Afghan deal to return asylum seekers

AN arrangement to send failed Afghan asylum seekers back to Kabul will help Australia deal with unauthorised boat arrivals, a Labor frontbencher says. Canberra and Kabul reportedly have agreed on a draft memorandum of understanding that paves the way for involuntary returns. The historic memorandum could be signed within weeks, The Australian said today.

Parliamentary secretary Mark Dreyfus says discussions between the two nations have been underway for some time. "It's an important part of any system for dealing with unauthorised arrivals," he told Sky News today. "We prefer that people went on a voluntary basis after their claims are rejected. "If they don't it's important ... to make sure it's done in an orderly way."

Liberal backbencher Paul Fletcher says reaching agreement would help deal with overcrowding in Australia's detention centres, which currently house about 6000 people. "That (figure) includes a significant number of people (who've) been denied refugee status and ... (are) required to return to their homeland," he said.

Figures from the immigration department show that 4342 Afghans have arrived since late 2008 and only two have voluntarily returned to their home country in that time.

Opposition Immigration spokesman Scott Morrison says any deal is unlikely to help with the immediate problem of overcrowding in detention centres. "If they do get to a deal no-one will be going home anytime soon because of the ability to pursue ... failed claims in the courts," he told the Macquarie Network.

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Hasty banking laws will have adverse consequences

ANYONE who believes that allowing gravel to call themselves boulders will convert a rock garden into Stonehenge urgently needs a dosage check. And that Wayne Swan and Joe Hockey seem to be sharing the meds hardly adds to one's confidence in the proposed banking reforms. But even putting the pebbles-into-pillars fantasies aside, the real trouble with the reforms is that they could inflict serious harm, merely so as to show that the government is "doing something".

The proposed ban on "price signalling", whatever that means, highlights the flaws.

Banks, like any other business, have a legitimate interest in informing their customers about likely trends in prices. That helps customers plan, and may also give them the time to shop around if they believe there are better deals to be found. Moreover, masses of research shows consumers react far better to price increases if they are forewarned and understand why they occur.

As a result, one would want convincing evidence before prohibiting firms from disclosing their pricing intentions. But rather than demonstrate there is a problem that needs fixing, the Treasurer merely says that the proposed ban "covers a gap in [the] Trade Practices Act" relative to "laws [that] already exist in the US, the UK and Europe".

That claim is at best misleading. American, British and European Union competition law would not prohibit the disclosure of price information unless it formed part of, or otherwise supported, explicit or tacit collusion; under the government's proposed approach, the conduct could be prohibited even if there were no collusion and no prospect of it.

Rather, all it requires for conduct to be in breach is that one purpose of the disclosure is to substantially lessen competition, where that purpose may be inferred by a court, even if there is no evidence that such a lessening of competition was the company's aim or intention.

It is easy to say that no court would come to such a finding capriciously. And it is also easy to say that actually making out the proscribed purpose could be a challenge. But long experience proves that bad laws impose high costs: not least by creating uncertainty as to what is allowed and what is prohibited. That the prohibition comes with swingeing penalties only adds to the risk that it will chill desirable conduct.

This is not to argue that our competition laws are in perfect shape. Rather, the provisions that deal with price-fixing need to be simplified and clarified. But sensible policy would tackle these deficiencies directly. Instead, the Treasurer is fiddling at the edges, in the process undermining the laws' coherence and integrity.

That the proposed changes will only apply to banking makes matters worse. It is for good reasons that successive governments have emphasised the need to ensure the competition provisions apply to all sectors equally, avoiding distortions associated with artificial boundaries.

And if "price signalling" is indeed so serious a problem, why tackle it in only one sector? Surely this is merely an admission that the legislation is hastily designed and rich in risks and unintended consequences?

All that and more could also be said of the proposed ban on exit charges. Far from being a barrier to competition, these were brought in by smaller mortgage lenders as a way of recovering costs and capturing part of the gains from competing aggressively to attract customers.

That exit fees, set at a moderate level, would enhance competition is hardly difficult to understand: these fees increase the prize each firm gets from winning a customer and hence encourage them to invest in customer acquisition.

And if they can't recover those costs from exit fees, they will either invest less in acquiring customers or recover the costs of doing so in other, less efficient, ways.

One might hope this would lead to a cautious, evidence-based, approach. But no such fuddy-duddy attitudes here. Rather, preferring decisiveness to prudence, the government proposes a blanket ban on mortgage exit fees, despite a complete lack of any evidentiary basis for so drastic a measure.

Nor are the interventions aimed at assisting smaller lenders better thought through. Rather, these too raise obvious questions the Treasurer's statement simply ignores. How can extending the deposit guarantees be justified, especially given that these are not priced in a way that adequately reflects and mitigates the risk taxpayers bear from the insurance they are providing?

And surely encouraging banks and credit unions to advertise the fact that they are government guaranteed courtesy of the proposed new "Government Protected Deposits" symbol, presumably modelled on the Heart Foundation's tick, will reinforce expectations of unconditional bail-outs, increasing yet further the dangers of moral hazard?

As for an increased commitment of public funds to buying residential mortgage backed securities, this involves the commonwealth selling government bonds, a very low risk instrument, and using the proceeds to purchase an asset that has substantially higher risks: indeed, so high a risk that private buyers are reluctant to purchase RMBS at current prices.

What is proposed, therefore, is a deterioration in the quality of the balance sheet of taxpayers. That deterioration amounts to a subsidy from taxpayers to the issuers of RMBS.

But where is the evidence that the benefits from the subsidy outweigh its costs? Indeed, where are the estimates of just how large that subsidy is likely to be, and to whom it will accrue? And where is the analysis showing that what Australia needs is yet more lending on houses, this time funded by taxpayers?

Don't waste your time looking, for the answers are nowhere to be found.

Is this really what we have come to? That with considerable concurrence between government and opposition, policy for perhaps the most important, but also most vulnerable, part of our economy is being made without any kind of careful evidence or analysis?

If so, these measures, however limited their apparent scale, foreshadow a future that is truly frightening: in which it isn't Stonehenge, with its timeless pillars, that the government is building, but a shaky and expensive house of cards.

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Party revolt growing over Prime Minister Julia Gillard's WikiLeaks stance

JULIA Gillard is confronting a growing backlash within her own party, with more Labor MPs yesterday attacking the Prime Minister's language and declaring their support for WikiLeaks's founder Julian Assange and free speech.

Ms Gillard said the latest WikiLeaks information dump was based on an illegal act, but Canberra has since insisted that was a reference to the original theft of the material by a junior US serviceman rather than any action by Mr Assange.

However, Labor Left MP Maria Vamvakinou from Melbourne yesterday told The Australian the government had read the public mood wrongly on the issue and said she supported the release of the classified material. "The leaked material, I believe, the public should know about and have the right to know about this information. I believe that very strongly," she said. "If you believe in freedom of speech, you can't pick and choose. "I can't understand the comments that have been made by the members of the government. They are unwarranted."

The ALP's parliamentary Left national convenor Doug Cameron said he believed in freedom of the press and the right to publish material without Mr Assange being depicted as a traitor.

"The guy is entitled to a presumption of innocence. He is entitled to consular support and these argument . . . that he is some kind of traitor, I think has to be in the context that it (WikiLeaks) is operating like any other media outlet," Senator Cameron said. "It really is about the problems the Americans have in terms of their security systems."

West Australian Labor senator Louise Pratt said she wanted Mr Assange to get full consular assistance and said he should not be prejudged. "I hope that he doesn't turn into the next David Hicks for the government."

Following suggestions by Ms Gillard and Attorney-General Robert McClelland that Mr Assange may have his Australian passport cancelled, Kevin Rudd told The Australian in Cairo that any such decision was his as Foreign Minister.

The government has asked the federal police to probe whether Mr Assange had broken the law, a process Mr McClelland said could take a long time.

The Coalition's foreign spokeswoman Julie Bishop yesterday accused the Gillard government of being thrown into disarray by Ms Gillard's response to WikiLeaks.

Mr Rudd has consistently taken a different line to Ms Gillard and Mr McClelland.

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Expensive Qld. government water bungles

A TOP-SECRET dossier has exposed the embarrassing water issues plaguing the Bligh Government - many of which it has tried to deny or deflect.

They include major blunders never publicly revealed until today, including the $2.3 million spent upgrading Queensland Water Commission's office, which is now half-empty because of its reduced role, and concerns about "rogue" recycled water test results.

In recent months, the Government has sought to deflect many of the issues raised in the document.

When quizzed about the value of water being recycled and poured daily into the sea, Mr Robertson's office initially claimed this did not happen routinely other than for testing. However, department director-general John Bradley later admitted the amount was on average 33 million litres a day – about $40,000 worth of water based on present wholesale prices.

The Government also tried to deny consumers would effectively pay for the scuttled Traveston Dam after being asked why the 10-year price path for water had not been revised down to account for the $2.1 billion in reduced expenditure.

However, Mr Robertson recently tried to make a virtue out of removing part of Traveston's original costs from prices so households could get a $5-a-year discount on their annual water bills.

Acting Opposition Leader Lawrence Springborg said the document once again confirmed the rampant culture of spin, lies and cover-up within the Bligh Government. "For too long Labor ministers have tried to get away with the Gordon Nuttall defence of claiming their department hadn't briefed them," he said. "This culture of denial is costing taxpayers hundreds of millions of dollars.

The Government has been under increasing fire over rising water bills, prompting it to mothball plants worth millions of dollars in a bid to cut costs. The $1.2 billion Tugun Desalination Plant, which has been plagued by problems since it opened last year, will be shut early next year, along with half the $380 million Bundamba treatment plant and the new $313 million plant at Gibson Island.

Households have been hit with average rises of between $100 and $300 a year to pay for building the water grid.

More HERE