Australian debt control worst in G20: report


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.



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 ($).


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 that show how far humanity has come.

Continue Reading →


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.


Waleed Aly does not deserve a free speech prize


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.


Maurice Newman on the arrogance of the political elites


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 ($).


Trigger warnings have arrived at Australian universities

The anti-intellectual and seriously dangerous phenomena of trigger warnings has arrived at Australian universities.

The Age reported late last week that Australian lecturers have begun warning students about potentially graphic or sensitive content:

Australian academics are issuing so-called “trigger warnings” for confronting material in classrooms at the start of each semester, and before classes, to give students the chance to opt out.

These types of warnings encourage academics to not teach ideas, for fear of facing complaints, and students to ignore confronting ideas. And, as has been noted in the United States, there are serious mental health concerns about trigger warnings: they have the potential to establish fears students would otherwise not have, and encourage individuals to avoid addressing their fears.

Continue Reading →


The Greens soft drinks tax: illiberal, ineffective, regressive

Yesterday the Greens announced an illiberal, ineffective and regressive nanny state tax on sugary drinks.

I argued in The Spectator Australia’s Flat White blog against the new impost:

Taxing soft drinks, using the coercive power of the state to manipulate individual behaviour, is patently paternalistic.  The policy treats parents as fools who are unable to raise their own children, and adults as mugs incapable of making their own consumption decisions.

It would also prove ineffective at addressing obesity issues:

Although increasing the cost of soft drinks may reduce their consumption, it does little to change overall dietary decisions. If we make one product more expensive, individuals looking for a sugar hit can, and will, swap to other unhealthy drinks and food.

However perhaps the bigger injustice is who it will impact the most, the poor:

A study of French dietary habitspublished in the American Journal of Agricultural Economics found that fat taxes are “extremely regressive”. That is, they have a far bigger impact on lower income households who have the least capacity to pay for the additional impost.

Read the full post here.


Metadata mission creep? Who would have thought?


The latest proposal from Victoria Police to monitor mobile phone use highlights the danger of mission creep under mandatory metadata retention laws:

The so-called textalysers… are able to analyse metadata to determine whether someone was using their mobile phone at a specific time – while driving, for example.

… The model proposed by New York authorities involves the analysis of a mobile device’s metadata after a road incident to determine whether the device had been used in the lead up to the event.
… Privacy laws are slowing progress of the proposed new legislation, although Israeli company Cellebrite, which produces the technology, claims that the textalyser system doesn’t have the ability to read the content of text messages and social media updates, but rather to determine whether the device was used at a certain time to send text messages.

However, Australia’s new metadata retention laws, which allow for the time and basic surface details of every message sent to be stored and made available to law enforcement agencies, could speed the technology’s introduction here.

While the government justified the introduction of metadata laws largely to fight terrorism, the inherent danger with gathering mountains of personal data (beyond privacy and data security issues) is that once it exists other entities will inevitably demand access (see that list here).

In fact, the IPA’s Simon Breheny predicted this as early as 2012, and the IPA’s Chris Berg warned about the likelihood of the compulsorily acquired metadata being used for purposes other than national security at the time of its introduction in 2014:

A lot of opponents of data retention have pointed out that this creates a very real risk of unauthorised access. It’s hard to keep data secure.

Yet just as concerning is authorised access. Once these databases have been created they will be one subpoena away from access in any and every private lawsuit.