environment. We could find no evidence that regulation increased welfare – in most cases it caused harm. We have not found a regulation that would meet even one of the ten necessary conditions for successful regulation.


Unions campaign to retain power over industry super


The Australian Financial Review is reporting that the Australian Council of Trade Unions has launched a political campaign against the federal government’s proposed changes to industry superannuation.

Currently, under a sweetheart deal that typifies Australia’s incestuous workplace relations system, half of the directors of the five million member strong industry superannuation funds represent employer organisations and the other half represent unions. The selection of the default fund for many workers belongs with the Fair Work Commission.

The government recently asked the Productivity Commission to develop a better way to allocate default superannuation fund members to products and restated its earlier commitment to require at least one third of superannuation fund board members to be ‘independent’.

Superannuation in Australia is a two trillion dollar business and many workers get no say in where their money goes. The issue has even been examined in the Trade Union Royal Commission which looked at the leaking of CBUS member details to the CFMEU and how ‘choice of fund’ operates in the Transport Workers Union.

The people who manage these funds should be on those boards because of their financial expertise, not because they are in the right union or employer body. This process may mean such representatives are more susceptible to political divestment campaigns.

Make no mistake – the ACTU’s campaign is about protecting union power, not member interests.


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