Monday, January 21, 2008

Rudd's plan to beat inflation -- by spending cuts!

Although I was virtually alone among Australian conservatives in predicting that Rudd would be roughly as conservative as he said he was, this still has rather gobsmacked me. This is as fiscally conservative as you get

Kevin Rudd will fight inflation with a "hardline" budget surplus target of up to $18 billion to be achieved through savage spending cuts. Outlining in Perth today a five-point plan to fight inflation, the Prime Minister will set a new target for the budget surplus of 1.5per cent of the nation's gross domestic product. The move follows the Howard government's pledge made during the election campaign to maintain a budget surplus of 1 per cent of GDP.

Mr Rudd will also flag new policies to create "real incentives" for private saving. He did not elaborate on the measures yesterday at a "community cabinet" session in Perth during which he and his ministers took questions from the public, but the reforms could include policies to encourage superannuation and savings plans to promote home ownership. These measures would have the potential to take pressure off home interest rates by slowing the surging pace of consumer and business spending that has the Reserve Bank worried.

Blaming the Howard government for failing to tackle inflation, Mr Rudd will also warn of new spending cuts to be unveiled in the May budget, beyond the $10 billion savings plan outlined in last year's election campaign. However, the Prime Minister yesterday signalled that he remained committed to delivering tax cuts of more than $30billion, and warned the current tax system was "too complex" and served only the interests of accountants. [Hear here!] "The future of the national economy is core business for the new Government of Australia," Mr Rudd will say in his speech today. "We are embarking on a hardline approach to fiscal discipline - aiming for a budget surplus of at least 1.5 per cent of GDP in 2008-09, provided growth prospects remain as currently anticipated. "This is higher than the target outlined by the previous government as recently as November. "It won't be easy. In going to the election we announced $10billion in savings over the forward estimates. We will be looking to make savings beyond that through our razor gang."

Mr Rudd, who proclaimed himself an "economic conservative" during the election campaign, had previously pledged to maintain a budget surplus of 1 per cent of GDP. But with Wayne Swan warning on Friday that inflation was likely to remain at or above the Reserve Bank's target of 3 per cent over the next 18 months - and the shockwaves of the sub-prime credit crisis buffeting consumer confidence and the Australian share market - the Rudd Government is determined to act.

The second edict of Mr Rudd's five-point plan, after setting the budget surplus target, is to examine "all options to provide real incentive to encourage private savings". [Hear here!] The third priority is new policies to tackle the chronic skills shortage.

Mr Rudd will also argue that the Government must provide national leadership to tackle infrastructure bottlenecks. Finally, the Government will aim to deliver "practical ways of helping people re-enter the workforce and removing disincentives to working hard - to lift workforce participation".

In his speech, Mr Rudd will argue Australia faces conflicting economic currents including "a global economy (led by the US), which appears to be slowing, an ongoing terms-of-trade boom driven by Asia-Pacific economies and significant domestic inflationary pressures at home". He will warn that the inflation challenge Australia faces "is very much the Liberals' parting gift to the Australian economy". And he will mock Mr Costello's election claim that "inflation is right where we want it". "A decade of neglect of the twin investment deficits in infrastructure and skills [Mainly by Leftist State governments] has meant our economy has been ill-prepared to deal with the demand surge flowing from the terms-of-trade boom," Mr Rudd will say. "The inflation problem we currently face has not emerged overnight. It cannot be solved overnight. But we can start immediately. And we have."

Australia's current gross domestic product, a measure of national income, including wages and profits, is about $1.1trillion. This suggests the Rudd Government, on current settings, would unveil a first budget surplus of between $16billion and $18billion. Peter Costello announced in his final budget last May a forecast of an underlying cash surplus of $12.7 billion. This was updated in the Mid-Year Economic Forecast Outlook released during the election campaign to show a surplus of $14.4billion, which is about 1.25per cent of GDP.

John Howard later predicted the budget surplus could be 50per cent higher than the $14.4billion forecast. "Budget papers show that in the last three fiscal years, the final surplus has been at least 1.5 per cent of GDP, or 50 per cent higher than the 1per cent figure projected in the original budget forecasts for each year," the then prime minister said in November. If this trend continues, the Rudd Government will comfortably achieve its new target of a surplus of 1.5per cent of GDP.

Mr Rudd, who toured flood-stricken towns in Queensland early yesterday, later jetted to Perth to join his ministers in meeting voters at the Canning Vale College. Pledging a more open style of government that would "listen" to the community, he answered questions from the floor during the "community cabinet" session. Grilled on the tax system, he pledged fundamental reform. Mr Rudd said he understood the tax system needed to be simplified and vowed to "get the balance right".

The Treasurer told the meeting the Government was committed to tax reform but admitted "it will take time". "There is no magic pudding out there," Mr Swan said.


Australians spend more on their housing

These findings certainly vindicate John Howard's call for State and local governments to be less obstructive about new housing developments

Australian homes are the least affordable in the world, with regional cities including Mandurah outside Perth and Queensland's Sunshine Coast emerging as among the most expensive. A survey of 227 cities published in the 2008 Demographia study of international housing affordability suggests the Rudd Government should not focus exclusively on Sydney, Melbourne and Brisbane.

The least affordable cities in Australia are Mandurah, a commuter town 74km south of Perth, which is ranked 6th in a list of the world's least affordable cities, and the Sunshine Coast, a favourite holiday destination of Kevin Rudd, which is ranked 7th. Sydney is ranked the 11th least affordable city in the international survey.

The least affordable place to live in the world is Los Angeles, but because Australia has the most cities - 18 - in the top 50, it is the least affordable nation for housing. "Australia (with New Zealand) has the most unaffordable housing in the surveyed nations," economist and report author Wendell Cox said. "There are no affordable markets in Australia and there are no moderately unaffordable markets. Twenty-five of the 28markets are rated severely unaffordable. "All of the large capital cities (Sydney, Perth, Melbourne, Brisbane and Adelaide) are rated severely unaffordable. The best ratings are seriously unaffordable in three smaller markets, Maitland (NSW), Ballarat and Bendigo (both in Victoria)." Perth, ranked 19th, is almost on a par with London, which is the 18th least affordable city. The 24th least affordable is another West Australian city, Rockingham, a holiday destination 47km south of Perth.

"It's not just the big cities. This study confirms that affordability is also a problem in areas including Mandurah, the Sunshine Coast and the Gold Coast," Property Council of Australia chief executive Peter Verwer said. "It's important with these new cities that we don't make the same mistakes, which is put a ring around and them and say: no more development beyond here. That just makes prices rise. "Australia's dismal performance highlights the need to reverse the policies that created today's artificially inflated house prices.

"On average, Australian families are forced to spend 6.1 times their entire household income to buy a typical home compared to 3.1 times in Canada and 3.6times in the US, and that's before interest charges. "In Sydney, the multiple is 8.6 and Melbourne is 7.3, but it's even higher in some of Australia's fastest-growing cities, including Mandurah, (9.5), Sunshine Coast (9.3) and the Gold Coast (8.6)."


I love plastic bags

Is anyone else irritated by the teenage lass at the supermarket showing her disdain when you opt for a free plastic bag over her suggestion of a purchased green bag to ferry home your groceries? Or is the lack of intellectual rigour in the whole debate about plastic bag use annoying you? Of course, it is politically correct not to like them; to front at the shops with a handbag full of crisp green or red or yellow or purple bags to carry your purchases. And it's politically incorrect to argue what I'm about to do here: that perhaps plastic bags might not be the environmental bogie we claim.

But in the absence of cold, hard facts about how people are using plastic bags, and what alternatives they are using to replace them, people who choose to use them should be left alone. And certainly not made to feel bad by someone trying to shame them into buying another green bag.

New Environment Minister Peter Garrett, who his friends would say had a lack-lustre election campaign, hasn't helped the debate by rushing in and demanding all sorts of things. Especially since he is still to receive the report that reviews options to reduce plastic bag litter from a working group set up last year by environment ministers. But until that report brings down a stronger case, those looking down their noses at their neighbours using the bags should read the Productivity Commission's report on the issue. It, in short, suggests policy makers should examine whether other options - such as tougher anti-litter laws - would be more effective than banning plastic bags.

It does this in a weighty report that looks at all sides of the argument. It says that while plastic-bag litter could injure marine wildlife, claims at least 100,000 animals are killed each year are not supported by evidence. It says research commissioned by the Australian Government shows only 0.8 per cent of plastic bags become litter, that plastic bags account for only 2 per cent of all litter items, and about 2 per cent of annual expenditure on cleaning up litter is attributable to plastic bags. Given that, it is fair to ask why asking for a plastic bag at a supermarket now appears a more heinous crime than throwing a cigarette butt out the window of a moving car or dumping picnic wrappers at the beach. And if plastic bags represent only 2 per cent of all litter items, why are they getting all the attention over the other 98 per cent?

Back to the Productivity Commission report, which finds that smaller retailers have signalled they would switch to paper bags if a ban was imposed on plastic bags. But this is what the commission says: "Again, this could lead to unintended environmental costs. For example, the greenhouse gases emitted in producing a paper bag have been estimated to be around five times greater than those from producing a plastic bag."

The issue of what people use instead of plastic bags has been raised elsewhere, too, with suggestions the reduction in use of plastic bags has led to an increase in kitchen tidy bags and bin liners - which use much heavier plastics. That's relevant given some research suggests two-thirds of all plastic bags taken from supermarkets are being used for kitchen rubbish. Those who don't use them in kitchen rubbish could be risking the ire of the water commissioner if they're hosing out their bin too often.

The Productivity Commission makes many other points: that consumers want them or wouldn't use about 4 billion of them each year; that a ban could cost retailers; and that any ban would need to include exemptions on health grounds, to pack meat, for example. The commission closed its report suggesting an investigation into the environmental impacts of plastic-bag litter and consideration of why the big reduction in bag use in recent years had not translated into an environmental improvement.

Banning plastic bags or introducing a tax on them might make Garrett feel warm and fuzzy, but that's not the best way to move forward on policy. What he needs to do is wait until he receives a report from environment ministers, probably in April, investigate those areas suggested by the Productivity Commission and put forward a plan based on facts, not rhetoric. No one doubts plastic bags cause environmental damage - but there are usually two sides to every story. As politically incorrect as it may sound, the bags might not be deserving of the bad wrap they're getting.


Child rapists repeatedly set free

The "sickening" lack of justice for child rape victims, even after courts find their attackers guilty, has left children's advocates despairing. Some say this apparent disregard for abused children could embolden child sex predators and discourage victims from seeking justice. Fewer than a third of rapists convicted of abusing children aged over 10 see the inside of a jail cell. Of the handful who are imprisoned, the sentences average just two years.

Figures obtained by The Sunday Age from three Sentencing Advisory Council reports show that men aged over 40 who rape minors - especially those in their care - are more likely to be sent to jail than younger offenders, but many still escape prison terms. If the rapist is aged under 20 and the victim is over 10, the rapist is almost certain to walk away with a community-based order. The figures come in the wake of comments by the Director of Public Prosecutions, Jeremy Rapke, who accused judges of being insensitive to child sex victims' suffering after Justice Michael Kelly ridiculed the impact statement of a man who was raped as a 13-year-old by a 24-year-old male.

The figures relate to a five-year period from June 2001, when a total of 307 people (including 11 women) were convicted of raping children aged under 16. Fewer than half, just 141, were sent to jail. But a breakdown of the figures reveals a wide variation in sentencing patterns depending on the victim's age. Victoria's County and Supreme Court records show that of the 193 people convicted of raping children aged 10 to 16, just 60 were jailed; 39 received wholly suspended sentences.

Childwise chief executive Bernadette McMenamin said the low sentencing rate for sex crimes against children over 10 showed many victims were being treated as adults by the courts. "Child sexual abuse is child sexual abuse," she said. "No matter what the age or age difference. You are still a child and people fail to recognise that - it is still childhood." The abuse of an older child could sometimes have a more devastating impact.

Another report, on the sentencing of rapists of children under 10, revealed higher imprisonment rates, with 59 of the 86 rapists being sent to jail. The third report examined the treatment by the courts of adults who raped children in their care, authority or supervision. It showed judges were least tolerant of predatory teachers, foster parents, youth workers, sports coaches, religious ministers and health professionals, with 22 of the 28 who were convicted being sent to jail.

But children's advocates say the overall low imprisonment rates will not deter child sex abusers. They fear they will instead discourage victims and their families from reporting child rapes - the vast majority of which never make it to court. Australian Childhood Foundation chief executive Joe Tucci said the low imprisonment rate was appalling. A Royal Children's Hospital study of 106 children who were sexually abused, showed charges were laid in just 12% of the cases, and only five resulted in prosecution, he said. "Without convictions and punishment it reinforces for these children what these perpetrators have told them 'You are to blame, you made me do it because you didn't say no the first time'. It's sickening. We fail our children all the time," Mr Tucci said.

Sentencing Advisory Council chairman Professor Arie Freiberg said an offender's age seemed to determine whether they were jailed. He said the heaviest sentences were dealt to adults in positions of authority or care. "It's as much about breach of trust as it is the sexual offence," he said. "These children are not only unable to consent, but the age group is so significantly different . there can be no excuse that she was my 'girlfriend'."

Former prison chaplain Father Peter Norden said jail was no place for young sex offenders because it linked them with recidivist sex criminals. Instead, health, social and educational interventions worked best in rehabilitating young offenders. Childwise will release a booklet next month to help parents recognise potential predators.


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