Tuesday, October 27, 2020

Budget's infrastructure spend no quick cure for jobs

Economists haven’t been enthused by inclusion in the budget’s big-ticket stimulus measures of $11.5 billion in road and rail projects. Why not? Because spending on “infrastructure” often works a lot better in theory than in practice.

Economists were more enthusiastic about infrastructure before the pandemic, when Scott Morrison’s obsession with debt and deficit had him focused on returning the budget to surplus at a time when this was worsening the growth in aggregate demand and slowing the economy’s return to full employment.

Reserve Bank governor Dr Philip Lowe pointed out that, unlike borrowing to cover the government’s day-to-day needs, borrowing to fund infrastructure was a form of investment. The new infrastructure could be used to yield benefits for decades to come, and so justify the money borrowed. Indeed, well-chosen infrastructure could increase the economy’s productive efficiency – its productivity – by, for instance, reducing the time it took workers to get to work or the cost of moving goods from A to B.

Another motivation was the high rates of population growth the government’s immigration program was causing. More people need more infrastructure if congestion and shortages aren’t to result, and thus worsen productivity.

But much has changed since then. The arrival of the worst recession in many decades has changed our priorities. We’re much less worried about debt and deficit and much more worried about getting the economy going up and unemployment coming down. And we don’t want economic growth so much to raise our material standard of living as to create more jobs for everyone needing to work.

Because infrastructure involves the government spending money directly, rather than using tax cuts and concessions to transfer money to households and businesses in the hope they’ll spend it, it should have a higher “multiplier effect” than tax cuts.

But as stimulus, infrastructure also has disadvantages. Big projects take a long time to plan and get approved, so their addition to gross domestic product may arrive after the recession has passed. And major infrastructure tends to be capital-intensive. Much of the money is spent on materials and equipment, not workers.

In a budget we’re told is “all about jobs”, many economists have noted that the same money would have created far more jobs had it been spent on employing more people to improve the delivery of many government-funded services, such as education, aged care, childcare and care of the disabled.

Most of those jobs are done by women. Infrastructure is part of the evidence for the charge that this is a “blokey” budget, all about hard hats and hi-viz vests.

If there’s a TV camera about, no one enjoys donning the hard hat and hi-viz more than our politicians – federal and state, Labor and Liberal, male and female. And it turns out that “high visibility” is another reason economists are less enthusiastic about infrastructure spending than they were.

In practice, many infrastructure projects aren’t as useful and productivity-enhancing as they could be because they’ve been selected to meet political objectives, not economic ones.

Politicians favour big, flashy projects – preferably in one of their own party’s electorates – that have plaques to unveil and ribbons to cut. It’s surprising how many of these projects are announced during election campaigns.

An expert in this field, who keeps tabs on what the pollies get up to, is Marion Terrill, of the Grattan Institute. She notes that since 2016, governments have signed up to 29 projects, each worth $500 million or more. But get this: only six of the 29 had business cases completed at the time the pollies made their commitment.

So “politicians don’t know – and seemingly don’t greatly care – whether it’s in the community’s interest to build these mega-projects,” she says.

Terrill says the $11.5 billion new infrastructure spending announced in the budget includes a mix of small and large projects, such as Queensland’s $750 million Coomera Connector stage one, and $600 million each for sections of NSW’s New England and Newell highways.

The money is being given to the state governments to spend quickly, and it will be taken back if they don’t spend it quickly enough.

Which they may not, because the new projects go into an already crowded market. Federal and state governments have been pumping money into transport construction for so long that, even two years ago, work in progress totalled an all-time high of about $100 billion.

By March this year – before the coronacession – the total had risen to $125 billion, Terrill calculates.

In some states at least, the civil construction industry – as opposed to the home construction industry – is already flat chat. It’s hardly been touched by the lockdown and doesn’t need the support it will be getting. Just how long it takes to work its way through to the new projects, we’ll see.

Terrill notes that the bulging pipeline of infrastructure construction built up before the pandemic was all about responding to the high population growth we’d had for years, and imagined we’d have forever.

But the pandemic’s closure of international borders – and parents’ reluctance to bring babies into such a dangerous world - has brought our population growth to a screaming halt. The budget papers predict negligible population growth this financial year and next, with only a slow recovery in following years. That is, we’re looking at a permanently lower level of population, and maybe a continuing slower rate of population growth.

Terrill says that, rather than ploughing on, we should reassess all the road and rail projects in the pipeline when we’ve got a clearer idea of what our future needs will be. And when we have a better idea how social distancing may have had a lasting effect on workers’ future travel and work patterns.

What’s so stupid about mindlessly piling up further transport projects is that the glitz-crazed pollies are ignoring a real and long-neglected problem: inadequate maintenance of the roads and rail we’ve already got. No sex appeal, apparently.

HSC maths enrolments still low

The number of students taking senior school maths has flatlined over the past 10 years, suggesting mathematics participation has "bottomed out" and universities may need to insist on the subject as a prerequisite to lift enrolments.

About one quarter of year 12 students over the decade did not take any HSC mathematics course, compared to just 6 per cent of students who opted out of maths altogether in 2000, figures provided by the NSW Education Standards Authority show. Of those HSC students who will sit their maths exams this week, more than half (30,757) are taking the standard non-calculus course.

Enrolments in advanced mathematics (16,966) and extension 1 (9060) are lower than they were 10 to 15 years ago despite today's larger overall HSC cohort.

The stagnant interest in HSC maths comes in spite of the NSW government's maths strategy which aims to increase the number of students studying mathematics in their final years of school, as well as the proportion studying higher level HSC mathematics, by 2025.

It also poses difficulties for the federal government's goal of producing more university STEM (science, technology, engineering and mathematics) graduates.

There has been a spike this year in students taking the highest level extension 2 maths HSC exam, making it the largest cohort in eight years (3418), but it is still below the number of students who took extension 2 in 2010 (3529).

NSW Education Minister Sarah Mitchell said the government was encouraging universities to introduce more prerequisites for their courses. It also made some form of senior school maths compulsory last year, and has hired specialist maths teachers in primary schools to build students' foundations.

"I want to reverse the trend of fewer students studying maths," Ms Mitchell said. "Maths challenges our students' to think critically and creatively, preparing them for whatever career they might choose after school."

Maaike Wienk, a policy officer at the Australian Mathematical Sciences Institute, said enrolments in maths had not bounced back after sharply declining from 2000 and stabilising in 2010.

"We have basically bottomed out," she said. "But because it's been such a long term decline, I think people forget how it used to be."

In 2000, 94 per cent of HSC students took a maths course. That dropped to 78 per cent of students in 2005, 75 per cent in 2010 and is 76 per cent this year.

Words mean nothing when those on the left use them in arguments

It’s easy to win an argument if you’re a leftist. All you need to do is change the rules of language as you go.

Plenty of allies will assist in this slippery enterprise. For example, then-Prime Minister Julia Gillard famously claimed in 2012 that Liberal leader Tony Abbott hated women.

“The leader of the opposition says that people who hold sexist views and who are misogynists are not appropriate for high ­office,” Gillard railed in parliament.

“Well, I hope the leader of the opposition has got a piece of paper and he’s writing out his resignation.

“Because if he wants to know what misogyny looks like in modern Australia, he doesn’t need a ­motion in the House of Representatives. He needs a mirror.“

At the time, misogyny was defined as a hatred of women.

This seemed an unfair accusation to level against Abbott, whose mother, wife, daughters, sister and female colleagues have never known him to exhibit any gender-specific loathing.

So the Macquarie Dictionary stepped in to help, softening the meaning of “misogyny” to now indicate a mere implication of “prejudice” against women.

“Gillard‘s critics no longer have semantics on their side,” the Guardian’s Lizzy Davies gloated. See? It’s just that easy.

A similar politically-motivated alteration recently occurred in the US.

During her confirmation hearings earlier this month, Supreme Court nominee Amy Coney Barrett said that she has “never discriminated on the basis of sexual preference and would not ever discriminate on the basis of sexual preference”.

“Like racism, I think discrimination is abhorrent,” Barrett concluded.

Readers unfamiliar with this issue are invited to detect any problem with Barrett’s words. It’s quite a challenge, because there is no problem. None at all.

But Barrett is a conservative and was nominated by US President ­Donald Trump, so a problem had to be invented.

Mazie Hirono, a Democrat senator from Hawaii, did just that.

“Not once, but twice, you used the term sexual preference to describe those in the LGBTQ community,” she reprimanded Barratt. “And let me make clear, sexual preference is an offensive and outdated term.“

Really? How so? And since when?

According to Hirono, the term “sexual preference” is “used by anti-LGBTQ activists to suggest that sexual orientation is a choice. It is not”.

But according to most people, and almost every dictionary, “sexual ­preference” just means “sexual ­preference”.

Immediately after Hirono’s outburst, however, Merriam-Webster updated its own dictionary so as to strengthen the case against Barrett – exactly as the Macquarie Dictionary had previously assisted Julia Gillard.

Their new definition reads: “The term ‘sexual preference’ as used to refer to sexual orientation is widely considered offensive in its implied suggestion that a person can choose who they are sexually or romantically attracted to.”

Merriam-Webster editor-at-large Peter Sokolowski claimed the change was just a matter of routine.

But the cultural left doesn’t stop at changing definitions.

They’ll also change words and phrases, rebranding various unpopular commie concepts so those abominations may be more easily marketed.

That’s why “socialism” became “social justice”, “global warming” became “climate change”, “East Germany” became “Victoria” and “advanced confinement-grade dementia” became “Joe Biden”.

It’s also why “riots” became “peaceful protests” and “violent Marxist stormtroopers” became “Black Lives Matter”.

Words mean nothing to these people, except as shields or weapons. That’s “progressives” for you.

Isolation fuels ‘pandexit’ calls from Western Australia

Premier Mark McGowan has turned Western Australia into a fortress against infection. This has shielded his community from the worst of the pandemic but has increased its separation from the nation. In the words of the Premier, the state’s hard border closure has turned it into “an island within an island”. Not surprisingly, this has rekindled talk of Western Australia seceding from the federation. The movement is gaining momentum because of the success of its isolation, and friction with the commonwealth and other states.

Western Australia was a reluctant entrant to the federation in 1901. It was the last colony to join and did so late in the process. The colony was concerned that its economic position would be weakened by joining the nation, and that the federation would be dominated by the eastern states. The west feared it would not receive its fair share of taxation revenue.

Geography also played a role. Almost 3300km separates Perth from the east coast, an unimaginable distance for many people at the end of the 19th century. By contrast, London is 2500km from Moscow. New Zealand is much closer to Sydney, and yet it declined to join the federation.

After much disagreement and debate, Western Australia decided to unite with the other colonies at the 11th hour. It did so by a popular vote in July 1900, three weeks after Queen Victoria gave royal assent to the British law creating the new nation. This meant it was too late to include a reference to Western Australia as the nation’s sixth founding state.

The opening words to the British Act that introduce the Australian Constitution speak of “the people of New South Wales, Victoria, South Australia, Queensland, and Tasmania” agreeing “to unite in one indissoluble Federal Commonwealth”. The omission of Western Australia was symbolic of its uncertainty. This has resonated over the years with the state’s politicians and leading citizens questioning whether a mistake was made and if the time had come to leave the federation.

Economic factors and political dissatisfaction have driven cycles of debate around Western Australia seceding. Mining magnate Andrew Forrest put forward the idea when the Rudd government proposed a mining tax that many saw as plundering the state’s mineral riches. A decade ago, the West Australian mines and petroleum minister Norman Moore also said that the unequal distribution of GST revenue had led to “rumblings of secession — everywhere you go these days, people are now talking about it”. He had “no doubt that Western Australia would be one of the most successful countries in the world if it was a separate country”.

These rumblings have grown again in recent times. The Western Australian Liberal Party passed a resolution at its 2017 state conference calling on the establishment of a committee to “examine the option of Western Australia becoming a financially independent state”. A poll taken this month found 28 per cent of Western Australians want to form their own country.

Others have expressed concern that calls for separation are growing louder. The federal member for Perth, Patrick Gorman, has warned against treating secession as a joke. He has acknowledged the growing support for the idea of Westralia and drawn a comparison with Brexit. In that case, unfavourable economic conditions and unresolved community dissatisfaction enabled a fringe idea to become a reality.

It is no surprise that the pandemic and Australia’s economic problems have restarted this debate. The closest that Western Australia has come to leaving the nation was 90 years ago amid the great depression. In 1930, a state government led by Sir James Mitchell was elected on a platform for secession. In 1933, he put a referendum to the people of Western Australia asking whether the state should withdraw from the commonwealth. People overwhelmingly voted to do so by a margin of two to one.

The state sent a delegation to London to petition the United Kingdom parliament to allow it to become a self-governing dominion within the British Empire. The British diplomatically took their time to respond. Two years later they decided not to entertain the petition because convention dictated that it come from the commonwealth and not an individual state. The commonwealth opposed secession, and so the push ended. The political movement then faltered as economic conditions improved and the commonwealth sent more money west.

The events of almost a century ago demonstrate the difficulty of any state leaving the federation. The problem for the proponents of separation is that federation is a one-way ticket. The constitution provides no mechanism for a state to leave the nation.

In the absence of a revolution, the only path to secession is to amend the constitution to permit a state to leave. The federal parliament would first need to approve the change, followed by the people voting at a referendum. A majority would need to vote yes, plus at least four out of the six states, including Western Australia. The political difficulties of achieving this make secession possible in theory, but impossible in practice. The bottom line is that Western Australians can only leave if the rest of the nation is willing to let them go.


Also see my other blogs. Main ones below:

http://dissectleft.blogspot.com (DISSECTING LEFTISM)

http://snorphty.blogspot.com (TONGUE TIED)

http://antigreen.blogspot.com (GREENIE WATCH)

http://pcwatch.blogspot.com (POLITICAL CORRECTNESS WATCH)

http://edwatch.blogspot.com (EDUCATION WATCH)

https://heofen.blogspot.com/ (MY OTHER BLOGS)


1 comment:

Paul said...

If I may add to Tim Blair's compendium of newspeak: Protesters against lockdown restrictions are now "Far-Right protesters" (and could soon be declared to be "extremists", maybe already have).

"When I use a word," Humpty Dumpty said, in rather a scornful tone, "it means just what I choose it to mean—neither more nor less." "The question is," said Alice, "whether you can make words mean so many different things." "The question is," said Humpty Dumpty, "which is to be master—that's all."