Monday, April 14, 2014

Free speech in  the Australian public service?

Tim Wilson

Before anyone screams "free speech", they should actually know what they are talking about.

Earlier this week the Department of Prime Minister and Cabinet released new social media protocols.  The protocols limit the capacity of public servants to make statements that are "harsh or extreme in their criticism of the government, government policies, a member of Parliament from another political party ... [and] a gratuitous personal attack that might reasonably be perceived to be connected with their employment", among others.

In response there have been cries that this code limits free speech. Yesterday Jenna Price wrote in Fairfax outlets that as "HenchCommissioner" I did not "leap in defence of our gentle, analytical and astute public servants".

Sigh. Since taking the office of Australian Human Rights Commissioner I have gleaned many new insights into the state of human rights in Australia. One of the most important insights is that many Australians seem to have no idea what human rights are, and many certainly do not understand what free speech is.

Price also said I "backed the reforms". This is factually inaccurate. It is not my place to endorse individual codes, but I have outlined that voluntary codes attached to employment conditions are not inconsistent with free speech.

Defending the universal human right of free speech is about the legal limits of speech. It is about when the law stops someone expressing their view. It is not about voluntary conditions we accept when we take employment. Conditions that are entered into through employment are not the same as the law.

All speech is legal, until it is made specifically illegal. But just because something is legal, it does not mean it is acceptable. For instance, it is legal to be homophobic, but it is not acceptable.

Codes of conduct play an enormously important role in filling the gap between what is technically legal, and civilising and normalising behaviour.

Voluntary codes associated with employment are one of the most important ways that we regulate the conduct of the individual without laws, and they are fundamentally a good thing.

Even the Australian Human Rights Commission, a body charged with defending free speech, has social media protocols for staff to preserve and protect the dignity of the institution.

Codes of conduct include requiring people to not act in a sexist, homophobic or racist way. If people do, and it is connected back to their employer, they can face disciplinary action, or be terminated.

At any time an individual no longer believes that they can abide by these standards they have the choice to terminate their employment.

Codes attached to employment in the private sector cannot limit free speech because they are voluntarily entered into as a requirement of employment.

Public service codes are not the same. They operate in a "grey space" because the government is the employer.

Excessive restrictions can fundamentally undermine a public servant's capacity to exercise their full democratic participation, but if they are too loose they can undermine the important perception of impartiality.

For instance, public servants are allowed to be members of a political party and participate in the democratic processes of the nation.

But they are not allowed to work for the Department of Health by day and moonlight as an anonymous journalist critical of the Department's work by night. Social media is fundamentally no different to any other platform. It is still public.

Similarly, it is not unreasonable that there is an expectation that public servants act in a respectful manner in the public domain if they want to remain employed. Even with the current protocols, public servants can make statements that are negative about government policy.

But there are justified limits to what an employer can reasonably accept when public comment crosses the line.

Imagine the justified outrage if a public servant was caught holding the "Ditch the Witch" sign at the Convoy of no Confidence protests, or "F--- Tony, F--- Democracy" at March in March.

Of course those individuals have every right to express those views, but it doesn't mean that the public service need continue to be associated with such vile conduct.

Some have argued that if the conduct is anonymous then it should be excluded from the code, but that is absurd. That is like arguing that the public service should not terminate someone's employment if they are involved in offences outside of work hours because they did it anonymously.

Voluntary codes of conduct attached to people's employment are consistent with free speech. They play a vital and important role in civilising public behaviour and establishing norms of respectful conduct.

They operate no differently in the public service, except they should be specific to an employee's area of work to ensure that they do not limit a public servant's capacity to engage in democratic processes.


Disquiet over loan to Rinehart by U.S. Ex-Im bank

Loan to set up new mine  -- now guaranteed to use U.S. mining machinery

Australian press is buzzing over the strange nexus between the country’s richest person and American taxpayers.  The headline in The Australian Financial Review even invokes the phrase “welfare queen.”

How Australia’s richest person, mining heiress Gina Rinehart, secured a $US694 million ($764 million) loan from American taxpayers is surely one of the great ironies of the capitalist system.

The case is the latest example of a flaw in the United States political economy: what some see as crony capitalism.

Rinehart’s mining group, Hancock Prospecting, last week signed off on a $US7.2 billion debt package for her highly anticipated Roy Hill iron ore project in Western Australia’s Pilbara region.

Why are American taxpayers subsidizing a financial transaction involving an Australian billionaire’s iron ore project? 

The Australian Financial Review explained “Government export credit agencies including the Ex-Im Bank in the US, as well as Japan and Korea, were crucial in helping the massive debt-funding deal over the line” because “Commercial banks and bond investors were reluctant to shoulder all the risk.”

When announcing the deal, U.S. Ex-Im Bank downplayed the risk, instead touting the “$694.4 million loan to Roy Hill Holdings of Australia [was] contingent upon the purchase of U.S. mining and rail equipment from Caterpillar Inc., GE, and Atlas Copco.”

So taxpayers have two plausible, though not mutually exclusive explanations for guaranteeing a $700 million financial deal with a woman reportedly worth $17.7 billion.

Commercial banks wouldn’t take the risk; or
U.S. companies worth hundreds of billions of dollars combined required taxpayer help.

The Australian Financial Review reminds us:

In 2008, an upstart senator named Barack Obama campaigning for president labelled the Ex-Im Bank “little more than a fund for corporate welfare”. Remarkably, the Obama administration now regards the agency as an important part of its drive to increase exports.


Sale of Medibank Private

The government has announced it will sell Medibank Private through an initial public offering in 2014-15. There is no case for its public ownership. This is a private business paying tax and providing private services that happen to be in the health industry. It operates in a competitive private market in which there are 34 players. Its public ownership is a quirk of the fallout from the abolition of Medibank (the national public insurer) in October 1976.

By selling Medibank Private the government will sacrifice a stream of dividends in exchange for a capital sum that will improve its fiscal position. In the 2012-13 financial year, as a wholly-owned government business, Medibank Private paid an ordinary dividend of $110.4 million and a special dividend of $339.9 million. It provides no public goods and makes no contribution towards public health.

Public goods are those from which everybody benefits but from which nobody can be excluded from using and therefore individually charged. A lighthouse is the classic example. Herd immunity, flowing from immunisation, is a case in point in health.

Everybody benefits from herd immunity. One person's consumption of this gain does not detract from the benefit available to others. People who fail to immunise become 'free riders.' Hence the case for government intervention through immunisation programs for which everybody pays though taxation. Medibank Private clearly does not fall into this category.

In 2012-13 Medibank Private made an after tax profit of $232.7 million, a return equivalent to about 7% on assets and 17% on equity. Medibank Private could hence be described a reasonably profitable company with an acceptable debt to equity ratio (1.21) that may prove attractive to private investors, depending on its issue price.

It is not as profitable as NIB, the only other publicly listed private health fund, now trading on a relatively high price earnings multiple of 19.8. On this criterion Medibank Private could realise in excess of $4 billion. The market nevertheless appears to attach a premium to NIB (its share price exceeds its earnings per share). The government may therefore need to be less ambitious about what it can expect from selling Medibank Private.

Medibank Private is the largest health fund in Australia with 3.8 million contributors. It has been suggested that privatisation will adversely affect competition and precipitate an overall increase in contributions charged to customers. This is a vestigial argument about government ownership as a competitive 'pacesetter.' It used to justify public ownership of the likes of Qantas and the Commonwealth Bank.

Australia now has a competition policy. Health insurers typically pay out 84% of their contributions. Pricing of contribution rates in any case is highly regulated - in most cases largely a product of claims experience plus administrative expenses. The efficiency of Medibank Private and the welfare of its contributors will be in safe hands in private ownership.



Re-moralising the pension

The old age pension used to be about the morality of self-reliance. But the contemporary culture of entitlement means that the pension today is about the immorality of encouraging dependence on government hand-outs and permitting the elderly to help themselves to younger people's income.

Treasury Secretary Martin Parkinson issued another warning this week about the fiscal burden that ageing-related spending will impose on the budget in coming years.

Parkinson repeated the central message of the Intergenerational Reports: unless government spending is contained, future generations face higher taxes and lower living standards than enjoyed by current generations.

It is therefore timely to recall the original purpose of the pension and contrast how far we have strayed from this.

When introduced in 1908, the pension was designed to operate as a safety net payment for those who were too improvident to provide for their own retirement.

Until the 1970s, the pension carried the stigma of 'charity.' Recipients were reluctant to publically admit they were on the pension because this was considered to be not quite respectable. This started to change when the Whitlam government abolished the means test for the pension for those aged over 70 in 1973.

Whitlam planted the corrosive and pervasive ideas of a 'right' to welfare in the Australian psyche, and initiated the perpetual political contest for the support of the increasingly important 'grey vote.' This has led both sides of politics to seek to buy the votes of the elderly by doling out increasingly valuable entitlements to the aged.

The current pension arrangements encourage retirees to blow their superannuation on overseas holidays, and/or gift their children large home deposits, and/or purchase an expensive means-test exempt family home in order to get on the pension. Financial planners market investment schemes yielding income streams that will beat the means-test and qualify for a part-pension and associated pensioner concessions including the valuable Seniors Health Card.

Ordinary taxpayers - including the archetypal 'battlers' and 'working families' - are being forced to subsidise the lifestyles of wealthy retirees and the inheritances of their children.

If we want to contain ageing-related government spending we need to put the morality back into the pension by implementing the TARGET30 campaign pension tips.

Alternative policies include using superannuation to purchase an annuity to pay for retirement living expenses. And the family home - the principal asset most Australians use to save over the course of their lives - could also be included in the pension means test.


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