State of the Union: Why it’s not an Australian thing

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This time yesterday, President Barack Obama made the annual journey down Pennsylvania Avenue to deliver his eighth State of the Union address.

American political aficionados will be familiar with this constitutionally required tradition, but as the President gave what will be his final SOTU address, I found myself wondering why it still exists.

The speech was fairly standard. It had the usual calls for civility, a less divisive politics, and for politicians of both parties to work together on areas of common ground. It had a list of accomplishments—some of which are commendable. The president even spoke about his commitment to close the detention centre at Guantanamo Bay, a campaign promise he has been trying and failing to fulfill since his second day in office.

But in no way did this deserve the pomp and ceremony it received, nor the dozen-odd standing ovations.

This highlights a significant difference between Australia and the United States. Despite our cultural similarity, and the fact that parts of our political system bear an unmistakable resemblance to that of our Anglosphere friends, Australians just don’t treat our political leaders with the same level of reverence that the US President receives.

By and large, Australians don’t think much of their politicians. They are viewed as functionaries, whose reputations rely on their performance. This is perhaps why we accept them being swiftly overthrown by their own parties (Rudd was an exception, because the opinion of his colleagues wasn’t representative of the public mood).

We certainly don’t consider them the moral leaders of the nation.

Yes, there are the rare Whitlam’s and Menzies’, who are remembered fondly enough. But even relatively divisive US presidents—like President Obama—are treated with a level of respect approaching that of the British monarch.

Thankfully, Australians are less sycophantic to our politicians than that.

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Insights into ‘victimhood culture’

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Writing for the New York Times last week, American Enterprise Institute president Arthur Brooks offers up some fascinating insights into the problems with victimhood culture:

…victimhood culture makes for worse citizens — people who are less helpful, more entitled, and more selfish. In 2010, four social psychologists from Stanford University published an article titled “Victim Entitlement to Behave Selfishly” in the Journal of Personality and Social Psychology. The researchers randomly assigned 104 human subjects to two groups.

Members of one group were prompted to write a short essay about a time when they felt bored; the other to write about “a time when your life seemed unfair. Perhaps you felt wronged or slighted by someone.” After writing the essay, the participants were interviewed and asked if they wanted to help the scholars in a simple, easy task.

The results were stark. Those who wrote the essays about being wronged were 26 percent less likely to help the researchers, and were rated by the researchers as feeling 13 percent more entitled.

In a separate experiment, the researchers found that members of the unfairness group were 11 percent more likely to express selfish attitudes. In a comical and telling aside, the researchers noted that the victims were more likely than the nonvictims to leave trash behind on the desks and to steal the experimenters’ pens.

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The Victorian government’s war on Christmas

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Today I have a piece in The Australian on the Victorian government’s dangerous Christmas carol ban:

This is a cultural turning point. The Victorian government isn’t just banning Christmas carols; this is an attempt to strip away the meaning of Christmas. It’s an overt attack on one of the most significant events in the Christian calendar.

The decision goes to the heart of good education. Christmas, and all the ceremony and custom associated with it, has been a significant religious and cultural ritual for 1700 years. A ban on these traditions is a denial of our history. Suppressing aspects of the Christmas celebration denies a cultural heritage that has formed the basis of Western civilisation and that underpins our understanding of life and liberty.

A well-rounded education should include lessons on Christianity and its contribution to who we are today. We can’t expect the next generation to defend the values of Western civilisation if they don’t know what they are.

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The competition regulator’s hobby horse

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Rod Sims, ACCC chairman, outlining the ACCC’s priorities for 2016 ($):

What we are trying to do is to get higher penalties awarded from the courts in competition cases because our concern is the penalties just aren’t high enough to grab the attention of company boards.

Sims, outlining the ACCC’s priorities for 2015:

The difference between a $10 million fine and a $100 million fine is quite profound. People will sit up and take notice, because it starts to show up in the profit and loss statement and it will grab attention, which is what we are trying to do with our deterrence messages.

It seems nothing has changed in the past year. The ACCC’s attempts to increase penalties which ‘grab attention’ are misguided.

Grabbing attention is what children do to their parents in toy stores. It is certainly not an appropriate enforcement objective for a regulator to pursue.

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Government agencies requesting data access without a warrant

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The ease with which the government would resort to undermining the privacy of its citizens just to make regulatory enforcement slightly easier is deeply concerning.

Since as early as 2012, the IPA has warned mandatory data retention would not be used solely for national security purposes.

Now, it is being reported that Primary Industries and Regions SA is seeking to become the next agency which can access retained data without requiring a warrant.

They can join this list of government agencies who should be told if they want data access, they should get a warrant:

Continue Reading →

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The cost of ageing in the Nanny State

A discussion paper from Christopher Snowdon at UK’s Institute of Economic Affairs published this week looks at the costs associated with an ageing population. This excerpt, from the introduction, highlights the flaws in the oft-used argument that restrictions on unhealthy habits will save taxpayers in healthcare costs:

If healthy lifestyles lead to longer lives and higher costs, it might be expected that unhealthy lifestyles lead to shorter lives and fewer costs. Nobody would advocate unhealthy lifestyles on the basis that they save money, but if the issue is reduced to cold financial facts this is a logical conclusion to draw. However, quite the opposite conclusion would be reached by reading the popular press and listening to public health campaigners. It is routinely claimed that groups with lower life expectancy, particularly smokers and the obese, are a ‘drain on the taxpayer’ because of the costs of treating smoking and obesity-related diseases. The clear implication is that expenditure on public services would be lower if there was less smoking and less obesity.

… There is no doubt that lifestyle-related illnesses require healthcare expenditure. The real question is whether these costs are higher than the longevity-related costs associated with ageing, not only to the NHS but to the government as a whole, including the social security system. The aim of this discussion paper is to find an answer to that question.

You can read Snowdon’s answer to that question here.

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ATO’s corporate tax transparency report doesn’t reveal much at all

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A sample of headlines from the last 24 hours:

ATO report shows nearly 600 big companies paid no tax in 2013-14 [The Guardian]

Almost 600 major corporations did not pay tax in 2013-14 financial year [ABC Online]

Nearly 600 companies paid no tax in Australia last year [Huffington Post Australia]

Unsurprisingly, the reports largely fail to go any deeper than this, while others interpret the numbers as a reason to target these companies for lost government revenue.

Absurdly, various reports refer to the large revenue figures of many of these non-tax paying businesses. This is irrelevant. Company taxes are only paid on profits. And this isn’t a complicated point – it’s simple logic. Even so, this is a point that confused too many outlets, with the ABC wondering how these companies managed to minimise their tax bills so much.

The answer is that these companies undertook expenses in order to generate revenue.

So let’s do what the media failed to do, and look at the data. Going slightly deeper, we find that of the 579 companies to not pay company tax, 466 did not actually record a profit in the 2013-14 financial year.

Yes, in the overwhelming majority of cases, companies didn’t even meet the pre-requisite to be obliged to pay tax.

And what of the other 133 companies? While “tax payable” is 30 per cent of “taxable income”, companies apply deductions and tax offsets, so that tax payable is always less than taxable income. For these 133 companies, deductions and offsets reduced tax payable to zero.

This is not controversial. This is companies taking advantage of deliberate government policy, in a way that those policies were intended to be used.

The only worthwhile conclusion to reach from the ATO report is what a waste of time and taxpayer money it was in compiling it.

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Uber legalised in New South Wales

The New South Wales government has today agreed to immediately legalise Uber, with “more than 50 taxi and hire car regulations” going into the repeal bin.

Unfortunately, this is to be accompanied by a $250 million compensation fund, to bail out taxi-licence for no longer having a legal monopoly. Also spared from the bulk regulatory changes are rules that give taxi’s the exclusive right to pick up passengers from ranks off the street and exclusive access to Sydney Airport.

At the same time, a swag of new regulations are to be imposed on Uber, including licence fees, criminal checks and regular safety checks on the cars.

But Uber only developed because it was free from burdensome regulations. As Pat Hannaford explained in the Herald Sun in May this year, Uber has created a service that is safer and more convenient than traditional taxi services. New regulations will only stifle further innovation.

 

While it’s obviously good to see Uber legalised, it is only a step in the right direction. Unfortunately, protectionism and government regulation continue to dominate the policy mindset.


For more on the sharing economy, check out the IPA’s paper by Chris Berg and Darcy Allen: The sharing economy: How over-regulation could destroy an economic revolution.

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Australian Medical Association takes dangerous position on e-cigarettes

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The Australian Medical Association today released an updated position statement on tobacco and e-cigarettes. Or should that be e-cigarettes and tobacco? Because tobacco is no longer the lead concern for the AMA. E-cigs are now the main game. Here’s an excerpt from the AMA’s media release:

AMA President, Professor Brian Owler, said the AMA wants the Federal Government to work with the States and Territories to introduce nationally-consistent controls and restrictions on the marketing and advertising of E-cigarettes.

“While some States have taken a strong stance on E-Cigarettes, others have not, which sends conflicting messages to consumers,” Professor Owler said.

“The AMA is concerned that E-Cigarettes are particularly appealing to young people, and the marketing of these products builds on this appeal.

“The promotion of E-Cigarettes to young people as recreational products has the potential to undermine tobacco control efforts, and normalise the act of smoking.

“The AMA believes that E-Cigarettes should not be sold to anyone under 18 years of age.

“E-Cigarettes should not be marketed as smoking cessation aids, because this is not currently supported by evidence.

Here’s what’s telling about the AMA’s e-cigarette concerns.

The most important issue in the e-cigarette debate is whether they help smokers to quit. They do. Study after study after study has shown this to be the case. But this isn’t the first issue addressed by the AMA. It’s revealing that the AMA prefers to focus on regulatory differences at the state level (yes – Australia is a federation), and the suggestive idea that e-cigarettes are ‘appealing to young people’.

Even if there’s doubt about the evidence, the decision about whether to use e-cigarettes is a voluntary one, and the AMA has no place lobbying for laws that restrict their use on the basis of uncertainty.

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Expert verdict on MYEFO: A stinker

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This week Treasurer Scott Morrison delivered Australians a Mid‑Year Economic and Fiscal Outlook (MYEFO) statement, announcing that debt and deficit is likely to stretch for more than a decade.

Unsurprisingly, the reaction by economists was similar to the one where somebody stumbles upon a bag of raw prawns under a hot Christmas Day sun.

We said MYEFO shows the government has barely made a dent in fixing our national overspending problem, and others were equally as critical of the mid‑year statement.

Writing in The Australian, Judith Sloan pulled no punches when she said:

Let’s face it, we are stuffed fiscally. … This year’s budget deficit is going to be even higher than was expected in May — up from a tad over $35 billion to $37.4bn. Over the four years of the forward estimates, the accumulated budget deficits now total $26bn more than was expected just eight months ago, an increase of nearly one-third. Yes, I did mention we are fiscally stuffed.

Economist Peter Smith conveyed an even more dire warning in his MYEFO response:

The budget is now forecast to move into surplus in 2020-21, a year later than forecast in May. Take this with a pinch of salt. The electorate will not easily give up free stuff and politicians will toe the line to get re-elected. In the end, as in Greece, it will result in misery of one kind or another; unless, of course, beneficial external developments save the day. Fingers crossed for the Lucky Country.

Do we dare mention that prior to the supposed surplus magically appearing in 2020‑21, both major parties will be fighting two elections to win over voters with debt‑funded goodies?

There are no two ways about it: MYEFO is a stinker, and Australia’s budgetary situation is dire.

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