It's the economy, Kevin

PETER Costello has a running gag in Parliament, which tickles tiny minds, including the one behind this column. Every now and then the Treasurer will, in mock solemnity, advise the House that the annual Fundamental Injustice Day is fast approaching. Costello says this calender event was established by Labor's Kevin Rudd on June 30, 1999, in the House of Representatives. Rudd, an MP for less than a year, had said, "When the history of this Parliament, this nation and this century is written, June 30, 1999, will be recorded as a day of fundamental injustice." Rudd vowed that this was "injustice that is real, an injustice which is not simply conjured up by the fleeting rhetoric of politicians". What he was talking about was the introduction of GST. [A sales tax. Now long accepted]

And Fundamental Injustice Day would be a forgotten faux commemoration, mere fleeting political rhetoric, were it not for Peter Costello's frequent, playful reminders. He is scoffing at Rudd's overblown foreboding delivered eight years ago and poking fun at the Labor leader's current grasp of economics generally. Costello's jokes verge on arrogance, but a glance at the economy shows he might have something to be arrogant about.

Something extraordinary is happening to the Australian economy. A boom is under way, and it is an unusual one. It is not a matter of interest rates possibly rising next year; the big news is that they haven't risen already. It is not all pretty, and Labor can make a case showing the current boom has an unpleasant underbelly, as shown by bankruptcy figures. But there is much that is good, as shown in a speech last week by Reserve Bank governor Glenn Stevens, who noted changes in the past 12 months. "Compared to what we expected a year ago, then, growth has turned out to be stronger, employment higher but underlying inflation a bit lower and wages growth has been steady in the face of unanticipated labour market strength," said Stevens.

There is a lot of money sloshing around the nation and it is being used by employers to hire workers, and to increase wages generally, and by households to buy things and borrow. Usually when these factors are combined, inflation goes through the roof, dragging interest rates with it. But that is not happening, and it is not seriously anticipated it will happen for some time.

Stevens said one of the reasons for the restraint, at least in part, was the industrial relations structure - the workplace laws covering wage decisions in a market in which workers should be able to name their price because demand for them is high. "Despite, on most counts, the tightest labour market conditions for a generation, growth in most measures of labour costs has remained well disciplined for the past two years or more, after a mild acceleration earlier," said the central bank chief, whose duties include setting interest rates. "Wages are rising quickly in some areas, but quite slowly in others. "That is, relative wages are changing, adjusting to the forces at work on the economy but without, so far at least, a serious inflation of the whole economy-wide cost structure."

That means wages are going up significantly where they can be afforded, say in the mining industry, but those increases are not being passed on to industry sectors and individual companies where they can not be afforded. That means pay rises can be paid for by increased company earnings, and are not jacking up the costs - and thus prices - in companies without boosted revenue.

Back when he was trying to install Fundamental Injustice Day in the nation's history books, Kevin Rudd explained why this appealing situation had arisen. He quoted Prime Minister John Howard acknowledging financial deregulation and tariff reduction completed by the previous Labor governments. Rudd said Howard believed the third pillar of reform was "fiscal consolidation" - cutting debt - and the fourth was changes to industrial relations law. Hey, maybe he was right.

Nobody should think the economy is problem-free and that all are benefiting from good times. The organisation Australians for Affordable Housing notes that over the past year house prices have risen twice as fast as incomes, and that rents are increasing faster than general inflation.

In another direction, the Australian Industry Group last week warned that the high value of the Australian dollar was making it hard to sell manufactured goods overseas.

Then there is the boom itself. Labor's shadow treasurer Wayne Swan dismisses Government involvement in the boom's creation, saying it is a product of "the strongest global economic growth in more than 30 years". Swan also points to Stevens' speech, where he mentions the expanded global economy and called it "a boost of first-order importance, with real national income nearly eight per cent higher than it would otherwise have been". However, at the coming election the issue might not be the derivation of good times but whether or not Kevin Rudd knows enough about the economy to maintain them

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Geography revival?

FIRST it was history, then English - now the Federal Government has geography firmly in its sights. Federal Education Minister Julie Bishop yesterday announced a $45,000 study into the teaching of geography in Australian schools in a bid to ensure the subject is included in the curriculum. The inquiry will look at what is being taught in states, including Queensland, where geography and history have been subsumed into Studies of Society and the Environment in most schools.

The federal inquiry follows lobbying by geography teachers and academics, who yesterday welcomed the move. Ms Bishop said it would investigate the decline in the quality of geography tuition in schools. "The Institute of Australian Geographers and the Australian Geography Teachers Association have raised concerns with me that too little geography is being taught in schools, and that in some cases, environmental and political studies are masquerading as geography," she said.

Queensland Education Minister Rod Welford welcomed the inquiry and said most of the concern centred on how well students were being prepared up to Year 10 to take on the subject at senior level.

Australian Geography Teachers Association President Nick Hutchinson said geography professionals had lobbied hard for the inquiry after geography barely rated a mention when the national curriculum was being mooted. "I think we were really afraid that geography was going to disappear," Mr Hutchinson said. The inquiry will examine the time devoted to geography and determine minimum course requirements and should be completed by August.

Mr Welford, meanwhile, announced yesterday that teaching graduates unable to find jobs would be paid by the State Government to retrain in a bid to tackle the chronic shortage in special education. The Government was offering 35 scholarships worth $4000 each, he said. The scholarships will fund graduate certificate courses in semester two this year and will target primary graduates with good results.

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'Tough love' plan for Aboriginal communities

ABORIGINAL families would be stripped of welfare payments if their children are abused or miss school under a plan by indigenous leader Noel Pearson to make benefits conditional on behaviour. Payments would also be withheld if public housing was damaged or rent not paid, or if people were found guilty of domestic violence.

In the most far-reaching reforms ever outlined for Aboriginal communities, Mr Pearson recommends a community-based authority be established with enough powers to withhold welfare entitlements.

Just days after a landmark report found sexual abuse was rife throughout indigenous communities in the Northern Territory, Mr Pearson's Cape York Institute has called for all welfare payments to be conditional as part of a program to rebuild "social norms". The blueprint, From Hand Out to Hand Up, a copy of which has been obtained by The Australian, is expected to be released within days. Financed by the Federal Government, it lays out a series of "obligations" that indigenous families would have to meet in order to receive full welfare entitlements, such as Newstart and Community Development Employment Project allowances. The report places better education outcomes at the heart of a push to improve Aboriginal self-sufficiency and remove the last vestiges of a "passive welfare" culture.

Mr Pearson, whose template to wean indigenous people off welfare has been criticised by some Aboriginal leaders, recommends that family payments be halted if three unexplained absences are recorded by a child during a school year. To ensure children are not left destitute as a result, payments would be redirected to a responsible adult within the community. They would then ensure the child was properly cared for. Entitlements could also be withheld when children were found to have been neglected or when parents knowingly allowed abuse to occur.

With alcoholism and drug-taking rife in some indigenous communities, the report recommends people be stripped of their benefit rights if they commit offences involving alcohol, drugs, gambling or domestic violence. And a month after the federal Budget placed a new premium on private housing for indigenous communities, the report says adults must abide by public housing tenancy agreements. Payments would be stopped if people were found guilty of using their homes for illegal purposes, if they damaged the houses or if rent were not paid.

In order to police the new approach, the report recommends a statutory authority - the Families Responsibilities Commission - be established and granted sweeping powers. The institute suggests that the FRC be chaired by a former magistrate - to give it the "gravitas and stature of a Crown body" - and be given a series of options for dealing with transgressions. For minor offences, a warning could be issued. But more serious - or recurring - offences would see the FRC step in and order payments be stopped.

The recommendations will be a challenge for the Coalition and the Labor Party ahead of the election. A series of senior ministers have in the past backed the thrust of Mr Pearson's "tough love" approach to reform, but it is far from certain that the Coalition will endorse his new recommendations, which would require significant changes to social security laws.

In a searing assessment of life in Cape York, which has four main indigenous communities, the institute says a welfare "pedestal" exists. This encourages people to obtain welfare and remain on it, "despite employment or education opportunities being available in or near communities". "The goal of policy solutions to address the pedestal is to see individuals come off welfare (or not enter welfare) and join the real economy or undertake education and training opportunities," the report says.

Mr Pearson has over the past decade led debate on the need for reform, but his often uncompromising approach has raised hackles within sections of the indigenous community.

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Flesh-eating bacterium on rapid rise in Victoria

HUNDREDS of Victorians each year are contracting a virulent flesh-eating bug described by scientists as "the most dangerous in the world". More than 300 Victorians fell victim to the invasive 'A' streptococcal disease during a two-year period of a study and 25 of them died.

Medical experts want the disease to become a reportable condition in Victoria. Australian streptococcal expert Prof Jonathon Carapetis, who led the study, said people in Victoria were not being protected against the spread of the bacteria. "There is a strong case that people who come in contact with streptococcal patients are at risk," he said. "They should be given antibiotics to prevent contracting the nasty bug, as is done with those who come in contact with meningococcal - and they are not. "We also believe that immuno globulin and clindamycin can stop the bacteria, but most people are not being given these drugs."

The disease particularly affects children under five, pregnant women and the elderly. One of the victims in the study was a two-year-old child, with a history of a sore throat, who died of streptococcal bacteraemia.

Prof Carapetis said the Victorian health department needed to make it a notifiable disease because Victorians were at risk. "It has been around for decades and we suspect in that time there have been many more severe cases," he said.

The study, between 2002 and 2004, tracked the number of serious strep cases found in hospitals and GP's surgeries in Victoria. Of the 25 victims, five died from necrotising fasciitis (flesh-eating disease) caused by the streptococcal bacteria and 11 died from toxic shock because of overwhelming infection.

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