Thursday, July 14, 2011

Muslim morality

No "women and children first" among Muslims, apparently

As a four-year-old girl desperately paddled towards a life jacket amid the wreckage of SIEV 221, a man bobbing in the monstrous Christmas Island swell grabbed it and then kicked her away, an inquest has heard.

Local Australian Federal Police officer, Special Constable Shane Adams, stood on the cliffs at Rocky Point on December 15, trying to help the 89 asylum seekers and three crew members whose boat had smashed into rocks.

He spotted the girl after the boat broke apart trying to dog paddle towards a life jacket he had flung into the sea.

Constable Adams said he then noticed a man aged about 35 in the water nearby. "He reached out and grabbed the life jacket, pushed out with his right foot and struck the young girl on the shoulder, pushing her back," he told the inquest on Christmas Island.

That was the last time Const Adams saw the girl. Before the boat was torn to pieces amid the backwash at Rocky Point


Huge rip-off of taxpayers by militant union

VICTORIAN taxpayers face escalating costs for state-funded construction projects after a powerful union won a "deal of a lifetime" pay rise.

It comes as the Herald Sun reveals how one state-funded infrastructure project is now costing three times as much in labour costs, while another had been deferred because of escalating pay rates.

Nearly 8000 members of the Construction Forestry Mining and Energy Union packed into Festival Hall yesterday to vote on the new enterprise bargaining agreement that will see base wages increase 5 per cent each year over four years.

The EBA, sold to members as "the best deal you will see in your lifetime", will see all overtime paid at double time and a living away from home allowance of $750 a week.

Assistant secretary Tommy Watson told members the deal means "you can buy the kids lollies and ice-cream, a bunch of flowers for the missus, a few slabs for yourself and still have something to put away each week."

Such wage claims are now widespread in Victoria and other states following the generous pay deal negotiated by workers on the desalination plant at Wonthaggi in 2009.

The Herald Sun has now learned that labour costs at the $93 million Northern Water Plant, being built by John Holland for Barwon Water with $9.2 million of government funding, are triple the normal rate.

Workers on the project costs the company $95.70 an hour in total labour costs, compared with $36.95 for a civil contractor doing the same job. Another Barwon Water project contracted to John Holland, the $42 million Black Rock Recycled Water Plant allocated $10 million in Federal funding, has been pushed back six months because of pay negotiations.

The spike in wages and union demands led Premier Ted Baillieu to last month declare he would take on the unions to cut costs on taxpayer-funded projects. "The rates at the desal plant have migrated to other projects; that's been a concern in the industry ... if that continues we will price ourselves out of infrastructure," the Premier said.

Yesterday Finance Minister Robert Clark repeated Government concerns. "If this continues ... we will no longer be able to afford the roads, schools and hospitals that Victorian families need," he said.

Ken Phillips, executive director of Independent Contractors Australia, said the situation "did not bode well for construction in Victoria", and would lead to a 20 per cent increase in construction costs.


Don’t base policy on crapulous alcohol statistics

Alcohol. The anti-alcohol lobby say just one drink increases your risk of cancer, and news yesterday was that cigarette-warning-style labels will start appearing on bottles of booze. The social costs of alcohol are often cited as an additional reason to crack down on it. Here, Dr Eric Crampton casts a sceptical eye over how that social cost is measured

If I told you that surfing cost the Australian economy a billion dollars and that we consequently should make life jackets compulsory, you could be forgiven for thinking that the number represented some real cost to the community; perhaps the cost of rescuing surfers caught in rips or medical care for those injured in accidents.

But if you found out that the vast majority of that figure was the combination of surfers’ expenditures on their boards and the costs of holidays they took heading up to Yallingup, you might think twice about endorsing the policy recommendation. And you might wonder a bit why anybody would have thought those costs could matter for policy.

And so it is with the often-cited social costs of alcohol. In 2008, Macquarie University’s Professor David Collins and the University of Queensland’s Associate Professor Helen Lapsley estimated that alcohol consumption cost Australia some $15 billion for the 2004/5 fiscal year.

The figure proved popular, being cited dozens of times on Australian television and radio, more than 100 times in newspaper articles and op-eds and it’s been referenced on a dozen occasions in Australia’s Parliament by nine MPs. With one large number proving popular, others like Professor Robin Room went on to produce even larger figures.

But what isn’t widely understood is that these papers use a method that, like the surfing example, mostly counts the costs drinkers impose upon themselves. This “Cost of Illness” method varies considerably from standard methods of economic analysis. There are many ways of producing a cost figure, but once we stray too far from standard economic method, we cannot interpret the produced figure as being economically meaningful.

There has emerged a cottage industry of academics and consultants using this Cost of Illness method to produce large figures for Ministries of Health from Canada to Australia. When the method counts over a billion dollars that drinkers spend on their own alcohol in Australia, but dismisses that those drinkers just might have enjoyed having a drink, the practice borders on advocacy.

In its final report which was publicly released in May last year, the Henry Tax Review argued that alcohol tax is a blunt tool for addressing harms caused by alcohol, but that tax can address these spillover costs where marginal social costs otherwise exceeds the price of alcohol.

But methods that include private costs as public provide a distorted picture of the appropriate level of taxation; the Henry Review urged caution about relying on these methods used by Professor Collins and Associate Professor Lapsley. As the $15 billion figure includes a large proportion of costs which fall on the drinker, the figure is meaningless from an economic and policy perspective.

Together with Matt Burgess of the Institute for the Study of Competition and Regulation and Brad Taylor from Australian National University, I have had a close look at the $15 billion figure and compared it to the figure that would have emerged had more standard economic method been used in its construction.

The end result was that policy-relevant annual costs of alcohol consumption in Australia were no more than $3.8 billion. To provide perspective for examination of spillover costs, the total tax take from alcohol (excluding GST) for the same financial year was $4.1 billion.

In other words, alcohol consumers contributed more in tax than they cost others through the health system and traffic accidents. The new $3.8 billion figure is not the result of cost-benefit analysis – more work would need to be done to quantify the benefits of drinking. Rather, it is the figure that emerges when we apply standard economic method and count only the costs tabulated by Professor Collins and Associate Professor Lapsley that truly count as spillovers.

Unfortunately, political discussion of alcohol’s sometimes tragic costs is too often clouded by emotion. It’s not that we do not care when a drinker falls ill or, worse still, loses his or her life.

But if we are going to count the costs that some drinkers impose upon themselves through their consumption, a fair analysis would also have to count against those private costs the benefits that drinkers enjoy from a night out or from a quiet drink at home. Or, it would not present costs drinkers impose upon themselves as being costs to society.

On Thursday, I will be presenting to the Australian Conference of Economists in Canberra as part of the Conference’s annual “Dodgy” awards. I’ll be arguing that preventative health suffers from the worst application of economic analysis to policy, Professor Collins and Associate Professor Lapsley’s report and how it’s been treated in policy discourse will help me to make that case.



Four articles below

Carbon trading hoax will mean $57bn will disappear overseas by 2050, says Tony Abbott

FOREIGN carbon traders would take $57 billion out of the Australian economy by 2050 under the Government carbon tax, Opposition leader Tony Abbott said today.

Visiting the Nolans Transport depot a Gatton, Mr Abbott said the scheme would end up being a "get rich quick scheme" for foreign carbon traders. "The more that the costs of this scheme tehat become apparent the less Australians like it," he said.

Mr Abbott fended off claims that former leader Malcolm Turnbull did not support the Liberals direct action policy to tackle climate change. "Every single member of the shadow cabinet supports our policy," he said before shutting down further questions on the issue.

Mr Nolan, who believes the carbon tax will cost his trucking business $300,000 a year, said the flood had dealt a big financial blow to the Lockyer Valley. "Farmers could not afford the tax, I can't afford it and I think Tony is right. It should go a vote."


Carbon tax could 'bugger' Australia, says top businessman

A LEADING businessman has warned that the government's carbon policy could "bugger the country", joining a chorus against the tax, as consumer sentiment sinks.

University of Queensland chancellor and former Suncorp chairman John Story said yesterday the government's carbon package relied on a "huge leap of faith", because the technology to manage a cost-effective transition to a low-carbon economy did not yet exist, reports The Australian.

His warning followed this week's criticism of the carbon tax by media and mining mogul Kerry Stokes and fellow West Australians, resource heavyweights Andrew Forrest and Gina Rinehart.

Mr Stokes warned this week that Australia was at risk of imposing too many extra costs on industry and pricing foreign investors out of the market.

Mr Story said the carbon tax also presented a huge challenge for research institutions to develop clean energy technology. "If the research institutions fail to work with government and industry on a creative and productive basis, and fail to produce realistic and cost-effective solutions within a limited time frame, then there is every chance that . . . the country will be buggered," Mr Story told a university business function.

The chancellor's warning came as the Westpac-Melbourne Institute index of consumer confidence slumped in May to a two-year low, its biggest one-month fall since October 2008 - around the time of the Lehman Brothers collapse.

The survey was conducted shortly before the government's announcement of its carbon pricing plan last Sunday.

Also yesterday, Visy executive chairman Anthony Pratt flagged a deep 10 per cent cut to the packaging group's energy use to offset an initial $12 million annual impost from the planned tax. Mr Pratt said in a notice to all staff that the annual cost of a $23-a-tonne carbon tax would more than treble to $37 million if exemptions granted to emissions from Visy's recycling and Tumut paper-making activities were removed in future years.


Bizarre impost will damage economy

IF ever there were a single country in the entire world spectacularly unsuited to be the sole imposer of a vast, unprecedented carbon tax, which no other country in the world is remotely duplicating, it is Australia.

Isolated from our strategic friends, far distant from our biggest markets, a member of no natural trading bloc or customs union, we have just one serious, competitive advantage in the global economy.

That is the abundance of our fossil fuel endowments. If ever there were a nation well advised to move slowly and carefully on policies to cut greenhouse gas emissions, we are it.

As Productivity Commission head Gary Banks commented: "It will not be efficient from a global perspective [let alone a domestic one] for a carbon-intensive economy, such as ours, to abate as much as countries that are less reliant on cheap, high emission, energy sources . . . Modelling aside, it's common sense that achieving any given level of abatement is likely to be costlier in a country with a comparative advantage in fossil fuels."

Banks here did something extremely dangerous. He pitted common sense against economic modelling. Part of the economics profession has gone weak at the knees because the government has labelled its bizarre new amalgam of vast new taxes, huge new bureaucracies, massive expenditure churn, endless new regulation, huge government subsidies for preferred companies and wildly unrealistic targets, a "market-based mechanism".

The government's carbon tax does not pass the commonsense test at any point. To call $8 billion in new taxes in the first year, and new government expenditure so great that it exceeds even the new tax intake, a "market-based mechanism" and economic reform just illustrates George Orwell's insight that if you control the language, you can convince people that black is white and up is down.

The whole enterprise is built on a falsehood, the supposition that nations around the world are taking comparable economy-distorting actions to that proposed by the Gillard government.

There is no really polite way of putting this but it is simply, utterly and comprehensively untrue. This is critically important. Even if you accept that all the science about climate change is true, that does not indicate what the best response for Australia is. If the science is true, then the problem can only be tackled by global action. If global action is impossible, then nations should do their best to cut greenhouse gas emissions in ways that don't hurt their economy too much, prepare for adaptation when it's needed and work to produce technological breakthroughs that allow lower emissions technologies to work and become affordable. This is broadly what other nations are doing. None is doing anything remotely like our carbon tax.

In the US, cap and trade, their name for an emissions trading scheme, is dead and buried. Far from approaching the official US target of reducing 2005 level emissions by 17 per cent by 2020, US emissions grew by 4 per cent last year. I lived in Washington in August and September and read three newspapers and watched a lot of news bulletins each day. I cannot remember a single mention, ever, of the US greenhouse reduction target. It has no traction in US politics.

According to the third Garnaut report, which engaged in every propaganda trick possible to pretend the world was as seized of this religion as Garnaut himself is, China's greenhouse gas emissions will increase from 2005 levels of five billion tonnes a year to 12 billion tonnes by 2020. That's an increase of seven billion tonnes a year. Australia, notionally, in that time might cut emissions by 70 million tonnes. So China's increase will be 100 times greater than Australia's decrease. Our contribution, for which we are turning our economy and politics upside down, will be too small to measure.

Japan has not only rejected an ETS approach but is likely, in the wake of the Fukushima disaster, to make renewed investments in coal. Canada has elected a government committed to no carbon tax or ETS. The remaining ETS schemes in a couple of states in the US are falling apart. South Korea has put off action until 2015 at the earliest. The European ETS raises $1 a person and has very little effect on economic activity. India has no interest in a carbon tax approach. It levies a tax on coal of $1 a tonne and its carbon emissions will grow almost as quickly as China's.

So Australia is going to impose a huge cost on itself for no benefit to the environment. That's not an argument to do nothing. It is an argument to move very carefully with minimum disruption to our economy. There is a further central paradox. Given that the biggest emitters -- China, the US, India and most other nations -- do not have anything like the Australian carbon tax, it is clear that what abatement has occurred in the world has taken place mainly through "direct action". Press gallery commentators' dismissal of Tony Abbott and opposition climate spokesman Greg Hunt's arguments on this demonstrate not policy sophistication but intellectual laziness, and an inability to move beyond the government's endless, admittedly very confusing, propaganda publications.

It is also the case that the Gillard government's own big tax will not actually reduce Australia's emissions. Instead, the government will spend many billions of dollars on its own direct action efforts. More than that, even if everything the government promises comes to pass, which is substantially less likely than my winning the US Ladies Professional Golf Championship, Australia's actual emissions will still rise and we will have to spend many billions of dollars buying carbon credits from overseas.

But the history of these credits so far is one of rorting and malpractice. Moreover, to believe the purchase of such credits will help the physical environment, you have to make the fantastic leap of faith to the conclusion that these credits represent real physical actions which, if we had not purchased them, would otherwise not have occurred. That is, it is not only that we pay a higher price for these credits than any other bidder but that if we didn't bid for them they wouldn't exist. Otherwise we are just trading in fairytales.

Yesterday the government also announced that it will be illegal for businesses to claim the carbon tax is causing them to put up prices. This is a bizarre, profoundly anti-democratic, environmentally useless and economically damaging period we are passing through. It's not market based and it's not economic reform.


Carbon tax the last straw for battlers as cost of living spirals out of control

THE micro effects of the macro-economic decisions are being felt disproportionately in the most sensitive parts. In short, we are hurting out here - again. No matter how well we have done what we were told to do, how proud we are to have pulled together, the punches keep coming. The carbon tax is the last straw. Enough is enough.

We endured a horror summer of disasters, have picked ourselves up or are helping our neighbours to their feet, and then were told last month that because we had sweated through the summer instead of whacking on the airconditioner, our power bills were being put on steroids to make up for the shortfall in projected power company profits. What? Hey? How does that make sense in a fair and equitable world?

But wait, there was more. Fresh fruit and veg prices have been high all year and were up a bit extra this month, partly as an after-effect of that horror summer. Eating well is far more expensive than eating poorly.

Public transport price rises early in the year mean it is often cheaper to drive to a destination (although it is debateable because petrol prices are also high), and the population boom and poor timetabling mean people often have to stand through the public transport journey after shelling out more than people in other states.

Water prices went up, even though it rained like it would never stop (see horror summer, above). So contributing to getting the region through the tough times was rewarded with more hip-pocket pain.

Well, enough with the big stick. Enough of the increased financial pain, even when we do all we are told to do.

Enough of telling us short-term pain will bring long-term gain. Queenslanders, more than others, have experience that shows short-term pain has meant a long-term price gain in the past. We know better than to fall for it again. By the start of the new financial year, there was a palpable cynicism and resentment over all of this. We were tired and stressed from the endlessness of rising bills.

The cynicism and resentment have made us behave in ways that are unlike our pull-together, believe-the-best selves.

We are far from school children, seeking the gold star, but we have shown we respond very well when a crisis or required action is explained rather than have threats and charges imposed. We feel empowered in helping to rectify the problem.

Consumer researcher Deborah J. MacInnis, in her study Why and How Consumers Hope: Motivated Reasoning and the Marketplace, found the most powerful motivator for behaviour was pride, not punishment or shame.

We are a proud people. Very few people were fined for using too much water in the bad old days of drought. Very few did the wrong things during the horror summer.

The carbon tax will not solve the carbon emissions problem, but uses money as punishment to - hopefully - change behaviour that causes environmental damage.

When the answer the governments reach for is to create a price, the drip-drip effectively becomes water torture for those who ultimately have to pay. There are many in our community who are trying hard to help out the ol' planet. It doesn't matter if they were the ones who were regarded as hippy twerps in the 1970s and 1980s. When they heard the warnings and believed them enough, they modified their behaviour in an effort to help.

Nope - no matter how much or little we have done in our lives to help the Earth stay cool or heal its ozone hole, more pain is on the way. We have been given fair warning to brace ourselves.

But just how much more pain are we prepared to cop? And how much can we afford before the house of cards falls down? We have been continually told we are the lucky country and our nation escaped the worst of the global financial crisis. But retail sales are abominable and have been for a year or more. I have not heard of a tradie who currently feels like they are sailing along financially, let alone living in luxury's lap. Charity donations are down.

Financial observers have noted rising petrol prices, higher school fees and healthcare bills, among other things, have effectively sent consumers to the safety of their homes. They have stopped spending.

How times have changed. Seven years ago, financial people tell us, people were spending every cent they had and then some. Now we are trying to save for the rainy day, which already appears to be here.

The problem we have is the Government, economists, retailers and companies see us as consumers. We are simply people who use things, buy things and dispose of things when we are finished. But we are so much more than that. Enough!


Note: I have two other blogs covering Australian news. They are more specialized so are not updated daily but there are updates on both most weeks. See QANTAS/Jetstar for news on Qantas failings and Australian police news for news on police misbehaviour

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