Saturday, May 31, 2014

Saturday Morning Musings – sidetracking through history

I haven’t commented on the Eastman case. I worked with David for several years, knew him for longer. The issue in the Martin Inquiry was not whether or not he had a sometimes difficult personality, but whether he received a fair trial. It appears not. You will find the details here, here, here, here, here, here.  Obviously, its big news in Canberra. What a mess.

Over at her place, The Resident Judge of Port Phillip, Janine Rizzetti has continued her series of book reviews, most recently with ‘A Biography of Robert Baldwin: The Morning-Star of Memory’ by Michael S. Cross. It’s a good review. Janine followed Judge Willis from Port Phillip to Canada and then found, as I had done, the similarities between Canadian and Australian history. Canadian history is longer, more complex, but both countries evolved as part of the same empire.

Australian historiography has been through phases. In one phase, the more nationalistic phase, the Imperial connection was effectively written out of Australian history except to the degree that it was necessary to establish a counterpoint to the Australian point, or deal with one of the isms, imperialism or colonialism. Australia was defined by its differences from, to a degree conflict with, its parent. It therefore comes as something of a shock to find that our now somewhat distant siblings actually had similar experiences. It can be a bigger shock to conclude that one’s parent may have been right after all, or at least conclude that that parent had a defensible view.

At the moment, I’m deeply enmeshed in the history of two linked Australian families, the Wyndhams and Wrights. I hadn’t intended to go this route. However, in pursuing one topic I found that I actually had a series of books on my shelves dealing especially with the Wright family. Thank heavens for the bicentenary! It led to a huge burst of historical and especially small press publishing. The bicentenary has long gone, as has the publishing burst. The books remain.

The books that I am reading contain excerpts from letters and diaries. This was the material as well as her own memories that Judith Wright used to write Generations of Men. It is the small details of life that I find most interesting,

On 7 September 1876, Emma Halliday nee Wyndham wrote from Darjeeling to her Uncle, George Wyndham, at Dalwood. The letter is an affectionate one, mainly concerned with horses. George had sent her a stallion from the Hunter; Emma appears to have been breeding and selling horses. “We are staying here in the hills because my husband has sick leave, as he had fever and argue”, Emma writes. “However, we rejoin the regiment in two month’s time, and we go up to Cawnpore, which I do not fancy at all”. Wise words. Next year, Emma, her husband and their child would die in the massacre at Cawnpore during the Indian Mutiny.

As an historian who see himself as a story teller, I don’t have to get involved in the rights and wrongs of the Indian mutiny. What is more important is that it touched one family in the context that I am writing about. 

I had intended in this post to go on to discuss some of the issues that Winton Bates is raising on Freedom and Flourishing. The segue would have been the importance of time in making judgements when so much of current data is actually short term. I apologise, Winton. I am reading!

Friday, May 30, 2014

Credential creep, the economics of education, with a dash of contract breaking or (alternatively) retrospective taxation

Soon after starting work in the Commonwealth Public Service I found myself in the Commonwealth Treasury. While I had completed a major in economics, my honours degree was in history. Given where I was now working, it made sense for me to switch my master’s plans from history to economics. To do this, I had to complete a masters qualifying, achieving distinction status in a third year course, one of the honours courses plus a sub thesis. I mention this now because the sub thesis topic I chose was the economics of education.

At the time, there was interest in two different types of measurement. One was the contribution increased education made to economic growth. This was positive, providing an economic justification for increased state spending on education. The second measurement was the contribution education made to increased life time earnings. This was positive too. The combination meant that greater spend on education was justified in economic terms, but there was also a case for charging students something for that education since they received a direct financial benefit over time. The challenge was to find a way of striking a balance between the two. Charge students too much and you reduced the overall national return on education by reducing investment in education.

This simple analysis forms the basis of especially higher education policy in many countries including Australia. I am not implying anything especially profound with my own analysis, although it was new to me. The same logical paths were being followed by many others. 

The discussion today around the Australian budget changes to higher education reflects that old model. Minister Pyne talks about the high individual returns from university education, a claim that the ABC Fact Checker program concluded were overblown. I have a more fundamental problem, call it a confusion if you like.

When these calculations were first run, the proportion of graduates was far lower as was the proportion going onto year twelve. With the explosion in mass university education, both the absolute number of graduates and the proportion of graduates has exploded. Logically, you would expect the return on a degree to have fallen. Yet, somehow, it is still showing a significant rate of return. You have to ask why?

To my mind, and I have argued this before, we are dealing with a side effect of credentialism. The rates of a return on a degree are calculated by a comparison with the non-degree populations. Over the last forty years, swathes of sub-professional areas have moved in credential terms from the non-degree to degree space. They are now, as they were then, comparatively less well paid than the professions themselves. However, they are now as they were then, better paid than most semi-skilled or unskilled occupations.

My hypothesis is, and I stand to be corrected by someone who knows the numbers better than I do, that the absolute return on a degree has fallen with increased numbers. However, the relative return on the degree has stayed positive because the returns as compared to the diminishing non-degree group have been held up by the migration of mid range wage and salary occupations from the non-degree to degree group.

On a tangential if related issue, Fact check also looked at this question: Is the Government's plan to charge interest on existing student loans a broken contract? This measure really annoyed me because my daughters made judgements based on existing arrangements. Would they have changed their plans? Probably not, but they would have had to make a choice. If the change is not a breach of contract, then it becomes a retrospective tax measure. Still, as kvd pointed out, it makes it easier to sell the student loan portfolio for a bigger price. Surely that’s good?

Thursday, May 29, 2014

New England Travels – journeys through space and time

Last year, my main writing for publication outside my weekly newspaper column and the blogs were two chapters, one a long one, in a book to be published to mark the 75th anniversary of the New England University College, the 85th anniversary of the Armidale Teachers’ College. I spent a fair bit of time on those chapters, trying to write as well as I could while ensuring proper historical referencing. I was looking forward to holding it in my hand as tangible evidence of my work. Frustratingly, the book hasn’t been published. First it was due to be published last year, then by the end of March this year, now who knows?

Last year, too, I began what would be two attempts to turn some of my existing writing into book form. Both stalled because of the degree of rewriting required. Now I am having another go, but this time in a different way. Instead of trying to edit and restructure my existing writing, I am writing from scratch in an area that I already know where I can draw from my existing work.

The working title is New England Travels – journeys through space and time. Part autobiographical memoir, part travel story, part history, my story meanders wherever it will take me. New England provides the unifying element, the frame if you like, but I am not restricted to that; the sands of Arabia, Lugard’s Nigeria, spying in Japan, boxing and boxing tents, life and death on the frontier, the rise and fall of dynasties and the strange by-ways of family life are already there, sketched on the canvas I have created; my choice now is to select.

I am not being too ambitious. For the moment, I have an income to earn, other things to write. My writing target is 300 words per day. So far I am sticking to it, although it’s very early days. For the present at least, I am finding the process liberating, an anodyne to other frustrations that bedevil me. I know that the draft will change greatly as I write. Even now it has changed several times as I strive to capture the right words, to achieve the balance I want. Accepting that, this is the present start of the book.         

“Dalwood House stands on a rise. From the side verandah, mown grass runs down to the old vineyard. The Hunter River lies beyond, hidden within its high banks. It was hot and still, the silence broken only by the distant sound of a crow. Even the working properties on the hills on the other side of the River were still, remote in the faint heat haze.

This was only my second visit to Dalwood. Many years before I had read Australian writer and poet Judith Wright’s Generations of Men, the story of her grandparents and the establishment of the Wyndham and then Wright pastoral dynasties; the book gripped me. I was especially caught by the almost lyrical descriptions of Dalwood House as seen through the eyes of Charlotte May Wright nee Mackenzie, Judith’s grandmother.

By chance, I had just finished the book when I went out to dinner in Canberra. Talking about the book over dinner, my hostess, herself a member of the Wright family, said “The house is still there, you know, although it’s a ruin now.” I got directions and visited it with a friend on my next trip to Armidale.

Many parts of Australia now claim Judith Wright as their own. Up in Queensland, the State Government has expropriated her for a performing arts centre. Her New England connection is dismissed in just a few words: “Judith Wright was a Queensland resident for over thirty years. She was born in New England, in regional New South Wales, and came to Brisbane as a young woman”. Later, Canberra and Braidwood would claim her too.

In all this, Judith remained a quintessentially New England writer. That was where her views were first formed, although her later experiences and especially her relationship with the older novelist and philosopher Jack McKinney would exercise a powerful influence over her. Judith met Jack McKinney when she moved to Brisbane. He was a much older man, some twenty four years her senior, only two years younger than her father. They fell in love, moving to Mount Tamborine in 1950; daughter Meredith was born in that year. In 1962, Jack and Judith finally married. Four years later Jack died, leaving a hole in Judith’s life.

Jack McKinney was the second of three powerful men in Judith Wright’s life. The first was her father, Phillip Arundell Wright, with whom she shared a middle name. The third was H C “Nugget” Coombs, a noted Australian economist and public servant, with whom she had a twenty five year love affair. Coombs was again an older man, in this case by nine years. Both were major public figures. Judith was a widow, Coombs long separated from his wife. Both shared common interests, including Aboriginal advancement and the environment. Judith moved to Braidwood to be closer to the Canberra based Coombs, but the affair was kept secret, if open to their friends and the Canberra network within which they moved.

Each man had a powerful impact on Judith, but I think that it was the father that formed her core views. It was he that gave her that love of the environment and of the country. It was he that gave her that love, affection and unstinting support that seems to shine through in the letter between them.

I knew her father as a much older man. PA, we all spoke of him as PA, was my grandfather’s friend; my grandfather was godfather to his son who bore the same first name; my copy of Generations of Men carries my grandfather’s signature, bought in the year the book first came out. To me, PA was a somewhat remote figure. I saw him at events and at the New England New State Movement Executive meetings that he sometimes chaired. I and my fellow students at the University of New England where he was chancellor poked gentle fun at him for his sometimes mangled English. It would be a number of years before I came to properly understand his contribution to Northern life and the causes he supported.

Judith loved her father, she loved the Fall country in which she grew up, she loved the life on the family properties. Her earlier works reflect that love, and then the joy she found in her relationship with Jack McKinney. Later, there would come a darkening of spirit, erosion in optimism, a rejection of elements of her past. “You ask me to read those poems I wrote in my thirties?” she wrote in Skins. “They dropped off several incarnations back.”

Judith had the misfortune to be born a girl in an age when men inherited. After the death of PA, she became separated from the properties and life she had loved. Towards the end of her life, she saw the end of the Wright family empire that had been carefully built by her grandparents and especially grandmother May Wright. The ABC TV Dynasties program recorded the event in this rather dramatic way:

By December 2000, he (brother David) had lost it all – his properties, his cattle and his wife to cancer. His sister, the poet Judith Wright, watched in despair and died soon after.

Six years later David, my grandfather’s namesake, died suddenly. On his death, University of New England Professor Bernie Bindon described David as one of the pioneers of the scientific research underpinning today's Australian beef industry. "I can't think of a beef industry person” Professor Bindon said, “who's made a bigger contribution to not only the growth of the beef industry but the science that underpins the beef business," The Herefords that formed the base of the V1V and V2V Wright brands began their life at Dalwood. It was Judith’s grandparents, the core characters in Generations of Men, who began the breeding program that created the Wright cattle.”

I hope that this will give you a feel for what I am trying to do.

Postscript

Message first via the UNE Facebook page and then a personal email from Jennifer Miller UNE Alumni Officer to say that the UNE book was back from the printer with a launch being organised. I was so relieved.  

Sunday, May 25, 2014

Untangling co-payments: where the Government went wrong

Just when the Australian Government felt that things couldn’t get any worse, it appears that a rise in nickel prices has replenished Mr Palmer’s coffers. Oh dear. Perhaps the Government is going to be watching the Nickel Exchange as closely now as the public opinion polls!

Meantime Leith van Onselen in a piece in Macrobusiness has noted, as I have, the way in which certain sections of the Australian media have regrouped and turned to savage the Budget’s critics. The piece’s title, Media turns on Budget “whingers”, captures the flavour.  I think that you can forget a lot of the commentary at the moment. In the end, with a budget like this, it is the actual way that things work in practice that will determine the Government’s survival.

The starting point here should be not what the Senate might do, but what will happen if everything happened just as the Government intended. Then, too, the issue is not so much the macro-economy, although that might blow the Government out of the water if, for example, China went pear shape. Rather, the key question is the myriad of smaller changes rippling across the country. To illustrate this, this post deals with the health changes. My main sources is budget paper no 2, supplemented by some of the commentary. I am only dealing with major measures. 

Initially I struggled a little to understand the co-payment and I’m still not clear. But this is what the budget paper says:

The Government will achieve savings of $3.5 billion over five years by reducing Medicare Benefits Schedule (MBS) rebates from 1 July 2015 by $5 for standard general practitioner consultations and out‑of‑hospital pathology and diagnostic imaging services and allowing the providers of these services to collect a patient contribution of $7 per service.

For patients with concession cards and children under 16 years of age the MBS rebate will only be reduced for the first 10 services in each year, after which it will return to current benefit levels. A new Low Gap Incentive will replace bulk billing incentives for providers of these services. The Low Gap Incentive will be paid to providers where they provide services to patients with concession cards or children under 16 years of age and only charge the $7 patient contribution ‑ for the first 10 services in a year, or where they charge no patient contribution ‑ for additional services in that year.

The measure will also remove the restriction on State and Territory Governments from charging patients presenting to hospital emergency departments for general practitioner like attendances.

The savings from this measure will be invested by the Government in the Medical Research Future Fund.

Let’s unpack this a little. On the surface, the Government is proposing to reduce the medicare rebate on a standard consultation by $5. Doctors will charge their patient $7. The Government is $5 better off, Doctors $2 better off, patients $7 the poorer.

At this point, I would like to thank regular commenter DG. This post was due to come up first Friday and then yesterday, focusing especially on the industry and structural economics of the proposed changes. In simple terms, what were the likely reactions within the health sector, how might these interact with patient behaviour? I find this type of approach helpful in providing different types of insights compared with the more conventional economic analysis.

In his comment, DG pointed to the earlier US Rand Study, to the Singapore health system and, more broadly, to evidence on the low price elasticity of demand for health services. This led me to change direction somewhat, although my focus remains on the Australian context and the impact of the proposed changes in that context.

Elasticity of Demand

For those who are interested, this Rand paper contains a useful summary of evidence on demand elasticity, this paper provides an introduction to elasticities in general, while this post by Jason Shrafin provides an entry point for other discussion on various types of elasticities.

  To summarise the material, price elasticities for medical services appear low. This means that a one per cent increase in the price will lead to a .17 or so per cent fall in demand. However, there are variations in price elasticity between medical services. For example, price elasticities for preventative medicine are higher since this spend is discretionary. Charging for vaccinations might fall in this class. Falls in demand also appear to work themselves out not so much by falls in visits, I will go to the doctor less, but by falls in the number of people going to the doctor, I won’t go to the doctor at all. Finally, price elasticities are higher in the longer term.

In contrast to price elasticities, income elasticity is positive. As incomes rise, we go to the doctor more. That makes sense, although the income elasticities appear relatively low. Again that makes sense. We go to the doctor more because we can now pay for a wider range of services. However with exceptions, cosmetic surgery might be an example, there are only so many things that we might want done to us. Perhaps now we will have that hip replacement operation rather than putting up with the pain.

If income elasticities are positive, then it follows that if incomes fall expenditure on health services will fall by a higher percentage than the fall in income. My income falls by one per cent, my expenditure on health services falls by 1.5 or 2 per cent. I defer or cancel that hip replacement operation. I put up with my flue for a longer period.

Finally, health services are not single services. I go to the GP. The GP tells me that I need antibiotics. I go to the chemist. I have to make two payments, one to the GP, one to the chemist. The data suggests that price elasticities for pharmaceuticals are higher for GP visits. Again, that makes sense. I go to the doctor because I am ill. The doctor says that I have flue and should take this medicine. That medicine is costly. I may not be able to afford it. In any case, I am somewhat reassured by the GP, so I choose to not to buy and suffer. And maybe affect others. Alternatively, I am meant to take two courses of antibiotics. I take one, but only one.

Health Minister Dutton’s numbers.

Australian Health Minister Dutton indicated at a forum that Department of Health modelling indicated that the $7 co-payment would only stop one per cent of people going to the doctor in the first year of operation, falling to half a per cent in the second year. This led Joanna Heath in a Financial Review story entitled Dutton disputes health claims to conclude that the modelling undermined claims made by patient advocates that the co-payment would deter many people from seeking medical help when necessary.

I blinked a little when I saw this.  Surely that’s too low? Looking at it against the elasticities data, I thought okay. So this change means that one Australian in a hundred will stop going to the doctor in the first year, falling to one Australian in two hundred in the second year. That would fit with the elasticities data. However, the story doesn’t end there. I actually have no idea how all the changes will work through.    

Looking at the co-payment on its own

It is clear that doctors are presently confused at just how the co-payment system with its safety nets might work in practice. I am too! But just keeping things very simple.

At present, around 88% of doctors bulk-bill, mainly in the big clinics. In these cases, the patient presents their medicare card and the service is charged straight to the Government. The remaining doctors charge the patient direct, setting their own consultation fee. The patient then goes to the Medicare office and claims the rebate back. Doctors who follow this route tend to be independent GPS or practices located in better-off areas who have chosen for personal, professional and business reasons to opt out of medicare bulk billing. On average, they appear to charge more than the scheduled fee.

For doctors who have already opted out of bulk billing, the effect of the changes is to increase the net amount that their patients must pay by $5 per visit, the fall in the medicare benefit. While it’s a significant percentage increase in the cost to their patients, it’s also a small amount that will have little impact on their customer base. They also don’t have to worry about all the special conditions/exemptions intended to soften cost increases. They just charge. It’s up to the patient to claim back.

At the other end of the spectrum, the big company chains that now dominate the mass primary care marketplace as well as certain other areas including pathology services do have a problem. Their income has gone down by $5 per visit. That’s their profit margin. Further, they have to think about how to implement the special conditions/exemptions required to get, or help patients get, the higher medicare benefit in certain cases. That imposes costs.

There are some hard choices here from a market perspective.This is a volume business.

Looking back at some of the reports I wrote in my past consulting life, my reservation about the emerging chains lay in their ability to gain a profit from a corporate service paying its doctors compared with ordinary GP operations. At the time, the corporates were paying large sums to buy practices, older doctors were exiting gracefully. I couldn't see where the profits would come from. The margins weren't there.

I was wrong along several levels. I underestimated the extent to which volume might be increased with given doctor numbers. I underestimated the economies that might be associated with centralised back-office functions. Most importantly. I underestimated the extent to which flow-on business to higher margin areas such as pathology might support low margin services. Still, mass primary health care remained a low margin business. Now what do the chains do? How do they respond?

In the first instance, they have to keep volume up. The full changes don’t come in for a while. Meantime, there appears to have been a drop in GP visits because people don’t know what is happening, are confused. This had led the Australian Medical Association, among others, to issue statements saying don’t worry, things are as they were.

Meantime while keeping volume up, the chains have to address practical longer term business issues. 

At the moment, they simply swipe the patent’s medicare card. Now they need a new system. The simplest system is that already applying in some areas such as dentistry where medicare does not exist, where private insurance is the norm. A bill is calculated. Patients without insurance pay that. Where patients have insurance, the system allows the practice to lodge the insurance claim and then issue a bill with the insurance rebate deducted. The practice still has to either collect cash or lodge a credit or debit card for the remainder.       

My feeling is that this is the system that will be adopted, although there are still problems. One is the Government’s rhetoric, its attacks on bulk billing, for this is bulk billing in a different guise. A second is the costs and complexities associated with the safety nets and other changes.

This then raises a another question, the extent to which doctors will opt out of bulk billing, joining the 12 per cent of doctors who do not participate. I think that the chains will stay in the system since that makes the best commercial sense in the short term. However, I would expect a significant percentage of independent clinics to opt out.

In this context, the Government’s rhetoric is unfortunate.This Government has the habit, as indeed did the Rudd Gillard Governments, of speaking as though it expects people to obey. It doesn’t work like that. It simply cannot compel doctors to comply. They will do what they will do. They will opt out. Their role is to deliver medical services in the way that they see best, taking their own personal values and considerations into account. They are not servants of the Government.

If a significant proportion of doctors do opt out, then a new equation comes in. The elasticities analysis is based on price, not cash flow. A $7 co-payment is one thing, a $38 or $40 charge a second thing. Even if you can claim back, you cannot go to the doctor if you do not have the cash. The price point is not $7, but the higher amount. That could lead to significant drops in demand. 

Looking at the co-payment in context

The Government has introduced a major series of interconnected changes.

On the cost side, it has increased costs across a wide spectrum of medical services, each with its own price elasticity. Keeping it simple, a patient may now pay $7 for a visit to the doctor, but also has to pay more for medicines prescribed following the visit. The drop in the demand for medical services will be the combination of the two.

The Government had also introduced benefit cuts that will lower the income of many lower income people. The drop in demand for medical services is now the combination of the price effects for primary consultations plus the price effects for medicines plus the income effects of lower benefits. Who knows how all this will play out?

Conclusion

The really annoying things about all this is that it was unnecessary. I actually support the idea of a low co-payment because it keeps people honest.

If I was introducing it, I would have worked out my systems first. I would say something like people need to make a contribution for their health care. This will cost you a small amount of money, but it will be easy for you, it’s not complicated. This is what will happen. We, the Government, are going to save some money that we can then invest back into health care so that you are better off.

But what did the Abbott Government do?  It introduced so many changes that not a bloody person, and I include the Government itself as well as myself, can understand them!  Is it any wonder that people are reacting?    

Update One

Neil Whitfield pointed me to this piece on the financial impact of the medicare changes on doctors’ incomes. I had not picked up the impact of the removal of the bulk billing incentive. Ironic, really. As I remember it, that incentive was introduced because the proportion of doctors bulk billing had dropped significantly to the point that it threatened the success of bulk billing. There is not much point in maintaining a bulk billing incentive if you want to do away with the practice!

Looking at comment threads across sites, there is not a lot of sympathy around for the affect of the changes on doctor incomes. I suspect that misses a key point.  It is not clear to me that the changes will affect doctors’ incomes, although it will affect the economics of the health care companies that employ doctors. 

In a comment, Janene wrote:

I don't know if Armidale is typical of other regional cities in this regard, but here doctors do not bulk bill unless you have a health care card due to being on a very low income. I took my son to the doctor last week and paid $65 for a 5 minute consultation, of which I can receive $36 back. I have no idea why doctors here feel it necessary to charge almost twice as much as their city counterparts.

One of the interesting subtexts in all this is that it was Tony Abbott as health minister who effectively restored  medicare as a mass service. This piece in the Conversation from September last year, FactCheck: were just 67% of GP visits bulk-billed when Tony Abbott was health minister?, provides a useful historical perspective. By the time Mr Abbott became health minister in October 2003, the decline in bulk billing had become a significant political problem. The changes then introduced helped reverse that decline.

Even now as first marcellous then Janene noted, the incidence of bulk billing varies greatly across space. Not everyone has access to it. If, as appears to be the case, we are at the end of bulk billing, then everybody can now enjoy the Armidale experience. To the degree that demand for medical services is price inelastic, there would appear to be scope for doctors to compensate for volume declines through higher prices.

DG used the term moral hazard in the context of GP fees and bulk billing. However, it was always the case that those going to the doctor then had to buy the drugs where co-payment was alive and well. To the degree moral hazard existed, it wasn’t really a patient issue, but one linked to over servicing, especially in pathology, and that was a corporate issue.  

Concluding, one of the difficulties with the multiple changes is they way they feed into each other. Patients face increases in GP costs plus increases in drug costs. Oh, and by the way, optometry benefits have also changed. Welfare benefits are down.

We appear to be moving from a universal care system to a safety net system. If we are to maintain a universal care system with increased co-payments, then the system design elements become critical. The same holds true if we are to go to a safety net system.

The Commission of Audit provides a salutary lesson here. Some of its recommendations were simply stupid, unworkable, because they ignored systemic interconnections. The recommendations on rent assistance are a classic case.

All this will be winnowed now through the political process. That is the way the Australian system works. You get compromises that are then tested through experience. Things actually tend to balance themselves.

Thursday, May 22, 2014

Mr Abbott’s bushfire

Budget reporting goes on and on while I try to work my way through it all. There is something extremely nasty about the responses running just below the surface on social media, peaking through from time to time into the more public space.  I can understand it, but I don’t have to like it.

Looking at the commentary especially in the Financial Review, the debate is not primarily about fixing the budget as some commentators think and the Government would like to present. It’s about the means adopted. The Government wanted to fix the budget and do the things it wanted to do. To do this, it had to cut out the things it didn’t want to do. It also wanted to force some structural, social and behavioural changes. I make this point only because it is quite clear from the numbers that the Government could have achieved the same budget outcomes with a different policy mix. It chose the mix, and those choices were its choices. That’s what the debate is about.

On the distributional impacts, NATSEM modelling would seem to confirm just how skewed the budget impacts are. You can actually see something of the same effects in the consumer confidence surveys where the fall in consumer confidence is most marked among Labor voters, with the diminished number of Liberal voters still positive.

If we put aside debates about budget aggregates, macro-economic impacts or indeed fairness, we are still left with the question of what it all means. What will be the impact of this budget on the way Australia operates and on the various sectors and activities affected by the budget and by all the associated policy changes? How might it work in practice?

This is where my present confusion lies, for I don’t understand the system design elements, the detail, well enough to track the likely impacts. I suspect the Australian Government is in the same position. Certainly the Opposition is.

This budget has timelines built into it. Changes come in at different points in time stretching well into the future. Those affected by the budget have to make judgements about impacts based in part on the what if principle. What if this actually happens?

To illustrate with a simple example, I can measure the possible impact on my daughters of the introduction of interest charges on HECS debts. All I need to know is their debt and then apply some interest rate ranges. What I can’t properly assess are the behavioural impacts.

Will better off parents or former students with access to cash draw forward their paybacks? Some will, giving the Government cash. What will be the impact on demand for university places? Now,that’s more complicated, for it depends in part upon movements in university fees affected by other budget changes. Normally with price signals, and that’s what this change is, you would expect them to work by reducing and also redistributing demand. That means fewer students going to university studying a different mix of courses.

For the universities themselves, the position is fiendishly difficult for they have to try to work out and respond to multiple possible interacting changes that affect every aspect of their operations.

I think that the Abbott Government has made a fundamental error with this budget. It’s simply too complicated, bringing in too many changes at one point. There is no prioritisation, no phasing, no picking of the key battlefields. In military terms, they have decided to invade on multiple fronts. Lacking logistics and with ineffective communications systems, the command staff is running around trying to push the campaign. Meantime, behind the front all the support activities are struggling to find the time and resources to follow up.

For the life of me, I cannot see just how the Abbott Government can have any hope of managing the changes they have unleashed. This is a practical, not political, judgement. It’s pink batts, but on a large scale. With every jurisdiction, every institution, every NGO, every peak body, every business and all citizens affected by the changes, the task of explanation is enormous. Every inter-government agreement is affected, every program. All this has to be managed in circumstances where, mixing metaphors, spot fires are breaking out all the time.

Staying with the fire analogy since Mr Abbott is a volunteer fire fighter. if you want to do some remedial burning, it’s not a bad idea to focus the burn instead of spraying fire starter across a vast expanse of bush. Perhaps we can call all this Mr Abbott’s bushfire. 

Postscript

Sue pointed me to this cartoon by David Pope from The Canberra Times on the fire theme. David Pope Cartoon

Wednesday, May 21, 2014

Consumer sentiment down in the shifting sands of Australian politics

One of the immediate underlying issues in the Australian Government’s budget was well captured by some of the small business commentary I heard at the time. While welcoming many of the changes, a recurring concern was just what it all meant for consumer demand. Would people stop spending? What did this mean for sales?

The budget aggregates suggest that the immediate deflationary impact of the budget is relatively small. However, the impact is likely to be far greater than the raw numbers suggest because the impacts on household budgets seem particularly concentrated in relative terms at lower and middle income families who spend a higher proportion of their income; cuts here flow straight to reConsumer confidenceduced spending. It will take time for people to work out what it all means for them. Meantime, belt tightening would appear the safest option where that can be done. 

This type of view would appear to be confirmed in the latest consumer confidence data. This shows quite a sharp drop.

It is too early to know whether or not the drop will be longer term.

It seems that the budget debate has drawn youngest into the fray: Abbott Government backs traditional art forms, promises funding for cave paintings. I’m not sure whether or not she will maintain this interest, Political Discord may remain a one post blog, Meantime, it’s quite a funny piece. 

One thing that the Australian Government has achieved in all this is to shift the terms of the economic and political debate. To begin with, increased taxation is back on the agenda. One thread is the debate over the GST. a second the State based payroll taxes, with Treasury Secretary Martin Parkinson telling the states to use it to help meet their revenue needs. Then, in parallel, is the debate over Commonwealth-State financial relations. Finally, discussion over entitlements has been replaced by a discussion over fairness.

Now in all this is the National Partnership Agreement on Asset Recycling signed on 2 May 2014. Yes, it’s dry, but the Abbott Government’s infrastructure plans seem to depend on this.  Maybe I’m wrong, I’m sure that people will correct me, but I can’t see any of the states or territories rushing to implement this until the sands have settled.   

Postscript

A second consumer sentiment survey came out today, the Westpac-Melbourne Institute.Westpac consumer confidence As you might expect, it shows the same pattern of weakening confidence. 

Meantime, wage date released by the Australian Bureau of Statistics (release here, commentary example here) suggest very slow Australian wages, below the rate of inflation, meaning falling real wages. This has implications for Treasury’s revenue projections. 

Meantime, the budgetary commentary roles on. There are different views on what all this means for economic activity, depending a little on where you fit within the political and ideological spectrum. However, the analysis is slowly delineating impacts.

Yesterday, the Australian Reserve Bank released the minutes of its 6 May Board meeting. This meeting took place before the 13 May budget speech. The minutes summarised the economic outlook in this way:

Members noted that there had been little change in the outlook for the global economy, with growth of Australia's major trading partners in the year ahead still forecast to be around average. The latest data received on the domestic economy had evolved much as expected, with further indications that growth had picked up a little over the past two quarters. This had been driven by very strong exports as well as an increase in the growth of consumption and dwelling investment. However, the Board noted that overall growth in coming quarters was likely to be below trend given expected slower growth in exports, the decline in mining investment and the planned fiscal consolidation.

While a range of indicators suggested that conditions in the labour market had improved in recent months, the demand for labour remained subdued and was likely to remain so for some time. This had led to lower wage growth, which in turn had seen inflation decline for non-tradable items whose prices were more sensitive to labour costs. This was being offset by stronger inflation for tradable items as a result of the depreciation of the exchange rate over the previous year. Inflation was consistent with the target and was forecast to remain so over the next couple of years.

At recent meetings, the Board had judged that it was prudent to leave the cash rate unchanged. The expansionary setting of monetary policy continued to have the expected effects on economic activity. Notably, a sustained increase in dwelling investment was in prospect, consumption had strengthened a little and business conditions were around average levels. Recent developments had indicated that the economy had evolved broadly in line with earlier expectations, resulting in little change in the updated forecasts for activity and inflation. With growth in activity expected to pick up only gradually, and spare capacity in the labour market consequently remaining for some time, growth in domestic costs was forecast to remain contained, which would help to offset the ongoing effect on prices from the depreciation of the exchange rate over the past year. Given this outlook for the economy and the significant degree of monetary stimulus already in place to support economic activity, the Board considered that the current accommodative stance of policy was likely to be appropriate for some time yet.

In a way, some positive features but steady as she goes because of the downsides. I think that’s still right, although the budget has increased the downsides to some extent.

Tuesday, May 20, 2014

Mrs Stace’s jump

Today I feel like a break from more serious stuff. Well, not too serious anyway.

One of the issues at present in Australia is whether or not Prime Minister Abbott might choose to call a double dissolution election. ABC commentator Antony Green had a useful piece on the mechanics involved. My thanks to Don Arthur (@donattroppo) for the lead. As an aside, I’511px-STACE-Esther_Mm inclined to agree with Don’s piece on Club Troppo, Humiliation and the dole: a forgotten debate.

One of he things that I enjoy about history are its byways.

This photo shows Yarrowitch woman Mrs Esther Stace setting  a world record for a sidesaddle jump of 6’ 6” (1.98m). The year is 1915, the place Sydney’s Royal Easter Show.

Yarrowitch lies to the east of Walcha on the Oxley Highway, so a local connection so far as I am concerned. I know nothing about Mrs Stace beyond the apparent fact that she came from Yarrowitch.  

I hadn’t realised now recent the modern sidesaddle was. It was invented in the 1830s by Jules Pellier. It was revolutionary, for it allowed women to ride at a gallop and to take part in equestrian events.

By time time Mrs Stace jumped, the sidesaddle era was coming to an end as changing concepts of modesty along with changes in women’s clothing allowed women to ride astride. I wonder if her record was ever beaten?

Update 16 September 2017

A comment from La Chienne Shady Lady provided a partial answer to my question, was Mrs Stace's record ever beaten? This fascinating 2012 piece from Flora Watkins, Side saddle high jump record broken, in Horse & Hound provides a partial answer. As an aside, I didn't know that when William "Will" Thacker (Hugh Grant) in the film Notting Hill said that he was from Horse & Hound I didn't realise that it was a real magazine!

Returning to my point. With the exception of one reported higher jump in the US which does not appear to be properly documented, Mrs Stace's jump is still the highest. But, and it is a big but, the height is challenged because the horse jumped off a springboard. I have no idea whether or not this is true, but it appears to be a major issue in the competitive world of sidesaddle jumping.

Monday, May 19, 2014

Budget Blues

The latest public opinion polls (here, here) suggest that the Abbott Government is in fiendish trouble. From Labour’s perspective, this is a budget that just keeps giving as more and more people work through the implications for them of the myriad smaller changes within the budget.

Perhaps the Government’s biggest problem is that this budget is simply seen as unfair. I am not sure what happened in Canberra’s pressure cooker, but in the end the Government seems to have gone a bridge too far.

From a purely practical viewpoint, one of my difficulties in assessing the budget is that I have very little idea just what measures might finally get through the Senate, what will need to be changed or dropped. Some measures do not require legislation, others do. Australia is in for a period of considerable instability while all this is worked through.  

Saturday, May 17, 2014

Saturday Morning Musings – public administration, dashboards and pink batts

This morning I started with my normal news round-up. The increasing newspaper restrictions on public unpaid access have really started to hurt. I wish Google would stop indexing those stories from, for example, The Australian where you click and get a message saying you must subscribe if you wish to continue.

The restrictions by other papers to a maximum number of visits in a period is also difficult. These vary from two for the Courier Mail to thirty for the Sydney Morning Herald.  It really bites when I come to do a round-up story. The current Australian Royal Commission into the Home Insulation Program is a case in point. Here I wanted to do a more detailed check of reporting to try to determine key facts. To do this, I normally trawl my way back and forwards through reports, often visiting the same story several times. In such cases, I can now quickly exceed my visit limitations.

That’s not always a bad thing, for it forces me to check source documentation when available. However, I do not have research assistants and my personal time is very limited. The restrictions therefore make it harder to do the summary reporting that I like to do. 

In what must first seem like an unrelated segue, yesterday I attended a training course on the writing of ministerial briefs and letters put on by the Institute of Public Administration. My present work colleagues were surprised that I went. After all, I wrote my first ministerial brief a long time ago, most people know that I am a writer, while in the current work context I write a lot of briefs, policy statements, Q&As, communications strategies, risk plans etc. However, I wanted a refresher. I also had specific things I wanted to achieve. 

In official writing whether in the public or private sectors, system, culture and context are critical. Writing itself is a craft. However, system, culture and context determine the way you present your material. They determine what is included, who you write for. Here my own extensive experience can sometimes be an impediment. I have to write just what is required in the way that is required, not what my experience says might be actually best. In management jargon, we call it fitness for purpose.

I am told that we have flatter structures today. As I have said before, I don’t see it.

When I first joined the Commonwealth Public Service, there were three or four reporting or decision levels between me and the Minister. When I first became a Second Division Officer and had direct access to the Minister, a graduate clerk could come to me with a worry, a concern about a program, and have that concern on the Minister’s desk that day or the following morning if I agreed. It didn’t matter how it was expressed; I and the relevant section head would handle that. If necessary, I would consult my Division Head, Secretary or Deputy Secretary before providing advice, but that was my call. If I got it wrong, then I would pay a price.

Today, depending on the circumstances, there are between seven and nine reporting/clearance levels between my recommendation and the minister. Further, as a contractor in a small agency that forms part of one of the new mega agencies, I don’t necessarily understand the rules, relationships and contexts that dictate what is acceptable or, even, what is done and why it’s done. My experience allows me to form views, to make guesses, but I don’t know. Mostly I’m right, but it is a battle.

This was my reason for doing the course. I wanted to be more effective in my current role, and that required me to fit in, to learn the acceptable way of doing things. As it happened, I learned far more than this.

The course was run by Dennise Harries. In listening to her, I responded at multiple levels.

As part of my tool-kit I am a professional trainer, so I watched her technique. That got a tick. As presently part of an agency and someone who cares about my colleagues (they are nice people) and knows their frustrations, I was watching to see if the training was practical, if it would help them do their jobs. That got a tick too, although as one said outside during a cigarette break, I wish my manager would do this course. One of the standard problems with this type of training is that you learn, become enthusiastic and then go back to an unchanged work environment. You then feel, what’s the point?

Speaking professionally, there was actually some good stuff here, simple techniques that would work independent of the immediate work context. Again speaking professionally, I started wondering how one might best embed this. Training is learning by doing, so you must have follow up practice.

  At the start of the course, I wrote down my objectives for the day. They were simple. They did not include training skills, nor the extent to which the course might deliver simple practical outcomes in writing terms. What I wanted to know was how to write more effectively in an environment that I did not properly understand, that sometimes frustrated me. I did find the course helpful in this regard.

As I listened, I thought of the on-going ICAC (Independent Commission Against Corruption) inquiries in NSW and the Royal Commission into the Home Insulation Program, Both reflect failures in public administration. Both reflect the systemic complexity that has been created. In both cases, the outcome is likely to be more complexity, more rules.

For those who are interested, you can find a copy of Mr Rudd’s statement to the Royal Commission here. The Commission web site includes full transcripts of the hearings, as well as the evidence provided. The release of Mr Rudd’s full statement was delayed by issues of Cabinet confidentiality, something I wrote about in February: The principle of Cabinet confidentiality. A truck has now been driven through that principle, something the current Government and indeed future Governments may come to regret.

The Royal Commission centres on the question of who was responsible for what, who told what what, who should have told what what. A lot of whats I know, but this Commission is all about who and whats!

I have only skimmed the material, but several things stand out. The first is that there seems to have been no clear chain of command, the second the sheer complexity of it all.

Let me introduce you to the concept of the dashboard. No, not the car dashboard, but the management information systems dashboard. As organisations become larger and more complex, it becomes harder and harder for those at the top of the chain to know what is going on. Pressed for time in a 24/7 world, awash with information and electronic chatter, they need devices that will simplify, that will present key information in an easily absorbable fashion. Hence the dashboard.

In the case of the Home Insulation program, Mr Rudd referred on a number of occasions to the way that reports going to Cabinet on this program, reports that were part of the overall stimulus reports, were coded green meaning no problems. “We didn’t know”, said Mr Rudd. Then, when the problems were identified, the shock reaction was to cancel the program, imposing a new and different set of costs on those who had become involved.

Now go to the bottom of the chain. There is a long, long, distance between the bottom of the chain and the dashboard on which Cabinet seems to have relied. Each link is under pressure. Each has to make a judgement on what to report in the midst of doing, a report determined not so much by what is important in a practical sense but by the things that have been specified as important.

This is the command and control world of the modern organisation. Is it any wonder that Cabinet’s dashboard failed?

In theory, responsibility should be pushed down to the lowest accountable level. This has risks, but does give the best results overall. In practice, things don’t work like this.

I am. I suppose, in a somewhat unusual position. I have worked towards or at the top of the food chain. Now, for personal reasons including the desire to make writing central, I am towards the bottom. However, I have lost neither the knowledge or skills that I previously possessed, nor have I lost my passion for improvement. I am just seeing things in a different way. It’s made me something of a campaigner.

I have enormous sympathy for the public servants caught up in this inquiry. To my mind, they did a  pretty good job under very difficult circumstances. I suspect they worked very long hours at all levels. “The fault, dear Brutus, is not in our stars, But in ourselves, that we are underlings." There is some truth in that.

Friday, May 16, 2014

Please, pretty please, can we have the Country Party back?

I am working on my Australian budget analysis and hope to bring it up at the weekend. Much of it has been covered in the commentary, but I am trying to focus on the dynamic impacts, not the politics. It’s quite hard, for some of the detail required for analysis is not yet available on line.

So far as the politics is concerned, Mr Abbott played hard ball in opposition and will now get that back in spades. That’s actually not helpful to any of us, but it will happen.

Reading the material and considering my own views: please, pretty please, can we have the Country Party back? The old Country Party and indeed the National Country Party and early National Party always tempered the more ideological and personal ambition driven Liberal view. Whether you agreed or disagreed with the Country Party, one of my friends used to fulminate in his beer over what he saw as special pleading, the Party prevented domination by a single position within the Liberal Party.

The Party was also useful because it asked different questions, concerned about the local impact of national or state wide policies. Sure, this might lead to special pleading, but it forced reconsideration of issues in a way that extended benefits well beyond any narrow sectional group. 

This is the National Party’s official position on the budget.

Record Investment in Regional Australia – WARREN TRUSS

13-May-2014

The Nationals in Government are helping to deliver a record $50 billion in infrastructure and billions more to support communities in every corner of the country in the 2014-15 Federal Budget.

Deputy Prime Minister and Leader of The Nationals Warren Truss has spearheaded the record spend to ensure regional Australia gets its fair share and continues to be the engine room of the nation’s economy.
The Nationals have fought hard to make sure the regions are at the heart of our economic recovery, which will start with this Federal Budget.

This Budget puts in place the structural reform that will repair our economy and secure the nation’s economic future.

That’s why we are investing in the things that will get our country moving again - investments that will underpin our productivity and prosperity for generations to come – and why regional Australia has a key role in our plans.

Our Nationals team will continue to work hard to ensure our regional communities get the support they need to continue making a sustained contribution to our national economy, and the recognition they deserve for their efforts.

The centrepiece of the Budget is a fast-tracked $50 billion investment in new infrastructure, including in regional Australia:
– $6.7 billion to fix the Bruce Highway
– $5.6 billion to complete duplication of the Pacific Highway
– $450 million for more four-laning of the Western and Princes Highways in Victoria
– $480 million for the North West and Great Northern Highways in Western Australia
– $400 million for the Midland Highway in Tasmania
– $90 million for the Northern Territory’s Regional Roads Productivity Package
– Up to $1.3 billion towards the Toowoomba Second Range Crossing
– $508 million for the Warrego Highway
– $300 million to kickstart the Inland Rail project, linking Melbourne to Brisbane

Funding with a regional focus includes:
- $1 billion for the National Stronger Regions Fund to create stronger, more prosperous regional communities
- $2.5 billion to continue the popular Roads to Recovery programme, including a double payment in 2015-16
- $565 million to fix dangerous roads under the Black Spots Programme
- $300 million for the new Bridges Renewal Programme
- $100 million for the mobile phone Black Spots Programme
- $314 million for important capacity building projects across the nation under the Community Development Grants programme
- $320 million in drought relief measures including $280 million in drought concessional loans, $12 million for emergency water infrastructure, $10 million for pest management in drought affected areas and $10.7 million in social and mental health support.
- $100 million extra for applied agricultural research and development
- $15 million to help small exporters with costs
- $8 million to improve access to agricultural and veterinary chemicals
- $20 million to build a stronger biosecurity and quarantine system
- An extra $9 million for fisheries, including more support for recreational and commercial fishing bodies.

As you might expect, this bombed without a trace. Indeed. and this has become a rule, outside defensive comments at local level trying to play up the positives, the National Party does not exist so far as this budget is concerned. It is a non-entity. It has no independent position.

That makes me sad. As I said, please, pretty please, can we have the Country Party back?

Tuesday, May 13, 2014

Budget Night

Well, Mr Hockey’s first budget is over.  TV has killed the budget speech itself. You don’t need to listen beyond getting a a rough feel.

In a comment to a blogging friend, I said go through the budget speech and rule out all the rhetoric. You have to leave in some things that may be cast in rhetorical terms but are critical to following the thread. Look how little there is.

Think I’m wrong? This the budget speech. Try it.    

Monday, May 12, 2014

African thought, Border Force, budget conundrums with a dash of New England soap

Treasurer Hockey will deliver the budget tomorrow. Like most Australians, I just want to get through tomorrow to find out just what we are dealing with. Tonight’s post is a just a round-up on a few of the things that I have been thinking about or working on.

In a comment on Saturday Morning Musings – South Africa votes in 2014, DG wrote:

Malema (my link) a "charismatic" figure? Well, to some I suppose; and much in the way that Hitler proved "charismatic" during the Weimar Republic. This lunatic enthusiastically endorses the Mugabe model of economic growth.

While I do not pretend to be in any way an expert on African thought, I have followed enough posts and comment streams on African posts to know that it is very different from Australian thought. One stream is that of the left, where Mugabe is still a hero, old anti-colonial and left agenda battles still being fought out. A second is a conservative stream. the imposition of absolute moral values, religious and political, whether by Christian or Muslim groups. My feeling is that I should know more about this, for population and economic growth will make Africa very important in coming decades.

In politics and public policy, organisational roles and the language wrapped those roles is very important in historical terms. I mention this now because I got completely sidetracked yesterday.I started a post looking at certain aspects of the pre-budget discussions, then introduced Australian Border Force. This is where the side-track came in.

My feeling at the time was that the creation of Australian Border Force was an important marker in the evolution of a new and, to my mind, not especially nice feature of Australian life. To try to test this, I began an exploration of the changing titles and administrative arrangements that had  governed the customs and immigration functions since Federation in 1901. This historical analysis tended to confirm my view, but what had begun as a short contained exercise suddenly became a middling piece of historical research. 

I started in the early morning, then had to take Clare to hockey. That was fun, but sidetracked me. I continued for another hour, then realised that it was just more than I could manage. I promise to bring it up. When I do, bear with the administrative detail, I accept that is boring. Yet I think that I have done enough research to at least establish that we have been trough a fundamental change without realising its significance.

The post that I had started before being sidetracked by Australian Border Force was on the importance of interconnections and lags in public policy. We have tightened and focused so many Government policy areas over recent years that a change in one area.

Consider this example. Over the last four years, the number of older Australians on unemployment benefits has grown by more than 40 per scent. Part of the reason appears to be changes in the pension age, especially for women.

Or this. Whereas public housing used to be a device for assisting lower income working class Australians to improve their conditions, limited supply and priority setting means that social housing has become focused on high priority cases. Most of these people live on benefits, paying a proportion of their income for rent. So when benefits are lowered, social housing rents drop. Rents are not high enough now to support the system, so each benefit drop adds pressure to the deteriorating social housing fabric via lower rents. 

In both these cases, a saving now in one area than can be measured creates costs in other areas that cannot be so easily measured in the short term. I think that we need to recognise this.

I will leave this argument aside for the moment. My end point is not what you might expect.

Meantime, this is the trailer for a new ABC TV series. I really have been enjoying it, including its soapy nature. Further comments follow the trailer.

This is a New England TV series, my New England, the Northern Rivers within the broader Northern NSW that forms my new state New England. Again, I will write a broader story. 

Saturday, May 10, 2014

Saturday Morning Musings – South Africa votes in 2014

South Africa has just been to the polls. I  summarised  the results of the 2009 elections in this post: Saturday Morning Musings - South African elections. The post contains a link to a post summarising the 2004 election results.

The 2014 results are not final. However, I would summarise the key features this way:

  • The ANC (African National Congress) retains its dominance, although its vote continues to decline slowly, from a peak of 69.69% in 2004 to 66.11% in 2009  to 62.16% in 2014.
  • The Democratic Alliance has consolidated its position as the main opposition party. Its national vote has risen from 12.37% in 2004 to 15.82% in 2009 to 22.37% in 2014. Importantly, it has increased its dominance in Western Cape with 56.37% of the vote, remaining in government in that province. It is the only party other than the ANC that controls a provincial legislature,
  • Both the Inkarta Freedom Party and COPE (Congress of the People) weakened further. Led by Mangosuthu Buthelezi, Inkarta had its roots in the previous system. while COPE Helen Zillewas a split-off from the ANC that hoped to challenge ANC dominance.
  • This was the first election for the Economic Freedom Fighters, another split off from the ANC formed by former ANC Youth League president Julius Malema, a radical and by reports charismatic figure. At this point, the EFF has scored 6.35% of the national vote, making its the third largest party after ANC and Democratic Alliance. It is also now the official opposition in Limpopo, the poorest of the South  African provinces.

As an outsider with limited knowledge of South Africa, the most important feature of the elections to me beyond the simple fact of their apparent success is the way that Helen Zille’s Democratic Alliance has been able to establish itself as an official opposition.

With fifty three million people and the most sophisticated economy on the African continent, South Africa is a critical player in Africa’s future. It is also a country whose re-foundation after the apartheid era is based on a multi-racial, polycultural premise. I think that’s important.  

Postscript

The first report in the Australian media.  Not dissimilar.

Friday, May 09, 2014

Hot air balloons over the Hunter

We were woken by  a hsst hsst sound. While daylight, it was still eaP1010633rly. With breaks, the sound continued. We wandered out onto the little patio at the front of the room to find out what it was, shivering in the still cool Hunter Valley air.  In the distance, we could see a hot air balloon.

We had seen them in the sky the day before, but some distance away cross-country. Finding one nearby on the ground was confusing. Had it just landed? What was going on?

While hot air balloons have a long history, dating back to their use as airborne lanterns (Kongming lanterns) for military signalling purposes in China during the Three Kingdoms era (220–280 AD. However, the first untethered flight with human passengers seems to have taken place much later, in France on November 21, 1783.

The hssst hsst sound continued. As we watched, we could see that there were in fact two balloons, that they seemed to be inflating. This is a long range shot. From where we were standing, we could barely see the balloons, let alone the people.   P1010635

As the hsst hsst sound continued, first one and then the second inflated, then came the first take-off. P1010649

Now the second was ready to go. In this shot, you can clearly see the hot flame heating the air, with the chase vehicles standing by. With hot air balloons, directions depends on wind. The chase vehicles follow the balloons to collect the passengers at the other end and to repack the balloons.

   P1010653

As it lifted, the first of the chase vehicles set off through the vineyards. The others soon followed.

P1010668

Hot air ballooning has become big business, with providers packaging the flights with all sorts of extras such as champaign breakfasts to add to the experience. This is an example. Excitement over, we wandered inside to prepare for breakfast. 

,

Thursday, May 08, 2014

Abbott and Shorten and a problem of trust

I made a vow to myself to stay away from politics until after the budget when I could reasonably analyse what had been said. It seems not. Think of this as a not especially profound  observation, rather than a political comment.

One of the things that puzzled international observers during recent years was the degree of economic pessimism in Australia as compared to, say, Europe. Australia was doing well in economic terms, Europe not. Why, then, were Australians economic pessimists? It seemed irrational.

The real answer was, I think, that Europeans expected their economic position to improve, if sometimes from a dire base.  By contrast, Australians had the nagging feeling that their economic individual position was likely to get worse. I think that’s still the case.

This creates the first problem for Mr Abbott. He is plainly telling people that they must bear pain, accentuating existing pessimism.

This feeds into a second problem. Globally, the decline of the middle class in western countries has become accepted dogma. It’s been coming for a while, but it’s strongly there in popular thinking. This Essential Research story indicates some dimensions of public reaction at this point.  Now Mr Abbott’s difficulty here is that when he says that his proposals will create future wealth, people say so what. It’s not going to come to me. It’s going to go to firms and the wealthy. You tell me that I must bear pain for the good of the country, but I don’t believe you when you say that I and my kids will benefit.

Mr Abbott’s third problem is that there is a remarkably high degree of economic literacy in Australia. His budget analysis and rhetoric is strongly countered by alternative views made more dangerous because, often, they are starting from similar premises. Australians don’t actually care about a one or two percentage point shift in the Government’s share of GDP. They do care about their welfare and that of their kids. They are quite capable of making judgements based on alternative reporting.

When I first did microeconomics all those years ago, we distinguished between value (what was earned) and distribution (how it was distributed). We were told that these two must be kept separate. In his focus on value (maximising national wealth), Mr Abbott has ignored distribution (how will people benefit?).

Now I happen to believe that we do have a longer term budget problem, if not quite as articulated by Treasurer Hockey. I also believe that we have to increase national productivity, given the changes around us in a globalising economy. However, I have also argued that we must look at fair sharing of returns and of compensation for those adversely affected. We have to present a case to what is, in fact, an intelligent electorate.

The idea that the electorate is actually intelligent is, I think, anathema to the commentariat of left and right. How can punters think?  Well, consider this. How did independent Peter Andren hold Calare when his views on some issues were so far removed from those of his electorate? 

I never met Peter Andren. However, as I understand it he was a straight shooter; he listened, explained, but would not shift on things he believed in just to retain his seat. People might disagree and even vote against him, but they had a base on which to make a judgement. He was a solid figure in a shifting world of political advantage. People knew what they were getting, not on specifics, but in terms of stance and values. They also knew that he would work hard for them regardless of their views.

Both Mr Abbott and Mt Shorten suffer from the simple question of trust. We trust neither them nor their parties. Until they engage us in sensible debate, lack of trust will remain.   

Wednesday, May 07, 2014

Populating a landscape – writers and writing

In an earlier post (Train reading – Conversations: Interviews with Australian Writers) I mentioned that I had been reading Paul Kavanagh and Peter Kuch (editors) Conversations: Interviews with Australian Writers(Collins/Angus & Robertson, North Ryde, 1991). Reading that collection, one phrase came to mind to describe the writing task: we take what we will and use it in our own ways for our own purposes.

We all mentally populate the worlds we live in. We impose order, patterns, create the familiar. You know how it works; photos on the desk; finding that favourite coffee shop; the shape of the buildings or country that we travel through all the time; and so it goes on.

The writer faces a particular problem because he or she is trying to bring the reader into a world that is often not familiar to that reader. The landscape has to be created in the reader’s mind by the reader based on what you write. Simple description won’t work, You have to attach a degree of emotion, build in such a way that the relatively ephemeral task of reading for a short time builds into a landscape that, if not familiar, is at least understandable.

You might think that this is just the domain of the novelist, poet or playwright where they are starting from scratch creating an imaginative journey. That’s not true. The same challenge is faced by other writers, including journalists, travel writers and historians. Each part of the craft has different rules, faces different issues, but the challenges are similar.

With a travel writer, there are hooks and tools to be used to attract the reader. A journalist can usually assume some base degree of familiarity. A novelist’s challenge is different again, for here the novelist is creating a new world. Most novels are situation and location specific, with novelists writing from their experience or research. However, the best novels transcend this in their ability to cross time, location and culture. 

An historian faces a different problem. Most historians write for a niche or, if popular, for a specific market segment. Like the novelist, the best histories at least partially transcend time, space and culture to reach out to a broader audience whose personal landscape is very different. They stand as literary works and are popular for that reason. 

I want to try for that for personal and professional reasons. To do this, I am trying to intensely populate my landscape, in this case New England,  over time in my own mind. I walk the streets and landscape,so that I know what they look like. This is both good historical practice and necessary for the picture being created in my own mind. I look for patterns and constraints, I smell the air.

Now before going on, consider this piece by Tod Moore on the Morpeth Review. I found it because I was trying to think of a story for my next Express column. St John’s College, arguably the first and very early tertiary institution in Australia outside a capital city, began in Armidale before moving to Morpeth.  There it and the short-lived Morpeth Review had an impact on Australian thought, an outlet for Christian humanism.  Look at some of the names; Burgman and Elkin can be taken as examples. 

Tod writes from a particular perspective, as do I. We are on different sides of the political fence. But when I look at the material, I see interface after interface with the work that I am doing; I  know the St John'’s building in Armidale; I have just walked the streets of Morpeth, although I did not get to the College site; I know or know of most of the people referred too; reading the names, I am aware of the links to Professor Anderson at Sydney University; but there is so much more than this. Local, Northern and national intertwine with events and thought elsewhere.

This is a writing post, not a history one. I am not arguing a case, just illustrating. So how might this fit into my history?  More than you would expect. There are so many interconnections with different parts of the New England story, of thought and political action. How many words? Perhaps 500 in a 100,000 word book, but interspersed over time; from the coal fields to depression Newcastle to attitudes about the Aborigines; from Christian humanism to worker education; It’s part of a story that illustrates and adds colour.

I thinks that’s both nice and exciting. However, it’s only a first step. The populated landscape in my own mind has complex physical and human dimensions. As I read and learn more, as I walk across the physical landscape and add that to the mix, the landscape constantly evolves. Facts, thoughts, stories and images swirl, forming new patterns. To write, I have to freeze all this. With so much detail, I have to select and then write sparsely, constantly building patterns. This is the writing challenge.

Tuesday, May 06, 2014

Stray cats, cruelty, civil aviation and my Hunter Valley trip

Much of Sunday afternoon, Monday night plus three hours this morning before I went to work, were spent first on trying to fix email problems and then on resolving quite aggressive virus/malware issues. Given that this meant that I had not been able to write pretty much anything, I was so looking forward tonight to coming home and settling in to writing. But it was such an early start and then busy day that I was exhausted by the time I got home.  P1010757

In an earlier post I mentioned the stray that I felt obliged to feed, in part because I had known him for two years (I’m sure that he had belonged to someone). I called him Blackie; obviously he is not. Still, Scrawny is not a bad name.

For the benefit of the pet Nazis in our midst, he is not my cat. I have neither the time nor money to put him through the cat registration process. I am simply stopping a nice and well natured cat from starvation.

Speaking of Nazis or at least the Authoritarian robotic rule makers who now dominate public policy, we were talking today at work about the impact of the latest anti-smoking laws in prisons and especially mental institutions. The mark of a psychopath is lack of human empathy. The mark of an authoritian system is rules enforced conformity. There seem to be a lot of both around at the moment, For the first time, and it is a first time in this country,the word cruelty has entered the public debate as a marker. I hadn’t seen it before, but I think that it’s right.

The latest Australian Government action on boats may or may not be cruelty. I don’t share some of the views of refugee advocates, but it certainly seems to have had a further adverse impact on our relations with Indonesia.  The practical suspension of our cooperative relationship with Indonesia continues. Assuming the newspaper reports are correct, It is hard to see how the relationship might be fixed before the Indonesian elections.  And then there will be a new and probably less sympathetic Indonesian president.

Turning to more positive matters, I began a series with Towards a new approach to economic and community development 1 Introduction. Winton, while I have only done one post since I haven’t forgotten. The New England aviation series is actually part of the story.

On a still more positive note, kvd will remember my 2010 Greek trip series. I am now doing something similar with my recent trip to the Hunter Valley.  So far only two posts, but I am working on a third. This is the first post in the new series: Journey to the Hunter – Friday 18 April 2014: the adventure starts

Saturday, May 03, 2014

Saturday Morning Musings – Ukraine, confusions over Australian politics

Another Saturday Morning. Up early; Avenger immediately demanded to be fed. I have now ended up with two cats to feed.

I have had a nodding acquaintance with Blackie, a neighbourhood stray, since I first moved into Astrolabe Road. It seemed quite a big cat, well fed, and apparently belonged across the road. I say apparently because it was always there. Recently, it has fallen on hard times becoming a shrunken vision of its former self, emaciated with big patches of missing fur. In the end, I couldn’t bear it any longer, so gave it an meal. Cats aren’t stupid, although they are very dumb compared to dogs. One meal led to another!

Our blogging friend AC is back in Poland, something she writes about in Back in Gdansk. She is there at aFires Odessa somewhat difficult time given the Ukrainian crisis. This goes from bad to worse (Ukraine unrest: Military trying to retake eastern town of Slaviansk, say pro-Russian rebels, Ukraine crisis: Dozens of people killed in building fire, more shot dead in Odessa). Poland has a small border with Russia via that strange anomaly known as the Kaliningrad Oblast, a somewhat larger border with Ukraine, so the Ukrainian troubles are naturally a matter of concern within Poland.

One of the things that I hadn’t properly realised until this crisis broke was the extent of EU dependence on Russian natural gas. Thirteen pipelines link Russia with Europe: three are direct pipelines (to Finland, Estonia and Latvia); four go through Belarus (to Lithuania and Poland); five through Ukraine (to Slovakia, Romania, Hungary and Poland); and one to Germany via the Baltic Sea.   

I had thought, naively, that Europe would have been able to import natural gas from other sources if Russian supplies were cut off. It’s not as easy as that. There are both price and supply questions. In simple terms, in the event of a cessation of Russian exports, supply chain issues mean that gas prices would skyrocket while European demand would have to be suppressed by rationing. That explains some of the EU reluctance to take strong action in the current crisis.

Just at the moment, I would be inclined to buy shares in Woodside or any other Australian gas entity. Looking at events in Eastern Ukraine, some cessation of Russian gas supplies to the EU would seem inevitable. I just don’t think that Mr Putin has the subtlety to handle the forces that he has unleashed.

In the short term, European gas politics continues. This Reuters story will give you a feel. All this will be swept away if, as seems increasingly likely, the situation in Ukraine ends in Russian intervention. It may be that the Russian special forces that Mr Putin appears to have committed to Ukraine will be sufficient to carve out a quasi-autonomous area that Russia can either negotiate with or absorb while Kiev remains helpless. At present, it seems more likely that the position will deteriorate to civil war and planned Russian intervention.

Europe went through two dreadful wars in the twentieth century. There is no taste for another one. In military terms, Europe will go just so far and no further. Mr Putin is counting on this. However, Europe cannot simply stand by.

I don’t believe in attaching precise probabilities to highly uncertain events, although I do so from time to time because it makes explanation easier. My best guess is that Europe will draw a line.

In government offices across Europe, officials are presently huddled in conclaves: what are the risks; what might happen if we do this; what should we do if they do that? I suspect that they are no clearer than I am.

Returning to Australia, the continuing investigations by the NSW Independent Commission against Corruption (ICAC) has another scalp, this time Police Minister Mike Gallacher. There is something unpleasantly like a star chamber in the way that ICAC is conducting its affairs. There is too much ambush for my liking. It’s not necessary.

The combination of Ukraine with ICAC has cast a real gloom over what started as a nice day. It’s not helped by the total collapse of my email system, that’s another story, nor by Canberra events.  For the life of me, I cannot understand what the Abbott Government is on about. I know that’s not very good English, but you get my drift. There seems to be a total disconnect between rhetoric, proposals and reality. The good, and there is some good, gets lost in the rhetoric.         

One of the points about a change in government, the reason why they are necessary, is to challenge the status quo. Mr Abbott is certainly doing that. But I so wish that the government hadn’t locked itself in in the way it has.

With Ms Gillard and her administration, i said that the problem was to find that quiet spot, that point of stability, that would allow them to regroup, It didn’t happen. The same applies to Mr Abbott. Once commentators start talking about a one term government, you know that there is a problem. Mr Abbott needs two or even three terms to bring about change. I doubt that he will get it. 

Meantime, Labor in NSW is blessing it’s lucky stars. Having, rightly, wounded the previous Labor administration, ICAC is now damaging the Liberals. Who would have thought it? The combination of Mr Abbott’s  missteps with ICAC is rapidly rebuilding Labor strength at branch level.

Sadly, neither Labor at NSW or Federal level is really presenting an alternative. They don’t have too. All they have to do is wait.