Alcopops tax grab added to Rudd's growing list of policy failures

The ALP's gratuitous tax grab that was disguised as an initiative to curb binge drinking among teenagers has been defeated in the Senate by the socially conservative Senator Steve Fielding of Family First and the Coalition.

In spite of all their emotive rhetoric about how teenage girls cannot help themselves with these sweet tasting, colourfully presented alcoholic beverages, one year on from when the measure was first introduced they failed to provide any evidence that it had an impact on binge drinking.

To make matters worse, the ALP chose to give the tax revenue back to the liquor industry for purely political reasons, as Senator Mathias Cormann explains:

While we opposed this tax increase as a bad tax, we also took the view that the money collected by the government so far (without legal foundation as it turns out now) should not be returned to the liquor industry.

In fact the liquor industry did not want it back.

We bent over backwards, over the past two days, giving the government every opportunity to validate the $300 million collected so far and to invest all of it in genuine and effective measures to fight alcohol abuse in the community.

I moved three separate motions, (one together with Greens Senator Bob Brown) to give the Government the opportunity to validate the $300 million in revenue collected so far.

Recklessly, the Government voted against every single one of them. The reason? Political. They wanted to put maximum pressure on Senator Fielding to pass the tax.

Emissions Trading Scheme fundamentally flawed

The government's proposed Emissions Trading Scheme (ETS) has become a major embarrassment for the Rudd Labor government. The government has been left in disarray because of internal divisions on the policy, and it is now the subject of three Senate inquiries. It has been very poorly designed and raises deep concerns from both the Coalition and Greens.

The ETS in its proposed form will have little or no impact on the nation's carbon emissions. Speaking of the Select Committee on Climate Change Policy, Andrew Robb, Shadow Minister for Infrastructure and COAG and Shadow Minister Assisting the Leader on Emissions Trading Design, said:

The Government's emissions trading scheme is deeply flawed – if implemented it would cost jobs, kill investment and not see any appreciable reduction in CO2 emissions.

This inquiry is an opportunity to look at additional complementary measures and alternatives to the Government's ETS.

This inquiry has been agreed to because everyone, including many in the Government's caucus think, that what the Government has come up with is so deeply flawed that we need to have an inquiry which will look more broadly at what can be done which won't cost thousands of jobs but can also do something significant about CO2 emissions.

The scheme has been slammed in a report commissioned by the Senate Select Committee on Fuel and Energy. Dr Fisher is critical of both what is known about the scheme and what remains unknown:

Although the public report on the Treasury modelling is voluminous there remain aspects of the modelling that are not transparent. To assist in this review the Chair of the Senate Select Committee wrote to the Treasurer requesting, ‘the government's complete documentation of the government's models together with the model codes and databases and any other model simulations undertaken relevant to the policy scenarios, but not publicly released’. To this reviewer’s knowledge no response was received. As a consequence, it has been necessary to undertake this review without access to a complete set of information about model documentation, databases, implementation and many of the underlying technical model parameters. Given the major long-term structural changes to the Australian economy implied by the introduction of an ETS and the fact that the development of the key model employed to determine the international effects on the Australian economy of the scheme was fully taxpayer funded, it seems reasonable that full model datasets, codes and comprehensive documentation be released.

...

As already stated this review regards the transparency surrounding the Treasury modelling process as unsatisfactory, notwithstanding the efforts of the Committee to gain access to models, documentation, codes and databases developed with public funding. This lack of transparency is regrettable given Treasury’s traditional advocacy of openness and competition when it comes to others.

The report also raises concerns about carbon leakage, where emission-intensive, trade-exposed industries relocate offshore. Carbon leakage not only threatens Australian jobs, but can potentially increase greenhouse gas emissions:

The most common description of carbon leakage concerns the relocation of energy intensive industries from countries with emissions constraints to countries with no such constraints. This could happen either via physical plant relocation or if firms in emission-constrained countries shrink while competitors in non-constrained countries expand. Global emissions might actually rise, compared to what otherwise would have occurred, if firms in the nonconstrained economy use more emission-intensive technologies.

Another channel by which leakage can occur is via global energy prices. Mitigation policies in carbon-constrained countries reduce demand for high carbon fossil fuels, leading to lower prices on world markets (other things equal). As a result, non-constrained countries would respond by increasing consumption above what it would otherwise be. Conversely, demand for cleaner fuels such as natural gas would increase in rich, participating countries, driving up the world price and reducing the reliance on such fuels in non-constrained countries.

Unfortunately, it appears that there was some political influence in the economic modelling that was carried out in the design of the scheme, as Senator Mathias Cormann, Chairman of the Senate Select Committee on Fuel and Energy, explained in a media release:

From evidence received late last year, the Committee already knew the Government had refused to ask Treasury to assess the most realistic scenarios when modelling the economic impact of its proposed CPRS.

Challenged about the scenarios chosen for modelling, a senior Treasury official told our Committee that “the scenarios that were modelled by Treasury were done at the direction of the government”.

That is code for don't blame us.

Lindsay Tanner's gutter politics

Lindsay Tanner, Minister for Finance and Deregulation, in the House of Representatives on November 12, 2008:

Why is this happening? Why do we suddenly get this pattern—an orchestrated set of attacks on Australia’s regulator? Most Australians support our regulators. Most Australians think it is important to have a strict set of rules and fair dinkum, impartial, tough umpires. But there are, sadly, some people in the community who do not. There are some people in the community who do not like regulators and who do not like tough rules. The sharks and the shonks and the spivs that inevitably populate the nether regions of the financial world do not like regulators. Unfortunately they have taken over the Liberal Party. The sharks and the shonks and the spivs have taken over the Liberal Party. There has always been a factional tension in the Liberal Party—not between the wets and the dries but between old money and fast money. And fast money has taken over.

Even before Malcolm Turnbull became leader of the opposition, Labor worked furiously to find something in his past to tarnish his reputation. The thinking was that he was a merchant banker, surely he must have been up to no good. What have they found? Absolutely nothing.

Rudd should expect no less for his personal attacks in Parliament

Kevin Rudd shouldn't shed any crocodile tears because of Malcolm Turnbull's article in The Australian slamming the Prime Minister's absurd ideological treatise on neoliberalism, given the number of denigratory remarks that Turnbull and the Liberal Party in general have tolerated from both him and Treasurer Wayne Swan in Parliament. Ever since Turnbull became Leader of the Opposition they have attacked him for his wealth and past career in the finance industry at every available opportunity.

The remarks play to voters' prejudices and not only were they totally uncalled for, they were simply wrong. The global financial crisis was not caused by greedy merchant bankers and neoliberalism. China ran up huge trade surpluses that were lent to the US and fuelled an asset bubble. Also, the US government intervened in the mortgage market, further inflating housing prices until the housing bubble burst.

Here is one appalling attack he made on February 5, 2009, in the House of Representatives, where he insults merchant bankers and outrageously suggests that Turnbull should apologise for the global financial crisis because of his profession:

Mr RUDD —I know those opposite do not wish to actually debate that which is real here, which is: how do you deal with providing the stimulus which the Australian economy needs because of the global economic crisis? We have a program put forward. It is costed. The assumptions have been backed by the Treasury, and we stand by those because they represent for us a credible strategy to see Australia through this crisis.

The alternative is not just sitting on the fence, not just carping from the sidelines, but an avalanche of politically opportunistic negativity from those opposite. But here is the ultimate irony for those opposite. There they are, representing the forces of neoliberalism around the world. There they are representing the forces of unrestrained greed. There they are, representing the forces of unrestrained markets, representing the forces also represented by unprincipled merchant bankers operating with under-regulated markets—their entire ideology, which has brought this crisis about—and yet they are unprepared to lift a political finger to support this government’s efforts to deal with the consequences of that crisis. This is the ultimate irony, the ultimate hypocrisy of those opposite: the unrestrained greed, unprincipled merchant bankers, under-regulated financial markets—at the absolute core of neoliberalism—causing this crisis worldwide, and there they stand back, smugly, seeking to take political advantage of this government’s attempts to deal with the consequences of that crisis for working people. Those opposite have contested whether in fact they are really neoliberals. Remember, as the Leader of the Liberal Party has said in response to this debate on unregulated financial markets: ‘Let us simply let the market run its course.’

Mr Hockey —Mr Speaker, I raise a point of order. I would just ask the Leader of the Labor Party to refer to the Leader of the Opposition by his proper title, please.

The SPEAKER —Order! Members should be referred to by their parliamentary titles.

Mr RUDD —The Leader of the Opposition has said on multiple occasions, ‘Let the market run its course.’ That is the very heart of the neoliberal agenda which has brought about this mayhem on markets worldwide, with impacts on working people, who now pay the price through the loss of jobs right across the world and in our country as well. The Leader of the Opposition reinforced that in the debate in the parliament on Tuesday when he began citing as his new authority on fiscal policy Professor Taylor from Stanford University in the United States, who is himself one of the archdeacons of neoliberalism. Remember what Professor Taylor said? He always asks himself each morning: ‘What would Milton do next?’—that is, what would Milton Friedman do next? And then you have not just these statements of ideology but also the action itself of ideology, which is to block this government’s efforts in the Senate to actually deal with the stimulus needs necessary to repair growth, growth which has been undermined by neoliberal wanton behaviour around the world which has brought this crisis about in the first place.

So there you have this extraordinary contradiction—their ideology wreaking havoc on the world economy and them refusing to support any course of action to deal with the consequences of their ideology’s spectacular failure. How about, I say to the Leader of the Opposition, you just stand up one day and say, ‘Maybe this neoliberalism, maybe this market fundamentalism—maybe we just got it wrong.’ How about a word of apology about all of those investment bankers around the world who creamed it, who scored tens and hundreds of millions of dollars out of this? How about just a word of apology which said you might have got it wrong? And how about a word of action to support a government’s efforts to clean up the wreckage after you? That is the moral challenge here, a moral challenge which has been failed by the Liberal Party corporately and by the Leader of the Opposition personally.

Wayne Swan is probably the worst in Parliament for playing the politics of envy:

Mr SWAN —I was making the point that the Liberal and National parties in this House are simply out of touch with the everyday lives of average Australians. The shadow Treasurer said only last week that Australians have never been richer. That is what he said only last week. Despite the fact that the stock market has halved in value in recent times, his view is that the champagne is still flowing. Of course, when you have the opposition led by a merchant banker and lawyer for merchant bankers, it is no wonder that they are so far out of touch.

More dumb policy from the Australian Laziness Party

You wouldn't expect any less from the ALP. Federal Treasurer Wayne Swan just proposed that executives should have their salaries capped because Pacific Brands gave its executives pay rises after laying off workers in their Australian operations. Take a wild guess what will happen. That's right—these talented workers will just take better offers from overseas. For those that don't move offshore, local companies will just provide generous perks such as luxury cars or private jets in their employment packages. It is pure fantasy to expect that executives will apply their full potential in companies that don't attempt circumvent such regulation.

One might argue that companies will be able to hire more workers using the money that would have otherwise went into executives' pay packets—this is not necessarily so. The CEO will have less incentive to make the company competitive in the marketplace and sales could very well fall. Don't expect consumers to embrace slogans such as "Buy Aussie made"—they are unlikely to take any notice, especially when they have a mortgage to pay and family to feed.

US President Barack Obama recently introduced a cap on executive pay, but he wasn't so stupid as to apply it across the board—it is merely a condition that has to be accepted by companies receiving corporate welfare from the US government. Barack Obama said:

We don't disparage wealth. We don't begrudge anybody for achieving success. And we believe that success should be rewarded. But what gets people upset — and rightfully so — are executives being rewarded for failure, especially when those rewards are subsidised by U.S. taxpayers.

Automated layoff tracker

Many layoff trackers have appeared on the Internet, but they all have the same shortcoming: people have to regularly update the page using information obtained through research or voluntarily submitted by those browsing their website. Here is a layoff tracker that is different.

With the aid of Google News, you can keep up to date with the mass layoffs occurring around the globe with a feed reader. News of the latest job cuts can be obtained by entering the following search criteria in Google News:

(cut OR layoff OR shed OR axe OR slash OR sack) AND job

This search can be accessed immediately at the following URL, which can be bookmarked for convenience:

http://www.google.com.au/news?pz=1&ned=au&hl=en-GB&q=%28cut+OR+layoff+OR+shed+OR+axe+OR+slash+OR+sack%29+AND+job

To receive a news feed of this search, enter the following URL into your RSS feed reader:

http://news.google.com.au/news?pz=1&ned=au&hl=en-GB&q=%28cut+OR+layoff+OR+shed+OR+axe+OR+slash+OR+sack%29+AND+job&output=rss

Was Andrew Bolt a lefty?

Andrew Bolt is an opinion columnist for the Herald Sun, well known for his outspoken conservative views. He is no stranger to controversy and is noted for his scepticism of anthropomorphic climate change and the stolen generation of aboriginal children. He appears to write with great conviction as he expresses views held by only a minority of the population that inevitably generate a backlash from many readers.

Andrew Bolt's biography on the website of ICMI, a speakers and entertainers bureau, might surprise a few people. Apparently he was involved in a couple of election campaigns for the Hawke Labor government:

Outside journalism, he has worked for the Hawke Labor Government on two election campaigns, and for the State Opera of South Australia as its publicity director and acting general manager. He is married with three children.

Prime Minister gets a hard lesson on the house of review

The initial defeat of the Rudd Labor government's massive economic stimulus package in the Senate would have taken many by surprise. The Prime Minister thought none of the crossbench senators would dare block the bill if he dangled a $950 cheque in front of millions of Australians. After the government refused to support Senator Nick Xenophon's amendments for economic and environmental assistance to the Murray-Darling Basin, he joined with the Coalition to block the bill. The bill was re-introduced into the House of Representatives and finally passed by both houses after the government negotiated a compromise with Xenophon.

As with other poor legislation that has been thrown out by the Senate, Rudd minimises the embarrassment by pinning the blame solely on the Coalition. The fact is that with the current composition of the Senate, the Coalition needs at least one other Senator to vote against a bill for it to be defeated.

Rudd's attitude, or at least the conception that he is trying to impart on voters, is that the passage of a bill through the Senate is just a formality, as is clearly evident by the figure of speech he used when he told Opposition Leader Malcolm Turnbull to "get out of the road" after he announced that he would not support the stimulus package. The reality is that when a bill is amended or rejected by the Senate, it is serving its intended purpose. It is a house of review and provides checks and balances that form a critical part of our democracy.

The role of the Senate in Australian democracy

The Australian Parliament is based on a British Westminster system, but the Senate was inspired by the Senate of Congress in the United States, which is a federation of colonies just like Australia. The US model of the upper chamber was chosen because it provides equal representation of all states regardless of population. Thus, it protects smaller states such as Tasmania and South Australia from dominance by New South Wales and Victoria. Presently, there are 12 senators for each state and 2 for the Australian Capital Territory and Northern Territory.

The Senate also plays a crucial role in providing a more inclusive representation of a broad range of political views because members are elected via proportional representation. Under this system of voting, a candidate is elected if the number of votes they receive meets a minimum quota, which is calculated by dividing the number of formal votes by one more than the number of seats being contested and then adding one to this result. Candidates receiving a number of votes exceeding the quota have their surplus votes distributed to other candidates based on their electors' preferences. The process is repeated for the remaining candidates using the transferred votes. If unallocated seats remain after this process, then the candidate with the least number of votes is eliminated and their votes are transferred to the other candidates based on preferences. The number of seats won by a political party is proportional to their share of the vote and as a consequence small parties such as the Australian Greens and Family First are able to win seats in the Senate.

Government's filibustering makes a mockery out of the Senate

If the government appreciated the gravity of the economic crisis and enormity of the stimulus package that will be put to a vote on Thursday night, it certainly didn't show with their lengthy and repetitious waffling on matters that were either irrelevant or weren't critical enough to justify the attention they received. Here is just one of the answers that Labor Senator Nick Sherry gave with $42 billion of taxpayers' money hanging in the balance:

Senator ABETZ (Tasmania) (6:10 PM) —At what time on Sunday did the Treasurer finally sign off on this document?

Senator SHERRY (Tasmania) (Minister for Superannuation and Corporate Law) (6:10 PM) —I am not really sure of that level of detail, but I will see if we can find out what time, where he was, what pen he signed off with, what colour it was—black or blue—and how much sleep he had the night before, which I suspect was not much. There may be some relevance to the level of detail we are getting to, but it has not become immediately apparent to me. It reminds me of when I asked the former Treasurer, Mr Costello, about the check-in and checkout times of the GST committee, when I was in opposition, in order to try and determine who was working on the GST package. It was a high-security zone down in Treasury and I wanted to know who was going in and out at what time. The records existed because of the security situation. There was an electronic check-in and checkout. I have to say that the former Treasurer, Mr Costello, was pretty blunt in his refusal to provide that level of information. I really think we are getting to that stage now. But I will put a request in to the Treasurer’s office about the approximate time, within a few minutes, that he signed off on it.

While the government denies it, they were deliberately stalling meaningful debate to delay a vote on the bill while they engaged in backroom negotiations with Independent Senator Nick Xenophon and the Greens.

Family First's Steve Fielding was the one crossbench senator who was not involved in the negotiations. The fate of the stimulus package will be decided by him if the Greens and Xenophon strike a deal. Senator Fielding was unable to engage the filibustering government senators, leading him close to tears in this emotional outburst:

A bit of economics here—I will go back to day one. What was happening on day 1? The Reserve Bank was going to make a significant announcement, but you guys wanted to hog the spotlight. The economy runs on confidence. You did not even allow the Reserve Bank’s downward adjustment of the interest rate to affect confidence in the marketplace. You wanted to hog it. You should have let that run its course and allowed confidence to build into the economy and then maybe come out with a plan. You did not allow the positive cycle of monetary policy to work itself out. No, no, no. You had to hog it. You had to beat your chests and say, ‘Hey, we’re in control of interest rates.’ Frankly, you should have let that run.

Then there was the second thing you did. You came into this place and basically told us, ‘Pass it, no questions asked.’ Don’t kid yourselves. Do not go to the Australian public and say you agreed to an inquiry. You were deadset against it. You have misread the Australian people. We know we need a stimulus package, but are you sure as all heck that your arrogance is 100 per cent right? That is what you said on day 1: ‘Don’t worry about it; just pass it.’ That was step 2—another mistake.

Step 3: these negotiations have been lip-service. You are tap-dancing around here this afternoon. You have put it off to some convenient time when there are no news stories. Stop playing politics. This concerns Australian people, their families and their lives. I am deadset serious about this. This is just a joke. I may not be the best negotiator. I am just a kid from Reservoir, but, sure as all heck, I know when someone is stuffing around. Get serious. Do not treat the Australian public like you treat the Senate.

US trashes global economy, then moves towards protectionism

One has to wonder if US President Barack Obama is plotting the ruin of the global economy. The United States is the world's largest exporter of recessions, but that hasn't discouraged Barack Obama from pursuing policies that tip the playing field in favour of American goods. His economic stimulus package, which is yet to be passed by Congress, includes provisions that require public works projects funded under the package to only use American made steel and iron. In response to international protests, the Senate has added an amendment that allows for exceptions in cases where the provisions violate America's commitment to international trade agreements. The Senate rejected an amendment from Republican Senator John McCain to have the protectionist provisions removed from the package altogether.

Obama couldn't have chosen a worse time to move towards trade protectionism. The International Monetary Fund and World Trade Organisation have warned that the so-called "Buy American" provisions could ignite a trade war. Last year, Australia exported $484 million worth of steel to the US.

The development has Caterpillar, which just laid off 20,000 employees, very worried. Jim Dugan, spokesman for Caterpillar, said to Indianapolis Star:

Our position is that, while 'Buy American' may sound good, in fact we're very concerned that if this stimulus legislation contains the 'Buy American' provision, other nations and regions of the world would follow our lead and pass similar provisions.

Suddenly, we could find ourselves with an old-fashioned trade dispute similar to the 1930s, and soon global trade could grind to a halt. We are very, very concerned that this 'Buy American' provision could end up leading to a similar set of circumstances that would be detrimental to Caterpillar, and more importantly, to the U.S. economy and the global economy.

Why has Obama chosen to head down the path of protectionism, despite the risks it poses to the US economy as well as international trade? He owes a debt to the trade unions that invested millions in their campaign to have him elected. The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) budgeted US$53.4 million ($80 million) for their campaign efforts, while its affiliated unions spent US$150 million ($224 million). President of the AFL-CIO, John Sweeney, described Obama as "a champion for working families". It is about time that John Sweeney and Prime Minister Kevin Rudd replaced the words "working families" with "union members".