Soft line spurred on people smugglers, says Kevin Rudd aide

A SENIOR Labor strategist admitted to US embassy officials as long ago as 2009 that Labor's decision to dismantle the Howard government's Pacific Solution was partly responsible for the resurgence of the people-smuggling trade.

A diplomatic cable sent from the US embassy in Canberra in the wake of a 2009 boat explosion off Ashmore Reef that killed five asylum-seekers, has provided a unique insight into Washington's take on the Australian asylum debate. The cable, released yesterday by WikiLeaks, said while the number of asylum-seekers venturing to Australia remained "relatively small", the numbers were rising steadily and that the asylum debate in Australia was "highly emotive".

"Border protection was widely credited as a major factor in the conservative Coalition's 2001 election victory," the cable states.

The cable quotes the views of a "leading ALP strategist" on what was causing the revival in boat arrivals, which dropped sharply after the Howard government introduced the "Pacific Solution" of offshore processing in Nauru and on Manus Island.

"A leading ALP strategist told Consulate Perth that he thought the increased incidence of asylum-seekers resulted from a combination of Australia's softer immigration policy and a global increase in refugee movements," the cable reports.

The views of the strategist, whose identity is not revealed, largely contradict the official government line at the time, which refused to acknowledge that the Rudd government's decision to dismantle the Pacific Solution and abolish temporary protection visas may have played some role in luring asylum-seekers.

Instead, then immigration minister Chris Evans attributed the revival of the smuggling trade to instability in source countries, such as Afghanistan and Sri Lanka.

Citing briefings from Australia's Department of Foreign Affairs and Trade, US embassy officials also describe the transformation of the people-smuggling scene, in particular the proliferation of smaller operators.

"Small, independent smugglers are replacing the larger operators in part because of Indonesia's success - bolstered by help and training from the Australian Federal Police and Australian Customs - in stopping the major people-smugglers, who exerted the most corrupting influence on the military, politicians and police," the cable says.

"Asylum-seekers have the money to pay/bribe the small providers, and the boats are leaving from many more coves and inlets than before, greatly complicating the coastguard's task."

The cable, dated April 17, 2009, was written a day after the explosion of an asylum-seeker boat near Ashmore Reef off the northwest coast of Australia. The blast occurred after asylum-seekers sabotaged the boat, pouring petrol into the bilges.

The cable paints a picture of the asylum debate as it stood in early 2009. It says the Coalition, at that point lagging "far behind" in the polls, was seeking to reignite the border security debate to emulate the success it had enjoyed in 2001.

But US officials played down the significance of the debate, which at that stage was just beginning to unfold. They said the economy, rather than border security, was "foremost in the minds of 'working families' " at the time.

"It is difficult to envisage Rudd significantly hardening immigration policy," the officials observe. "This would alienate the Left of his party, and possibly undermine Australia's bid for a UN Security Council seat."

The authors of the document even go so far as to say the issue could "backfire on the Coalition" by alienating Liberal moderates who were uncomfortable with the hardline stance of the Howard years.

Opposition immigration spokesman Scott Morrison said yesterday the WikiLeaks disclosures highlighted the government's culpability for the chaos their policy changes had wrought.

"For more than two years, the ALP has known that their soft policies were a pull factor drawing boats to Australia and doing nothing about it," Mr Morrison said.

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The gouge is on for NBN users

Henry Ergas

WHEN Ralph Willis announced his telecommunications reforms in 1989, he delivered immediate price reductions and a price cap under which prices would fall steadily in real terms. Willis's reforms ushered in a long period of productivity increases that allowed price declines up to the present day.

In contrast, it is now clear this government's national broadband network will involve a huge slug to consumers. Indeed, Australia will become the only advanced economy where telecommunications prices rise steadily over time.

That is, if NBN Co's proposed special access undertaking is accepted by the Australian Competition & Consumer Commission.

Once approved, that SAU would determine the prices NBN Co could charge. And an NBN Co discussion paper shows those prices could be very steep indeed.

Inevitably, there is a sweetener. NBN Co proposes a five-year freeze on prices for basic services, followed by a further five years in which they would increase at half the consumer price index. But like many teaser rates, those promises hardly provide adequate protection.

To begin with, consumers will still face rising bills. This reflects an important difference between the NBN's proposed charges and current regulated prices. To rent Telstra's copper lines, competitors pay a flat fee, regardless of how much data their consumers transmit or receive.

But service providers will pay the NBN both a monthly fee and a volume-related charge, even though data volumes barely affect the NBN's line costs.

And according to NBN Co's corporate plan, average consumer usage grows 30 per cent a year. So even were the current price per bit kept constant, the average monthly usage payment to NBN Co per household would rise from $1 in 2013 to more than $100 in 2028.

Moreover, the truly high speed services, NBN's raison d'etre and the source of its touted social benefits, are excluded from the price freeze.

Charges for these and for business services would be allowed to rise by the inflation rate plus 5 per cent a year. This contrasts with Telstra's copper, whose price has fallen 7 per cent annually in real terms since 2000.

On top of that, NBN Co, whose early years will be a sea of red ink, proposes to roll forward losses; that is, accumulate them for later recovery. That is fine, but it wants to apply to that accumulating amount a cost of capital - effectively a compound interest rate - whose starting rate exceeds 20 per cent.

NBN Co would later be allowed to raise prices, including for basic service, to recover the total amount outstanding.

Another element then magnifies the scope this gives NBN Co to gouge future consumers. With Telstra, the ACCC defers depreciation costs to the network's later years and then effectively writes them off. But NBN Co's approach brings more of the depreciation charge up-front. That increases the early losses, tipping added dollars into the pool where they compound at those high interest rates.

To justify those high rates, NBN Co points to the returns an ordinary business would require. But ordinary businesses are not granted monopoly privileges, including exemptions from competition laws. Sure, NBN Co wants the high returns; but they reward risks the government has ensured NBN Co doesn't face.

Moreover, central to the government's case for the NBN was that it "would not need to make the rate of return that the telco sector is used to". "This project", Stephen Conroy promised, only requires "a modest return of 6 to 7 per cent". And no less an authority than Julia Gillard said a return a smidgen above the commonwealth bond rate would be "a viable rate of return" for the NBN, "recovering all its funding costs".

Yet NBN Co now wants to charge consumers on the basis of rates of return that start at seven times the bond rate, and that even when the network is fully mature, remain far above it.

Reconciling the government's repeated claims with NBN Co's ask must put the ACCC in a difficult position. And those difficulties are all the greater because the Garnaut report and now the NSW regulator argue that allowing government utilities returns well above the bond rate causes serious distortions, including over-investment. Tight controls, those reports say, are therefore needed to ensure those returns are only sought on investments that pass a strict cost-benefit test, so that consumers would freely choose to see them undertaken.

Nowhere is that need stronger than in the NBN, where politics dominates over economics. But NBN Co's approach specifically rules out such scrutiny of its spending. Rather, it proposes that the investments made to provide fibre access to 93 per cent of premises be "deemed efficient" and hence excluded from regulatory review.

It seems difficult to believe the ACCC could do anything but reject that exclusion outright. And if it then assessed how much of the investment would be justified in cost-benefit terms, 40 per cent or more of NBN Co's proposed spending could be written off. The government might proceed with those outlays; but it would have to finance them through on-budget subsidies to NBN Co, instead of by taxing captive consumers.

That, of course, won't happen. Rather, the government has demonstrated its willingness to sacrifice every principle of sound public policy to get its way. It can, and likely would, try to direct the ACCC to accept the most offensive aspects of NBN Co's SAU.

That exposes consumers to huge risks. Not according to NBN Co of course, which points to price declines promised in its corporate plan. But that plan can be changed at will, and consumers have no recourse if NBN Co's actions belie its promises. In contrast, the SAU is legally binding. And once it is in place, NBN Co can do whatever it permits.

So now is the time for the ACCC to stand up for consumers. No one else will. And that is why it exists as an independent statutory body. It has made its share of mistakes. Here's a chance for its new chairman to show it remains an institution well worth feeding.

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Federal government hasn't got a clue about Aborigines

The only thing that would help is to treat them exactly the same as everyone else

THE head of the Productivity Commission, Gary Banks, has backed a Finance Department finding that the $3.5 billion the Commonwealth spends on indigenous programs each year yields "dismally poor" returns.

The Finance Department strategic review, released this month under freedom-of-information laws, found strong commitments and large investments of government funds had "too often" produced results that were "disappointing at best and appalling at worst".

Launching a biennial report that says results have deteriorated in seven of 45 measures monitored by the commission, Mr Banks said "plenty" of policies were not working. "A recent finance department strategic review of indigenous expenditure has made that clear," he said. "I don't think we should be too critical - it is a very hard area to get right. But the key is to be open about failure and to learn from it."

The report found a widening of the gap in the rates of child abuse between indigenous and other Australians, and that the imprisonment rate for Aboriginal men soared 35 per cent over the decade; for women it rose 59 per cent.

The Productivity Commissioner, Robert Fitzgerald, said one of most important things the government could do would be to ease overcrowding in indigenous homes.

The proportion of indigenous houses with more than twice as many people as bedrooms has remained unchanged at 27 per cent for five years. In the Northern Territory the proportion exceeds 60 per cent.

"What is absolutely unquestionable is that easing overcrowding helps educational outcomes, health outcomes, the home environment and makes communities safe," Mr Fitzgerald said.

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Some things worked better in the past

Lawrie Kavanagh

I GET a big laugh when I hear or read of today's intellectuals and dumb lefties screaming blue murder when they hear oldies like me calling for much tougher court penalties for young criminals, and the reintroduction of corporal punishment in schools.

You see, I happened to grow up in those long-gone, terrific days when the punishment fitted the crime . . . well most of the time . . . with me at least, anyway.

I'll tell you about those early days in a moment, but let me first make a suggestion that could curb a lot of youth violence and serious crime in this great state of ours. It's called National Service - or as we knew it back in the 1950s, "Nasho".

National Service taught a lot of us young blokes right from wrong, particularly where it concerned respect for other people.

You see, most of the blokes I served with at Wacol in Brisbane's outer southwest in the first intake of 1954 were pretty apprehensive about becoming Nashos. They didn't know what to expect.

This was particularly so in my hut because, whereas I had arrived at Wacol with a bunch of Maryborough mates, including my older brother, Marty, I was separated from them because I was taller than my mates, and put into a hut with tall blokes, mostly from north Queensland.

I had no worries about going into national service, because I'd been in the cadets at my school, St Brendan's College, Yeppoon, and even had a couple of weeks of army training in Sellheim Army Camp, west of Townsville, with heaps of other young blokes from all over the state.

So I was pretty surprised to hear my new Nasho mates expressing a bit of trepidation about being forced into army service for three months first up, then two weeks each year for the next two years.

But all that changed after the first few weeks of army training under a lot of very tough, but very fair, professional soldiers.

Things weren't going so well in the hut next to us, in A Company, because in that hut there was a very big and very aggressive bully who simply took what he wanted from the other blokes in the hut. You might be sitting on a stool polishing your uniform brass work or cleaning your SMLE .303 rifle, maybe with some food or soft drink beside you, and this jerk would just pick up your biscuit or sandwich and eat it, then grab your bottle of soft drink and swill it down. If you objected he would give you a push and walk off.

That went on for the first few days of the camp before one of the blokes came up with a brilliant idea. He had one of his hut mates sitting down polishing his brass work, with a half-full soft-drink bottle beside him, when the big bully walked up, grabbed the bottle and swigged down a couple of mouthfuls before turning red and almost spewing the fluid out of his mouth and all over the hut.

Why, you ask? The bottle was half-full of urine, placed there to bring the bully into line.

And as for those blokes who expressed trepidation in the early days of the camp, most went home with many happy memories of being in Nasho.

As far as corporal punishment at home and at school is concerned, for God's sake, bring it back. I copped it in both places and deserved it most of the time. A couple of times I didn't, but that was mainly from a young Irish nun, who hated being in Yeppoon and took a lot of that hatred out on me because I couldn't spell and was a very poor reader. Still am.

She once hit me on the head and the knuckles with a blackboard pointer stick for bad spelling. I had a big lump on my head but it was nowhere near the size of the swelling on my knuckles.

She sent me outside crying and while I was sitting on the steps still crying, another nun, Sister Laurence, who saw what had happened, came out and sat beside me. She put her arm around me and started crying too. I was about seven or eight at the time.

I sometimes got the cuts from other nuns, once for swimming in the nuddie with a couple of mates in a creek behind some houses from which people saw us and complained. Why swim in the nude? Because Mum and Dad wouldn't let us go swimming unless we had an adult with us, so they would hide our togs.

One time I was playing with some mates, swinging on a crane in the Yeppoon railway yards when it gave way, flinging me on to the railway line.

The station master, who had been talking to the local cop on the platform, trotted over, picked me up and led me by the ear over to the cop. The cop gave me a swift kick on the bum then dragged me across the road to the Railway Hotel, where he knew my old man was the manager. He told Dad I had broken the crane. Dad took off his leather belt and gave me what for.

The Christian Brothers at St Brendan's were pretty good, but if you stepped out of line it would really hurt because, unlike the nuns who used canes, the Brothers used leather straps with about six leather strips stitched together and about 30cm long. You either got those cuts on the open hand or, even worse, across the bum.

How did school punishment change my life? Well, after 76 years I have never had any trouble with the police except for that time at Yeppoon railway station. I've never been in jail or court.

I truly believe today's crime rate would tumble if they brought back National Service and re-introduced corporal punisment at school and at home. But I sure ain't holding my breath.

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