Telstra, Telstra, Telstra

Thankfully the government is finally trying to separate the retail and wholesale divisions of Telstra. No doubt shareholders will complain loudly about this, having bought into a company that was somehow able to maintain many of its monopoly privileges after privatisation. However, many of Telstra’s profits came at the expense of consumers. Making Telstra retail compete fairly and on the same terms as other telecommunication companies is good for competition, innovation, customer service and prices. Around the world, countries with well regulated telecommunications markets that promote competition do well in these areas. Countries with big monopolies that have not embraced reform properly do not.

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Whatever happens with the national broadband network, it will always be desirable to split Telstra’s infrastructure-owning wholesale arm from its retrial division. Telstra’s monopoly power has harmed consumers in the telecommunications market for too long.

Allowing a monopoly over essential infrastructure to be privatised was inexplicably poor policy by the Howard Government, which should have known better. This makes me suspect that they had other reasons for selling off Telstra the way they did. Some of the funds raised were used to pay off the net government debt accrued under the previous Labor government. Perhaps Telstra was kept whole to help keep the share price high, and thus cut more of the debt, with the regulatory mess of fixing things up in telecommunications left to the next government.

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Phil Burgess reckons that a forced separation of Telstra’s wholesale and retail divisions is a form of “blackmail” that would “destroy Telstra’s future” and “delay innovation and investment.” There may be some truth in this, but if anything his comments provide further reasons for the government to go ahead with the break up. Telstra’s monopoly power has lasted too long and it must be forced to compete more fairly with other telecommunications companies. Of course this would erode Telstra’s market value and remove the company’s stranglehold over infrastructure and innovation in the industry. Telstra’s profits should be determined by its ability to meet consumers needs efficiently and cheaply, not on its ability to exploit market power.

It is also important to keep this matter somewhat separate from the government’s proposal to build a national broadband network. It will always be good policy to take monopoly ownership of infrastucture off Telstra, regardless of whether the NBN gets built. And if there is a NBN, far better that is is publicly owned and properly regulated than it is controlled by a single private sector company.

Award simplification

The debates over award modernisation are going to be long and protracted. It is inevitable that there will be many losers from award simplification in the short term (as well as many winners, who will be much less vocal). However, in the long run there are widespread benefits from having a system of simpler and nationally consistent awards.

So why is the Rudd Government pushing ahead with award modernisation in a time of economic uncertainty and rising unemployment? Arguably, the Government needs to be a lot tougher and decisive in making economic decisions and standing up to vested interests, but surely it could wait until the recovery is a bit firmer and confidence has fully recovered.

The best strategy would involve phasing in the new awards over time. The Government should announce a (fixed) future date for full implementation—say, 1 July 2010—to provide a period for workers and their employers to adjust.

NSW

The NSW Constitution was amended in 1992 to create fixed terms for governments which would prevent premiers from varying election dates to suit their own political ends. This is all well and good, but we can no longer assume (as some might have then) that voters will hold governments to account for their stuff-ups, or that there will always be sufficient and competent competition available at election time.

Has state government in NSW ever been in such a mess? The Labor government has been going downhill for nearly a decade, with the Coalition not far behind. If we held an election tomorrow and voted in the Opposition, would they really have the vision and courage to change anything? Where are the alternatives?

Surely we can find a better system of government and democracy in NSW. The major parties have failed us catastrophically.

Malcolm Turnbull

Malcolm Turnbull writes that “The Coalition left Rudd with a national balance sheet free of debt and with cash at the bank, not to mention sustained economic growth.”

What rubbish. The Coalition delivered these things not because of particularly strong or visionary economic policies, but because it was lucky. Earlier deregulation reforms and the floating of the currency made Australia rather resilient to the Asian Financial Crisis and US tech-bubble recession. The industrialisation of China and India ensured that revenues from resources would keep piling in. Funds were in such over-supply that the treasurer had to create a “Future Fund” and cut taxes annually to stop the budget surplus getting too big. These are all cyclical events in which Australia was lucky. The previous Coalition government did not tackle the choking infrastructure and skills shortages we faced; it did not leave Australia immune to the global financial crisis. The Rudd government has taken a large and proactive policy stance to offset some of the worst effects of the crisis.

Could Malcolm Turnbull, if he was Prime Minster, really have done anything different without making more Australians jobless? What is his alternative vision for dealing with these events, and for the future? His essay is glaringly silent on these.

The Chinese diaspora in Australia

The Chinese government’s demand for support by the Chinese diaspora is hardly unprecedented in historical terms. Many politicians in many countries have attempted to exploit the long-distance nationalism and ethnic sentiments of their diasporas as a means to obtain investment, foreign exchange or votes (for example, Israel, India, Italy, and that’s just the I-countries). This is nothing new.

We need not worry about such rhetoric. The Chinese diaspora in Australia poses no threat. Many of these people have migrated because they do not agree with the Chinese government, or because they seek better lives in a democracy. Many of those who subsequently send back money to their family or invest in China do so because they care about their relatives or because their background and connections provide them with a valuable understanding of business cultural and commercial opportunities in their homeland. It is rarely (if ever) because they have unwavering patriotic support for the government.

Many diasporic people yearn for a homeland that no longer exists, and many come to feel alienated when making return visits after a long time away. For most migrants, the material standard of living in the new country is often superior to that of the old. For these reasons, it is likely that Chinese immigrants, like millions of others, have a greater allegiance to democratic Australian society than they do to the repressive Chinese government. Migrants do not need their homeland to tell them to feel pride in their cultural background. The Chinese government may well find that a drive to enlist overseas Chinese as supporters by making silly-sounding statements about “blood lineage” could easily backfire.

Coorong wetlands

It is a tragedy that the Coorong wetlands have become so degraded they are almost beyond the point of recovery. The tragedy is compounded by the negligence of governments that could, and should, have seen this coming. State governments' stubbornness on buying back water allocations from farmers is destructive. How many more precious ecosystems and bird habitats must die before action is taken?

There are complex processes underlying the changes being observed in the Murray-Darling basin, but the basic causes are straightforward. There are too many farms using too much water, and often in an extraordinarily unsustainable way. The landscape simply cannot support this level of agricultural activity. When European farmers first saw Australia's wide open spaces, they assumed these lands had the same high levels of soil fertility and could grow the same types of crops as in Europe. To overcome the lack of water, the Snowy River was diverted into the Murray, causing immense shock and change to the ecosystems of both rivers.

Governments' inability to actually implement changes that will stop the Murray River degrading further continues this pattern, as if they think that one day more water will simply appear out of nowhere. Environmental determinism is never sustainable in the long-run. We need to respect the constraints of nature and farm our land more sustainably. That means fewer farms and lower water entitlements in the Murray-Darling basin.

The Australian book industry

Do not be fooled by the eloquence of Australian authors. They have been repeatedly arguing that Australian authors deserve a fair profit and that Australian literature has great cultural benefits for many of us. That’s difficult (and slippery) to dispute, but it’s an attempt to reframe the argument over book import laws in a way that stirs emotions.

Unfortunately, such emotions rarely lead to good public policy. The territorial copyright restrictions currently in place are a market distortion, a barrier to trade and the cause of over-inflated book prices paid by consumers. If an author (or their publisher) wants to boost their profits by printing different editions abroad and pricing them differently, why should Australian law permit them to prevent imports of the foreign-market version? If authors and publishers are too scared that cut-price books from abroad will threaten their royalties and profits in the Australian market, they should stop publishing in or supplying to foreign markets. They will continue to have control over this, and retain the copyright to their own work, regardless of any changes in book importation laws. Despite what they may say, the integrity of copyright itself is not at stake.

By restricting imports in such a way, laws against parallel imports cause the price of all books to be much higher than they otherwise would be. This seems to be mostly for the sake of supporting a few Australian authors who, judging by the shrillness of their recent complaints, would otherwise be unable to remain viable. I am sick of having to pay through the nose for books in Australia, or pay high freight costs to buy them online from America.

If consumers valued the work of Australian novelists more than that of other authors, they would be willing to pay more for their books. These writers should stop trying to stir up emotions through the media and focus on writing better books.

War on terror

I’m glad the government is dumping use of the preposterous term “war on terror.” The term never made any sense. The Australian government joined the US to invade Iraq and create an enormous sense of terror amongst many Iraqi civilians. Both countries made stellar efforts to make many of their own Muslim citizens feel terrified. These events inspired further violent attacks by extremist groups throughout the world. The way events were spoken about and reported created a further sense of terror amongst voters, which politicians repeatedly reinforced.

This was not really a war on terror, but a war in support of it.

Planning boards

It seems like the Planning Minister is trying to make the large projects approval system more democratic and transparent. Instead of approving such projects herself, the Planning Minister is now devolving that power to regional boards. Great. The only problem is that the minister will appoint a majority of members on each board. Instead of decisions being made by an elected politician, they will now be made by faceless bureaucrats, non-elected non-experts or, it is possible, Labor party donors and development industry supporters. The minister can then praise these regional boards when good decisions are made, yet distance herself when politically controversial developments are approved.

Training schemes for youth

Kevin Rudd's latest scheme to cut welfare payments to unemployed youth who do not take up education or training places when out of work may seem a clever way to massage youth unemployment figures, but it is fundamentally a good scheme. With the level of unemployment predicted to rise so high in this recession, it will be vital to ensure that the skills of those who are unemployed do not lapse behind what the labour market is likely to demand in a recovery, and that existing skills do not deteriorate from lack of use.

It will be vital, however, that the government ensures there are sufficient training places available for those who will have their youth allowance cut off, and in the areas where these youth live. It is also essential that general skills are taught alongside occupation-specific skills to ensure that the workforce remains flexible. Decisions will have to be made about which skills will be in demand in the future, but it workers must also be able to adapt should labour demand evolve if the predictions of skills demands are off.

Nevertheless, the strong focus on education and training is good for Australia in the long-term. More productive workers and a more highly educated workforce leads to more people being employed in 'good' jobs and higher wages once the economy is back to normal.

Mardi Gras has become too congested

Mardi Gras has become too congested

Brad Ruting
The University of Sydney
b.ruting@usyd.edu.au

When the State Government first announced that it wanted to move Australia’s largest parade, the Mardi Gras, to Homebush I thought April Fools’ Day had come early. Except they were serious. How stupid, I thought, to move the parade away from Oxford Street, especially to somewhere without gay clubs or dance parties. Not having thousands of gay men, women and whatever-in-betweens march through Sydney’s gay district for Mardi Gras would be rather like trying to make pilgrims converge on Turin rather than Rome.

Yet on Mardi Gras night, as I stood on the tip of my toes in the crowd, I began to think the State Government had a point. Oxford Street may be the home of Mardi Gras, but when it came to squeezing in giant floats, dancers, officials and over 100,000 spectators the street felt a lot narrower than I’d remembered. The parade continues on to Moore Park but most people cluster at the city end, which is easier to get to and easier to get away from afterwards.

The crowd was mostly happy, jovial and in great spirits. But, like any big event, there were the occasional troublemakers, drinking alcohol, pushing, stealing and upsetting others. The police presence was commendable but it seemed a tad strange to put the coppers inside the barriers, making the public practically unreachable on the other side.

Then there’s the transport nightmare of getting home. Because of the big street closures many taxi drivers reckon it’s the worst night of the year. Buses are redirected, trains are overcrowded and everything departs late.

And here is the problem. Mardi Gras needs Oxford Street, but does Oxford Street need Mardi Gras? The ‘Golden Mile’ between the city and Paddington’s edge has been a significant milieu for gay people, businesses and services since at least the 1960s, attracted by the cheap prices, city location and the emergence of gay venues and a gay population. The first Mardi Gras in 1978 symbolically claimed Oxford Street by bravely marching down it, declaring it gay space. (A far cry from now, when gay and lesbian spectators are barricaded behind metal bars, and marching in the parade requires registering weeks in advance.)

The area is different now. Most of Darlinghurst, Surry Hills and Paddington have been gentrified and property is expensive. The Golden Mile end of Oxford Street has recently struggled with being dirty, run-down, unattractive, violent, loud and traffic-filled. The area has suddenly become less attractive to gays and lesbians. Not only is Oxford Street tackier and living nearby dearer, but the remarkable increase in public tolerance of homosexuality—to the point that ‘gay’ means cool in much media—has allowed gays and lesbians to live almost anywhere in Sydney without being persecuted.

There’s also the City of Sydney’s push to ‘revitalise’ Oxford Street by renovating council-owned buildings, opening up laneways and increasing retail space. The council says it wants to maintain the area as a gay district, but its main aim is to (somehow) create a cosmopolitan and ‘artsy’ precinct.

What remains understated, however, are Oxford Street’s three main non-gay functions: as a busy traffic thoroughfare, as an historic shopping street, and as a nightclubbing zone. These three are incompatible in the long-run. Heavy traffic makes shopping there undesirable (and unhealthy), and young and rowdy straight patrons spilling out of nightclubs make it unlikely to become a thriving urban village overnight.

So why does Mardi Gras persist there? Why should it march down this old haunt—a relic of the past when it was one of the few places where gay people could lead openly homosexual lives—when times have changed? Shouldn’t it barge down George Street to show it is now a mainstream event that has achieved global recognition? Or even head west to Homebush Bay, where organisers can not only reap more funding from the State Government but even charge an entry fee?

Despite now being one of Sydney’s largest (and most economically valuable) annual events, it is still important for the Mardi Gras parade to be on Oxford Street. It belongs there, amongst the bars, clubs, parties and history. Move it to Homebush and the crowds will wither away. A different approach to the parade route should be trialled, such as extending the starting point down Liverpool Street to George Street, to spread out the crowds and provide more space to watch. Extra bus and train services need to be put on. Festivities could be more dispersed, with events throughout the city in the afternoon. More rubbish bins should be provided to minimise the tons of waste left on the street afterwards.

Even if Oxford Street has lost its gay edge, the parade is a ritual that is repeated because it has an important message to send. Of course, crowds may be heavily diluted by young straight spectators; displays may be been toned down so families can attend; gay youth may be more interested in the partying than the politics.

Yet underneath all the consumes, banners and corporate sponsorship remains the same plea for acceptance, equality and peace that has been behind all Mardi Gras. Homosexuals are still widely discriminated against in Australia, both socially and legally. The challenges around the world are even greater. Mardi Gras remains an important way to communicate these challenges, as well as a party to celebrate Sydney.

The labour market and the downturn

New OLO article: http://www.onlineopinion.com.au/view.asp?article=8630

The labour market

The geographic unevenness of job losses is one of many worrying developments in the labour market. The overall unemployment rate is forecast to rise above 7 per cent in the coming year, but the impacts will be much more severe for particular groups. Not only will some suburbs and regions suffer badly, but so will many part-time casual workers, unskilled workers, indigenous Australians and migrants with poor English skills. Particular occupations and industries, especially those that have been doing it tough for some time, will be hit much harder than others. Underemployment will rise markedly and the number of "hidden unemployed"--people whom remain outside the workforce because they have given up on finding a job or do not enter the workforce in the first place--will rise much faster than the number who are counted as unemployed.

The challenges for the government are large. More needs to be done to assist those who will be hit hardest to get by, and to help them up-skill, retrain and then find suitable work once the economy is growing again.

Don't turn migrants away

The government's decision to cut the immigration intake by 14 per cent is disappointing. This looks like a populist measure that will generate very few benefits. The impacts of immigration on the Australian labour market have been extensively studied and, contrary to popular opinion, there is no firm evidence to suggest that skilled migrants either steal jobs from locals or reduce wages.

Yet in the name of this populism--and to kowtow to the unions--the government wants to remove part of the boost that migrants give to aggregate demand. Many highly skilled migrants with good ideas and entrepreneurial drive will be turned away, hurting Australia in the long-run. Migration benefits both the migrants, whose lives and opportunities can improve markedly in Australia, and the economy as a whole, helping to make it stronger, more diverse, and more productive.

Carbon emissions trading

The federal government wants to reduce Australia's greenhouse gas emissions by implementing a carbon trading scheme. This will raise the prices of energy and energy-intensive goods and services for consumers. Yet, at the same time, it wants to give $9 billion to heavy polluting industries to "cushion" the effect of the scheme. This is great for those companies that churn out most of our greenhouse gas emissions, but what on earth is the point? If the aim is to preserve jobs, why spend oodles of money to subsidise jobs in these industries when it would be cheaper and more productive in the long-run to assist both labour and capital to switch to greener industries?

This kowtowing to business lobbies is ridiculous. The point of a carbon emissions trading scheme is to reduce emissions in a way that encourages efficiency and innovation by users of carbon. Doling out billions to heavy polluters defeats the point entirely.