Wednesday, June 01, 2011

Government is the partner of organized crime

By Michael Duffy and Bob Bottom.

We have just finished a 21-part history of organised crime in Sydney, for a series to be published in the Herald's new iPad edition. Most organised crime took place in the 20th century, and naturally we found ourselves pondering why.

What we found is that much of it emerged following the introduction of laws banning popular pleasures. America is famous for one big Prohibition: we had a lot of smaller ones.

What happens is that illegal markets are set up to provide the banned goods and services such as drugs and alcohol or gambling and prostitution. The volume of these illegal transactions is enormous, making it profitable for organisational entrepreneurs to move in. They take two forms: the efficient businessmen, such as Abe Saffron and George Freeman, and the standover men who in effect “tax” the illegal businesses, and give permission for them to stay open. Perhaps Sydney's most famous standover man was Lennie McPherson, known in some circles as Mr Big and in others as Mr Ten Per Cent.

One example of this pattern was the 1916 Liquor Act, which made the sale of alcohol illegal after 6pm. It was to assist with wartime productivity, but was not repealed until long after World War II. It spawned dozens of illegal bars around the city catering to everyone desperate for a drink in convivial surroundings after dark. People prepared to supply them, whether Kate Leigh with her sly grog joints in Surry Hills or Joe Taylor's and Saffron's celebrity nightclubs later on, became very wealthy.

You can track the rise and fall of a great deal of organised crime against the legislative history of popular pleasures, with a decline as laws were introduced legalising prostitution and extending drinking hours, and with the creation (and later the extension) of the TAB and the setting up of NSW's first legal casino, Star City, in 1995.

The nature of the illegal pleasures shapes the nature of the organised crime that arises to provide them. Drugs are unusual, historically, because they are not sold or consumed at a relatively small number of locations. This means dealers are harder to locate and tax, making it impossible for standover men to impose a certain amount of stability on the underworld. The profits are enormous and easy, which attracts a continual stream of psychopaths into the milieu to try to rip off those already there.

For these reasons, the drug underworld is far more volatile and violent than the old underworld based on alcohol and gambling and prostitution. The days when McPherson, Freeman and Stan Smith could pretty well run the underworld for decades are long gone.

A final difference is drugs are used by a relatively small number of people. This means police and politicians are far less prepared to take bribes – an important factor in the decline of corruption in recent decades.

What does history tell us about measures that work against organised crime? The biggest success in Sydney was in 1930, in response to the violence of the razor gangs involved in cocaine and other illegal trades. Parliament passed the NSW Vagrancy (Amendment) Act, which made it illegal to be seen habitually with reputed criminals or people with no visible means of support.

Alfred McCoy, in his book Drug Traffic, calls this “one of the most authoritarian and effective measures against organised crime ever passed in a Western democracy”. Police numbers were increased and it became illegal to carry a razor. Within months the level of violence dropped. It took longer – about five years – but the cocaine trade was crushed.

The laws were draconian, but according to McCoy, “In the small-town atmosphere of Sydney in the 1930s it was generally understood who the targets were to be, and there were few abuses of these exceptional powers and fewer civil libertarian qualms.”

Would the law be acceptable today? Justice James Wood noted, during his Police Royal Commission in the 1990s, that the law gave police such extraordinary powers that it eventually became “an instrument for corruption and for the establishment of improper relationships”.

Still, harsher laws can work. One great example of this is America's RICO legislation, which allows someone to be sentenced to a long jail term if they are a member of an organisation that has committed any two of 35 designated crimes. The law has been particularly useful in locking up large numbers of criminal bosses. Writer Evan Whitton has urged NSW to consider such a law, and we think the idea deserves serious consideration.


Crash site 'did not exist', according to arrogant ambulance operator

Ambulance Victoria has apologised to a triple-0 caller who was told by an emergency operator that the crash site he was calling from "did not exist".

Peter Rennie was driving along the Daylesford-Ballarat Road at Dean, about 20 kilometres north-east of Ballarat, when he came across a car that had smashed into a tree on May 23. Another motorist stayed with the injured woman who was trapped inside the vehicle while Mr Rennie ran to the nearest corner - the intersection with Dean-Mollongghip Road - to call an ambulance.

He spelt out the road sign to the operator over his mobile phone, only to be told his location didn't exist. "I didn't know how to pronounce it so I spelt it out right from the start," Mr Rennie told the Ballarat Courier. "When I spoke to an operator, I was told there was nowhere in Victoria called Dean.

"I couldn't believe it. I said the system had no idea, and then I was told to check my attitude. "I said to them: 'What do we do? Do we leave this poor woman in the car to die?' " He said the operator finally found the location and sent an ambulance, before hanging up.

Ambulance Victoria spokesman Paul Howe today said the organisation had reviewed a recording of the exchange, and had apologised to Mr Rennie. He said the operator had been "dismissive" of the caller, and would receive further training in light of the mix-up. "It was purely a human error on the call-taker side and, listening to it, it clearly wasn't handled by the book," Mr Howe said.

"We didn't follow the correct protocols and we apologised to the person who made the call."

Mr Howe said he believed the tense exchange between the operator and Mr Rennie lasted minutes. "I don't believe that it was a long time, but clearly in a stressful situation anything that's going to add any anxiety or distress is not ideal, and that's what we're certainly apologising for in this case," he said.

"We've got pretty rigorous systems here, we take call-taking seriously. Obviously having over 750,000 calls a year, we investigate any complaints and we also have random audits of calls to make sure that we're following correct procedures."

He said the woman involved in the car crash was not seriously injured and was taken to Ballarat Hospital in a stable condition.



Four current articles below

Climate report an assault on democracy, says Abbott

TONY Abbott has rejected the latest climate change report from economist Ross Garnaut as an assault on democracy, warning that it proposes to give a committee of unelected appointees the power to set tax rates.

As the Opposition Leader yesterday complained of a "democratic deficit" over Labor's proposed carbon tax, Julia Gillard noted the report rejected Mr Abbott's proposal to tackle climate change through direct action measures such as planting trees.

Delivering his final climate change update report at the National Press Club yesterday, Professor Garnaut said the direct action approach risked entrenching the political culture of vested interests that had resisted economic reform for eight decades.

"The big rewards in low-emissions investments in regulatory approaches would go to those who persuaded the minister or the bureaucrat that their idea was worthy of being included in the direct action plan," he said.

"If not under the government that introduced the direct action policies then under the governments that followed."

In his report, Professor Garnaut proposed the establishment of an independent committee to set Australia's carbon emission reduction levels -- a proposal that could break the deadlock preventing Labor from winning Greens' support for the tax.

Mr Abbott seized on the proposal, warning it would put the power to set tax rates out of the hands of accountable politicians.

"There is a developing democratic deficit here," he said. "First of all the Prime Minister wasn't upfront with the Australian public before the election. Now the idea that taxes in this country should effectively be set by people who are outside the parliament, and who are not accountable to the people, I think, is just odd.

"This just goes to show how out of control the government is on this whole climate change question."

Later, the Opposition Leader continued his attack in question time, noting that the report said: "Australian households will ultimately bear the full cost of a carbon price".

"So how can (the Prime Minister) continue to maintain that her tax only makes big polluters pay?" Mr Abbott asked parliament. "Who pays? Big polluters or households? The truth is: households."

Ms Gillard accused Mr Abbott of misrepresenting the report, and hit back by pointing out that the report criticised Mr Abbott's direct action policy.


No pain, no gain: compensation vitiates carbon tax

"Compensation" means that the tax will not have the effect that is its only justification!

ANYONE who thinks the proposed carbon tax is mainly about the environment is mistaken. That may have been where the debate started. But due to political pressure on the minority government, it has morphed into an exercise in wealth redistribution, not environmental action. And Labor has many environmental groups and advocates fooled.

Because Labor can't afford to lose seats at the next election (in fact, it needs to win seats to gain a majority), but also has to be seen to be doing something as a government, it is trying to convince voters it is acting on the environment while also compensating them for that action to a point where the action itself becomes meaningless.

Cate Blanchett is a fine actor, and as Coalition MPs have said -- before launching scathing attacks on her -- she is certainly entitled to her opinion. Blanchett is also entitled to use her hard-earned fame to spruik ideas and policy positions that matter to her. And the third parties that have funded the pro-carbon-tax campaign Blanchett is part of -- GetUp, the ACTU and the Australian Conservation Foundation -- are entitled to approach her to help.

There is nothing wrong with such campaigns. After all, the miners campaigned against the super-profits tax, and retailers and the tobacco industry are campaigning against plain packaging of cigarettes. What's wrong with individuals doing the same?

What I question, however, is the value of Blanchett taking part in a campaign aimed at convincing ordinary voters of the carbon tax's merits. I am not sure an actor of her international standing is the best person to front a campaign that affects the cost of living. It contrasts sharply with the very impressive campaign against Work Choices the union movement organised with voices from real workers under threat from the Howard government's laws in the lead-up to the 2007 election.

For that matter, I wonder whether Blanchett has thought things through. Blanchett is no dummy. She completed a degree in economics before deciding acting was her calling. However, the logical thinking necessary for an economics degree seems to have deserted Blanchett on this matter.

She has been blinded by her passion for environmental action on climate change. Consider the interview she gave yesterday to a rival newspaper.

Blanchett said "everyone will benefit if we protect the environment". Yes, but does a carbon tax do that? It won't if it causes no fiscal pain to consumers, because the whole point of a carbon tax is that it creates a price pressure on the use of dirty energy, thereby encouraging consumers and businesses to change their ways.

But Blanchett also wants to be the people's princess -- in the interview she said her support for a carbon tax was conditional on "generous assistance" for low- and middle-income earners. She has fallen for the trickery of the carbon tax and her own attempt to stay popular when advocating it.

Take with one hand (carbon tax), give with the other (compensation). The result? No price pressure or incentive for people to change their energy use.

Make no mistake, when the carbon tax is applied to businesses, they will pass on that cost to consumers to maintain their profitability. Consumers will tolerate that price rise if they are rich, and go on burning energy but simply pay more. Mainstream voters and the disadvantaged will secure generous compensation from the government (don't believe Tony Abbott when he says otherwise), which will allow them to keep consuming dirty energy without changing their ways.

The government may claim there is pricing pressure, regardless of compensation, because polluting companies will have to raise prices, but the carbon tax would have to be much higher to have a real effect.

What does all of this add up to: wealth redistribution with little impact on the environment unless the compensation is rescinded and consumers are thereby forced to change their ways -- or unless the price on carbon goes up quickly and the compensation packages don't.


"Eco" resort bombs

It got all sorts of awards -- from everybody except paying customers. Nice when Green/Left elitists feel in their hip pocket how out of touch they are

THE Gold Coast's embattled tourism industry has copped another blow with multi-award-winning eco-tourism retreat Couran Cove Island Resort closing its doors.

Hailed as a benchmark tourism facility when it opened 13 years ago, the South Stradbroke Island resort is to be placed into voluntary liquidation. Its owner, InterPacific Group, yesterday announced that it was putting the resort up for sale after a "sustained period of low occupancy" and years of operating at a "considerable loss".

Staff have been laid off, with those eligible provided with redundancy payments and full entitlements. It is understood a skeleton crew has been retained to maintain the sporting and eco-friendly resort's facilities.

In a statement, InterPacific said that, although Couran Cove had stopped operating as a resort, its facilities would remain accessible to owners of the private residences within the resort.

"Over the past 13 years, considerable time, energy and money has been invested to create the premium resort Couran Cove is today," it said. "However, this hasn't been enough to combat a volatile global economy, weak local tourism conditions, a lack of industry support and rising operating and infrastructure costs.

"The resort has been operating at a considerable loss for a number of years and, sadly, despite our best efforts, this is an unsustainable position for any business operation. "This is the most sensible course of action for the business and its shareholders."

Couran Cove's development on a 151ha site was spearheaded by former Olympic runner Ron Clarke before he was elected Gold Coast mayor. Billionaire American philanthropist Chuck Feeney, who bankrolled the project but later had a falling-out with Cr Clarke, reportedly has been propping up the resort - pouring $283 million into it since 1998.

InterPacific is owned by Mr Feeney's Bermuda-based charity foundation Atlantic Philanthropies.

Corporate doctors Ferrier Hodgson will be appointed liquidators today to facilitate its sale.

Industry sources said InterPacific had been unsuccessfully trying to offload the South Stradbroke Island resort for several years.

The resort has won more than 50 domestic and international awards for excellence.


Global cooling hits South Australia

ANYONE shivering in Adelaide this morning had good reason to do so it is the coldest start to June on record. Bureau of Meteorology senior forecaster Vince Rowlands said the minimum temperature was a chilly 3.7C at 7.24am at Kent Town on the first day of winter. "I think it's the coldest start to a June that we've ever had at Kent Town," Mr Rowlands said.

Elsewhere around the state the mercury dropped to -2.7C in Yunta, -1.3C in Renmark, -1C in Clare and Coonawarra was -0.6C.

"Around Adelaide itself, Elizabeth got down to 4C, as far as the Hills go, Mt Lofty stayed a touch warmer because of the winds but I'd certainly expect the back of the Ranges to be pretty cold Murray Bridge got down to 1C," he said.

Mr Rowlands said the cold was to be expected with winter. "Obviously the atmosphere is a lot colder and then we get the really clear nights like we've had over the last couple of days, there's nothing stopping the heat from escaping into the atmosphere and we get these really cold conditions."


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