Tuesday, May 18, 2010

Budget papers fudged to boost Rudd's stimulus effect

"It will always be difficult," said Ken Henry in February 2009, after he was asked whether the government would ever be able to judge the success of its stimulus package. Just over one year later, that caution has completely disappeared.

About a minute into Wayne Swan's budget speech last week the Treasurer said he was "proud to announce this strategy is working, ensuring our economy has far outperformed the rest of the developed world; Without stimulus, we would have gone backwards".

And the Government's budget papers soberly concur: "It appears that the impact on economic growth of the fiscal stimulus that countries, such as Australia, put in place has exceeded expectations."

So: verdict's in? Not quite.

Certainly, Australia's economic performance has been comforting. Our unemployment rate is around 5.4 per cent. Compared to the United Kingdom, which has an unemployment rate of 7.8 per cent, or the United States, which has an unemployment rate of 9.9 per cent, we're doing pretty damn well.

But the question isn't whether we have done well. It's whether we have done well compared to how we would have done if we hadn't had a stimulus, or if it that stimulus had been smaller.

And here the Government has scored an extraordinary own goal.

Slotted within Budget Paper Number One, Statement Two, Box Four is a graph which purports to be the final word on stimulus packages. The graph measures the size of the stimulus packages of 11 countries. It then calculates how their economies have performed, compared to how the International Monetary Fund one year ago predicted their economies would perform. Using this technique, the graph shows a big stimulus package is closely correlated with good economic performance.

Putting aside whether the causation flows the other way (could dire economic forecasts from the IMF have scared countries into implementing bigger packages?) it's an elegant way of showing stimulus works.

Well, it would be - if the Treasury hadn't cherry-picked the data.

In fact, there's a pretty strong case the Government is being deliberately misleading.

That's because the IMF data on which the Treasury graph is built doesn't list just 11 countries. It's actually a list of the G20 countries - 19 states plus the European Union.

RMIT Professor (and my IPA colleague) Sinclair Davidson ran the calculation again, this time with all 19 countries included. And - surprise! - the correlation disappears. There is no statistically significant relationship between stimulus package size and economic performance.

So why did Treasury pick those 11 countries? They're not OECD countries - there are 31 members of the OECD. And they're not the world's "advanced economies", although Wayne Swan keeps using that phrase. Thirty-four countries make up the IMF's official advanced economies list.

Damningly, the Treasury seems to have deliberately ignored those G20 countries (like Russia and South Africa) which implemented massive stimulus packages but have subsequently had terrible economic performance, and those countries (like India, Argentina, and Indonesia) which had small packages, but have still done well.

It's like ignoring patients that died after they took an experimental medicine, or got better without taking it - but applying to be listed on the PBS anyway.

This is not an academic problem. Whether the stimulus package worked is at the absolute heart of the Rudd Government's re-election strategy. If the Government can't take credit for Australia's economic performance, it loses its only real policy success.

Governments aren't all-knowing and all-seeing. The stimulus package was a crap-shoot as much as anything else; a massive amount of money dumped as quickly as possible into an essentially random smattering of industries, with the hope the Government could lift the economy by brute force alone.

After all, does anybody believe that home insulation is the pivot on which our economy turns?

Few Governments have had so many chips fall in their favour. The economy is performing well, and, at least until late last year, an overwhelming majority of Australians supported the Government's proposed action on climate change. Yet, even with all this, Kevin Rudd has seen a precipitous fall in his popularity. No surprise Rudd and Swan are falling back on a story about performance during the economic crisis.

Rudd is being forced to run on his economic record, and Treasury's argument that countries which pushed through a big stimulus had a big recovery.

So the fact that Treasury had to cherry-pick data to prove the stimulus worked is not a good look.

It makes you nostalgic for the old Ken Henry, who back in February 2009, said "there are sufficient differences among economies that that sort of analysis … would not be particularly useful".

Shame this modesty couldn't last an election cycle.


The population implosion

Comment from Miranda Devine

To mark the 50th anniversary of the Pill this week, 1960s sex symbol Raquel Welch blamed the oral contraceptive for the breakdown of marriage, decline in moral standards and rise of promiscuity.

"One significant, and enduring, effect of the pill on female sexual attitudes during the '60s, was: 'Now we can have sex any time we want, without the consequences. Hallelujah, let's party!' " she wrote in an article for CNN.

The 69-year-old actress said that she felt it was her duty to "speak up" and wave the "red flag of caution" because she used to be a sex symbol.

But what she didn't mention was the impact on birth rates and the associated demographic disaster the world is hurtling towards.

As the tattered sexual revolution spawned by the pill hits middle age we can see the consequences of unmooring sex from the possibility of children, and the rejection of the age-old imperative to be "fruitful and multiply".

The result is a so-called contraceptive culture, societies which regard children and childbearing as a nuisance, a burden and an expense, rather than a blessing. We seem trapped in the mindset of past doomsayers, from Thomas Malthus to Paul Ehrlich who claimed in his 1968 book The Population Bomb that the greatest catastrophe facing mankind is too many people. Today, the pervasive misanthropism of the modern green movement holds that every new human is a burden to the planet, just another carbon footprint to be resented.

There is even a green charity in the UK, PopOffsets, which has people offset their carbon footprint by funding projects to reduce the number of babies in places like Madagascar.

But, as the US conservative writer Don Feder told a group of young men from the University of NSW's Warrane college on Wednesday night, the precipitous decline of birth rates by more than 50 per cent worldwide since 1979 signals a looming "Demographic Winter".

Whereas in 1979 the average woman on the planet had six children, today she has 2.8, and declining, according to the United Nations World Population Prospects publication of 2006.

There are 6 million fewer children aged under six today than in 1990. "It could be the greatest crisis to confront humanity in this century," says Feder, my former Boston Herald colleague.

The Demographic Winter will spark "wars and international conflict on a massive scale". Nations without enough young people to man armies will fall prey "to those who have a cause to advance".

In much of the developed world, birth rates today have sunk to below replacement levels of 2.13 children per woman.

Contrary to popular opinion, these trends of the past 30 years are being mirrored in the developing world, in Asia, Latin America and the Middle East.

"Barren wombs and empty cradles" are a phenomenon of both the Christian and Muslim worlds. Even Iran has retreated from its baby boom of the 1980s, with the fertility rate of 6.5 collapsing to 1.7. The same trend can be seen in the once fruitful United Arab Emirates, Tunisia, Bahrain, Kuwait and Lebanon. The world's most populous Muslim nation, Indonesia, has a birth rate just above replacement, at 2.31, according to the 2009 CIA World Factbook.

The birth rate for Muslim immigrants in Europe may be higher than the countries they come from, leading to the widely predicted Islamification of the continent in the next 50 years. But it is nonetheless declining.

Despite recent small gains, Australia's birth rate of 1.78 is still below replacement, below China's 1.79. Britain is worse at 1.66, Canada at 1.58, while the US is at 2.05. Germany and Russia are at 1.41, above Italy and Spain at 1.31. Catholic Poland is languishing at 1.28.

Japan, at 1.21, has lost 24 per cent of its people in 20 years. By 2050 there will be two senior citizens for every child.

The highest birth rate is in sub-Saharan Africa with Niger at 7.75, Uganda at 6.77.

In the Anglosphere, New Zealand has the highest birth rate, at 2.10, and a tradition of cherishing babies in hundreds of tiny ways - from restaurants with high chairs to nosy questions of newlyweds to official street signs pointing to baby health clinics. By contrast, in Australia, children are regarded as nuisances, with complaints about monster prams and bitter competition for space in Sydney parks. Attitudes may make a difference.

Feder attributes the Demographic Winter, at least in the West, to the "me generation" selfishness of the '60s sexual revolution, and 43 billion abortions worldwide each year.

"Today for the first time in history just under half of the world's population uses some form of contraception … We don't ask if sex has an emotional or moral component, or if it serves a higher purpose, only if it's safe."

Unlike Malthusian environmentalists, he insists "people are the ultimate resource". The population explosion of the past 200 years - from 980 million to 6.7 billion - fuelled "every human advance from the Industrial Revolution to the computer age [and the] phenomenal growth of productivity, prosperity, scientific advance, health and general human well-being."

Today's children are the "workers, employers, producers, innovators, caregivers and taxpayers of tomorrow".

As fewer babies are born and people live longer, we face the perfect demographic storm, with the greying of the population stressing welfare and health systems, which are funded by less tax from a shrinking workforce.

It's a warning for Australia. If the shadow cabinet this week did put the kybosh on Tony Abbott's suggestion of a $10,000 baby bonus for stay-at-home mothers, it was a shortsighted victory for fiscal rectitude.

Abbott's proposal for a parental leave scheme guaranteeing working women wages so they can spend time with their newborns was similarly scorned earlier this year. But as we saw with the baby boomlet associated with the 2004 baby bonus, governments can influence family choice. Abbott seems to be rare among his colleagues as a politician who understands the dangers of the Demographic Winter.


Leftist ratbag ends up as Qld. State Premier

She leads international trade trips, has appointed her husband to a plum post in the bureaucracy and appeared in Australian Women's Weekly. Yet almost 30 years ago, Premier Anna Bligh was rallying against junkets, opposing jobs for the boys and fighting the "insidious" impact of women's magazines.

Even the humble milk flavouring Ovaltine earned the ire of Anna Bligh in her days as a student radical at the University of Queensland.

Minutes of student union meetings from the early 1980s have emerged for the first time, revealing the extreme change in Ms Bligh in her journey from student to state leader. And her chief nemesis on many of the issues she championed at union meetings was fellow student leader Paul Lucas, her current deputy and close political ally.

In one exchange in 1981, the pair found themselves on the opposite side of an argument as to whether a ban should be placed in the union shop on the sale of men's magazines Playboy and Penthouse and women's magazines Cleo, Cosmopolitan and Women's Weekly.

Mr Lucas argued the magazines should continue to be available and banning them was a "very offensive" type of censorship. However, Ms Bligh argued it wasn't censorship if they were sold elsewhere. She said the union should not profit from pornography that promoted violence against women, and from "insidious" women's magazines that encouraged a "passive" attitude.

"Anna did not agree that the removal of Playboy etc from sale in the union shop was censorship, as they could be bought anywhere in Australia," the minutes record. Ms Bligh won, and the magazines were banned in a motion that also promised "militant action" against any anti-women, anti-homosexual or anti-lesbian material.

The pair also found themselves at loggerheads the following year in what Bligh termed the "Ovaltine scandal". Ms Bligh led the charge against the milk flavouring after being offended by scantily clad women handing out Ovaltine sachets on campus.

And in her pitch for the student union presidency, Ms Bligh campaigned on a platform of being opposed to junkets and jobs for the boys. Nor did she back down on her opposition to Playboy and Ovaltine. When Mr Lucas fought for election on the student body the following year, he campaigned on a platform of "Bringing Ovaltine Back" – after originally supporting the ban.

But not all Ms Bligh's political rhetoric has changed over the ensuing years. She promised then – as she promises now – to take issues out of the "too hard to handle" basket.

When Mr Lucas ran for vice-president in 1981, he used a spiel in Semper [the student newspaper] to attack his opponent – (now retired MP) Rod Welford – as an "unknown man", and promised booze and better food for the bistro. Mr Welford won, and so did the magazine and milk flavouring, which were eventually allowed back.

Ms Bligh yesterday said she and Mr Lucas now laughed about their student battles, yet their passion for debate and ideas remained the same. "I think it's a great thing for young people to be involved in politics, and I certainly look back on that experience fondly," she said. "I think like most people, my views on things have changed over time as I've gotten older and wiser."

Mr Lucas remains gracious in his defeat at the hands of Mr Welford, saying he was also "better looking than me". He was philosophical about his student days, saying while his opinions now appeared quaint it was important for young people to believe in something. "If only life in 2010 was as simple as having to decide whether or not to ban Ovaltine or Playboy," he said.


Government medicine in its usual form

A 4 hour wait is GOOD by government standards -- and too bad if some of the peasants die

NAMBOUR Hospital's emergency department has been described as "frequently a disaster zone" after an elderly man died while waiting four hours without seeing a doctor.

Neville Keith Evans, 87, died in the Nambour ED at 8.20pm on Mother's Day, after arriving from the Sunshine Coast's Rotary Garden Village with stomach pains at 4.20pm. The incident follows three deaths in the Nambour ED in April, two assessed on arrival as non-urgent category 4 patients.

Australian Medical Association Queensland president Mason Stevenson said Nambour emergency patients were frequently having to wait much longer than what was considered medically safe before being seen by a doctor.

"We now have patients sporadically dying at Nambour emergency department while waiting to be attended to, at times after having been triaged as a non-emergency case," said Dr Stevenson, a Sunshine Coast general practitioner.

"The Nambour emergency department is a disaster zone on frequent occasions. Staff are doing the best they possibly can but they are deluged with patients from a huge catchment area of almost 500,000.

"With that scenario, there will be loss of life. People will get under the radar and the severity of their condition may not be fully appreciated when you are overwhelmed, overworked and exhausted."

Ambulance union organiser Kroy Day said Mr Evans was assessed as a category 3 patient when he arrived at the hospital with paramedics and should have been attended to within 30 minutes under medical guidelines.

Instead, Mr Evans spent the next four hours being monitored by a paramedic on an emergency department bed because ED staff were too busy to see him. At 8.20pm, his heart stopped and he could not be revived. "If the doctors or nurses had seen him an hour earlier, or half an hour earlier, would it have made any difference? We don't know," said Mr Day, of the Liquor Hospitality Miscellaneous Union. "But I do know waiting four hours is wrong."

Sunshine Coast-Wide Bay Health Service District chief executive officer Kevin Hegarty extended his sympathies and offered support to Mr Evans' family.

"Any death that occurs within a hospital is subject to review and the outcome of the review will be made available to the family," Mr Hegarty said.



Ruby of Toowoomba said...

Does the Govt really care? Our hospitals are at crisis point. Our doctors and Nurses are carrying unbearable workloads. Yet there is unlimited millions for new sports ground and junkets to all over the world for politicians. The waste involved in the BER scheme, the ETS scheme would have improved hospoital care so much.

So, does the Government really care? I think not!

Paul said...

OK, so far I've been paid. I thought that last fortnight until I actually saw the chaos that was my payslip, so it'll be interesting to know this time just what I've been paid for (and not paid for). You know here in Cairns they restructured our pay office in the lead up to the new system, taking away single points of contact for individual departments. As a result for us here the turmoil of the new system was layered over the turmoil of a reorganisation that didn't seem needed.

I'm waiting for the Government to start blaming it on the "complexity of the award" and start calling for "simplification". All the while hoping that we forget that the previous pay system worked.