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SEPTEMBER 2000
NEWSLETTER
The Institute for Private Enterprise promotes the
cause of private enterprise and a reduction in the role of government.
Subscribers ($275 pa) receive copies of all IPE publications including a
monthly newsletter.
THE MYTH OF THE “STOLEN
GENERATION” DIMINISHED
The Federal Court decision
to dismiss the claims of maltreatment against the Commonwealth by two
part-Aboriginals from the Northern Territory (NT) was a triumph for those who
have consistently opposed the stolen generation myth. Astonishingly, however,
none of those who have propagated that myth have publicly retracted their view
notwithstanding the damning evidence and judgment. One can only speculate that
the term risks becoming a “falsey” that is entrenched in community-speak simply
because it was widely accepted for a time. Those who got themselves committed
have certainly engaged in a series of responses designed to promote other
courses such as treaties, agreements - and even bills of rights – as well as
apologies (for those interested I have critical analyses of some of these). One
leading daily has even stepped up its coverage of matters claimed to be
adversely affecting Aborigines. Such strategies are clearly diversionary and
defensive, of course. The evidence and judgment
confirm what the IPE has been saying now for some time, viz that the
Commonwealth did not have a policy of forcible removal of part-Aboriginal
children from their mothers in the NT; that separations were either the
deliberate decision of mothers or reflected their agreement obtained over a
period of up to 18 months; and that the Commonwealth action was the opposite of
“racist” both because its policy was principally designed to protect
part-Aboriginal children who were often not accepted by traditional communities
and because many part-Aboriginal children were not separated anyway. Peter Howson was fortunate
in being able to have these truths enunciated in the attached article in The
Age and in an interview published in the Sydney Morning Herald. He
also had a letter published in The Wall St Journal responding to a
highly misleading front page article published by it. However, he has so far
been unsuccessful in attempts to have published further articles trying to
focus attention on the real need - to stop looking at the past and concentrate
instead on what should be done to improve the current position of Aborigines,
particularly the minority living in traditional communities. This failure is
despite a plethora of articles published in the media promulgating the stolen
generation thesis. A “victory” of sorts did
occur when The Australian editorialized after the Quadrant conference on
8-9 September in Sydney that the “other” view should at least be discussed.
However, the paper did not retract its demand for an apology even in the face
of the excellent dinner address by the Commonwealth’s Counsel, Douglas Meagher QC. Apart from confirming the main features of
the judgment, Meagher exposed many egregious errors and fallacies in the Bringing
Them Home report by Sir Ronald Wilson (I have a copy of his very balanced
paper). He also pointed out that Sir Ronald’s claim to have had insufficient
funding from the Commonwealth was not made until after he presented his
report! Incidentally, although Sir
Ronald’s “justification” to the Senate Inquiry was little short of a disgrace,
it received no media criticism/analysis even though his report has been such an
important factor in propounding the stolen generation myth. Among other things, when questioned on
O’Loughlin’s decision that there was no general policy of forced removal he could
do little more than refer to the existence of the power to remove
without parental consent. He made no acknowledgement of the fact that this did
not happen in the NT! Astonishingly, he implied that the evidence given by
Aboriginal witnesses to his Commission could not be relied upon; and he cast
doubt on Judge Abadee’s decision against Williams in NSW, an outcome that was
subsequently fully endorsed by the Full Court. Most of the Quadrant
conference papers will be published in Quadrant itself. However, there are some
important points that should be mentioned here: # The summary
of the judgment issued by Judge O’Loughlin was misleading in implying at one
point that the Commonwealth may have had a policy of forcible removal.
O’Loughlin’s full judgment made it clear that he accepted that there was, in
fact, no such policy. #The media has
been palpably blameworthy in reporting the summary’s implication without
qualification. It had plenty of opportunity to recognize the real possibility
that the case would come out as it has. The trouble was that, once it looked as
though the apology view would not be confirmed, the media chose to almost
entirely ignore an important case - or to report it only perfunctorily.
Moreover, why in the month or so since the judgment, has the media still chosen
to avoid the truth? # While the white occupation of Australia
inflicted violence and killings on Aborigines that appear unjustified in
today’s terms, many of the publicized killings by whites need to be seen
against the background that they occurred in circumstances of response to
killings of whites by Aboriginal warriors. Moreover, a re-assessment of the
past presented by retired academic Keith Windschuttle suggests that many past
claims of maltreatment/killings of Aborigines may be exaggerated, partly
because they have been based on secondary sources that were not adequately
checked and/or partly because they
reflected bias. Both the Wilson report and the historical analyses by Henry
Reynolds must come under suspicion for these reasons. # Claims by
historian Henry Reynolds that around 20,000 Aboriginals may have been killed
(or “massacred”) by whites in the occupation of Australia may be highly
exaggerated and lacking in reliable first hand evidence. Since the Quadrant
conference Reynolds himself has publicly defended the estimate – but also
acknowledged it as nothing “more than a guess”! # One Quadrant
presenter with lengthy first hand contact with part-Aboriginal children who
lived at one of the hostels (sometimes characterized as a “prison”) indicated
that, contrary to popular belief, the children had considerable freedom of
movement and, importantly, none wanted to return to Aboriginal culture. Indeed,
his and other accounts made it evident that there was considerable hostility
between half-castes and full-bloods. # It turned out that one of the claimants -
Peter Gunner - was fathered by a Mr Gunner who also fathered another nine Peter
Gunners! Overall,
some progress has at last been made in changing the Coombsian culture. But
there is still a good way to go. WHY
THE DOLLAR HAS BEEN DEPRECIATING
Until recently, the media has been reporting the
depreciation of the $A almost as poorly as it has the Aboriginal “stolen
generation” question: # the
focus has been far too much on the $US-$A rate rather than the best measure of
competitiveness - the trade weighted average exchange rate (TWI), which has
depreciated much less. While the $A TWI has dropped quite markedly over the
past two years or so, it has been considerably less than the drop in the $US-$A
rate. The market seems only recently to have realized the extent of the
substantial appreciation of the $US
trade weighted rate in recent years and the downward pressure that has exerted
on the $A TWI (see chart). Given the generally strong world economic growth
that should have helped both currencies, the question is why the $US has risen
so sharply while the $A has declined; #
some media commentators have been touting the prospect of an Australian “debt
crisis” as in the 1980s. But both our current account deficit and our
(relative) servicing costs have declined, and our existing economic policies
are much superior to what they were then. Moreover, given the increase in the
US’ current account deficit from 1.7 per cent of GDP in 1997 to around 4.5 per
cent today, the question is why the $US hasn’t depreciated; # far
too little attention was being paid to the effects of variations in capital
flows on exchange rates. There seems little doubt that the $US has
been rising because US productivity growth (up 5.7 per cent in the June
quarter) has been attracting large and increased capital inflows, reflected in
its widening current account deficit. These inflows have undoubtedly been major
contributors to the surge in the US’ business capital stock, importantly associated
with the “new economy”. Of
course, Australia is also maintaining high levels of investment: indeed
significantly higher under the present Government than the previous one. We are
also attracting foreign capital that is currently contributing the equivalent
of over 20 per cent of that investment. But we have become relatively
less attractive to such capital and thus have to “offer” a lower exchange rate.
Gross Fixed Capital
Formation & Current Account Deficit (% of GDP) CAPITAL* CAD 1991 –92
19.9 3.3 1992 –93 20.5 3.6 1993 –94 20.9 3.6 1994 –95 22.3 6.0 1995 –96 21.8 4.3 1996 –97 22.8 3.4 1997 –98 23.8 4.0 1998 –99 23.9 5.7 1999 -00 24.3 5.4 * Includes both
public and private investment. This is discussed further in
my attached article, which may have contributed to the recent improvement in
media analysis, particularly in focusing on capital flows. However, there
continues to be over-reporting of the views of financial commentators who often
have a vested interest in either promoting themselves or the “books” of their
institutions. Moreover, while the competition for foreign capital is now better
recognized, the (relative) reduction in Australia’s investment attractiveness
is being attributed almost entirely to an alleged failure by the Government to
“pick winners”/ provide more money for R & D. This claim, however, needs
to be put in perspective and account taken of the fact that, by avoiding trying
to pick winners in the technology sector when that was advocated several years
ago, Australia has “saved” national resources and may now be reaping
some of the benefits of the large R & D invested by others. Of course,
there are sometimes advantages in being at the forefront of technology: but, as
one Nobel Prize winner has pointed out, “the world’s technical knowledge is
generally accessible at little or no cost to all countries”. Australia faces a much more fundamental
problem than not being a leading investor in technology, viz, our institutional
structure is less conducive to risk taking/ entrepreneurial behaviour and,
hence, to foreign (and other) investment generally. A major inhibition here is
almost certainly our workplace relations system, which seems to be
deteriorating almost daily (see below).
INFLATIONARY
TRENDS DO NOT PRESAGE HIGHER RATES Most commentators
(including the market) predict a further rise in interest rates driven partly
by the inflationary effects of the lower $A. However, particularly as that
lower $A is not being caused by increasing domestic inflation, any “first
round” inflationary effects from the depreciations, should they emerge, ought
not to result in monetary tightening. So far, there has been little sign of
such effects. It is
also significant that inflationary pressures remain very modest on the cost
side, as shown in the following chart (which includes the June quarter
outcome). It seems little appreciated here that the faster growth in
productivity, and the continued low increase in Australian unit labour costs,
are important in keeping inflationary pressures down. Indeed, no media attention has been given to the fact that all
the 1.7 per cent increase in compensation to employees in the June Quarter’s
national accounts was due to increased employment ie on this national accounts
measure (which is more comprehensive than others) there was no increase
in average wages in the quarter. This eases pressures on that potentially
important influence on costs and, hence, on inflation.
On
the expenditure side, the June accounts do show that the faster rate of
increase in prices evident in March was sustained, with household consumption
expenditure prices increasing by 0.6 per cent for the second quarter in a row.
However, those increases are still within the 2-3 per cent pa inflation target
and include some (such as petrol and food) that do not reflect “core”
inflation. Housing prices were also temporarily boosted by the pre-GST “boom”.
VICTORIAN
POLICE LET THE SIDE DOWN - AGAIN While
individual members of the Victorian police force generally appear to have
performed well in handling the protesters at the World Economic Forum, the
police command again performed atrociously. Police Commissioner Comrie claimed
that the softly, softly approach adopted by police on the first day reflected
an understanding with one group that the protests would be non-violent. One
cannot help wondering whether, with such naivety, police have any similar
agreements with Victorian criminals! Attached
is an article I was asked to write on this subject by the Sydney Daily
Telegraph, which was followed by a similar piece in the Herald-Sun. It is
encouraging that a number of political leaders criticized the violence (but why
was it described as “fascist” rather than “socialist”?) – and that Premier
Bracks actually “intervened” after the debacle of the first day to “authorize”
the police to take firmer action. But police need to be instructed to stop
violence and stop interference with the rights of others – that is not
“political interference” but maintaining civil society. GLOBALISATION
– AND TALKING TO NGOs Many
commentators responded to the WEF protesters by suggesting that, with more
non-government organizations (NGOs) critical of allowing “free” market reforms,
those NGO’s should be given the opportunity to put their views or at least
attend relevant organizations, such as the World Trade Organisation (in fact,
some 780 NGOs attended the WTO Seattle meeting!). One editorial even suggested
dialogue “until agreement is reached”! This is a profoundly mistaken view: most
of these NGOs have relatively small memberships and are formed because they are
ideologically opposed to freer market reforms. They are not representative of
wider community views, and would only further obstruct the progress of such
reforms. Attempts at “dialogue” would be fruitless. The
real need is for political and business leaders to explain the benefits of such
reforms not to the NGOs but the rest of the community. Many of the uncommitted
are unsure of the arguments and need to be assisted. Last month’s newsletter
(see www.ipe.net.au) referred to some rebuttals of the nonsense about widening
gaps between “rich” and “poor” countries (and within countries too), and this
has been picked up by some commentators. But political and business leaders
need to do much more to explain that globalisation has not produced greater
inequality. WORKPLACE
RELATIONS SLIDE PRODUCES BCA RESPONSE The
apparent continued deterioration in the capacity of businesses to manage their
own workplace relations has at last stirred the Business Council of Australia
into action on this major issue. The September edition of BCA Papers includes
the results of “extensive interviews” with CEOs of 57 members showing that “91 per cent see a need for further reform
of the industrial relations system; and that such reform could deliver 20 per
cent of the potential improvement in their businesses”. Moreover, many CEOs see
further reform as facilitating the internal improvement in their businesses
that would be the major source of improved efficiency. This
significant development (barely even reported in the media) includes a major
change in CEO attitudes: by contrast with the early 1990s, there is now no
acceptance of the view that unions and tribunals must be partners in
improvement. Moreover, while CEOs acknowledge improvements in the system,
“concerns remain about the opportunity costs of the system, especially its
capacity to consume management resources, its limiting impact on the art of the
possible and its capacity to obstruct, deter and delay change, innovation and
improvement through its effect on managerial, employee and union behaviour.” Bravo
- the foregoing quote sounds rather like an IPE conclusion! However, the real
question is whether the BCA will push for labour market deregulation.
Its immediate agenda appears to focus on the machinery rather than the
substantive side by holding a forum on the possible establishment of a single,
national system of regulation, which has been floated as a possible option by
Peter Reith. The
BCA survey comes in the aftermath of the disastrous decisions taken at the ALP
Conference in July, when Beazley caved in to the unions. These decisions included the abolition of
individual bargaining, an increase in powers of the AIRC (including some powers
not previously held, such as the power to arbitrate collective agreements -
which could be used to regulate market rates of pay), the abolition of
secondary boycott laws in the Trade Practices Act, the declaration of small
contractors to be employees, increased funding of the ILO and trade union
training, greater rights of entry by unions, and unionists to become the agent
of all employees. Similar
backwards steps are being taken or threatened by State Labor Governments in
NSW, Victoria, Queensland and Tasmania. Of particular concern is the attempt by
Queensland to bring independent contractors (who are free to negotiate their
own terms and conditions outside the tribunals) within the regulatory
framework. Labor is also pursuing this policy in most other States and Federally.
The
Labor States’ policies are being heavily influenced by Sydney University’s
Professor McCallum, who claims to have a “new vision of collective labour law”.
He has just authored a report advocating the re-establishment in Victoria of
laws to provide for remuneration and terms and conditions of employment for
those not covered by federal awards, and a Fair Employment Tribunal. Both
Victorian industry representatives on the Taskforce opposed the
re-establishment of a State system, as well as other proposals. The Taskforce
commissioned that well-known advocate of more regulation, the Australian Centre
for Industrial Relations Research and Training, to undertake the statistical
research. These
moves are being undertaken against the background of the continued maneuvers by
Federal Court judges to find ways of interpreting the existing federal
legislation so that employers are constrained in managing their work forces,
unions are favored and tribunals have more to do. This has been analysed in
previous newsletters (see Jan-Feb-March in particular). A classic recent
example of heavy interventionism has been the Federal Court decisions to the
effect that outsourcing to obtain lower costs may be in breach of legislation
requiring freedom of association. One such appalling decision – against St
George Bank - has been appealed to the High Court, where the Commonwealth
joined the action in support of the employer’s case. We are also awaiting the outcome of the Federal
Court’s decision on BHP’s (partly frustrated) attempt to offer iron ore workers
individual contracts. It is scandalous that this has dragged on for so long,
let alone that there should be any doubt about the decision. One encouraging
development on this front, however, has been the decision by the Commonwealth
Bank to abandon further negotiations with the Finance Sector Union after it
rejected the Bank’s offer of a package providing an average “wage” increase of
4 per cent pa for two years and demanded a 6.5 per cent pa increase, plus
staffing assurances. The Bank is now offering its 28,000 staff individual
agreements (Australian Workplace Agreements) in what would be the largest such
offer under the Workplace Relations Act. This is a major initiative that has
significant potential to spread if it is accepted, with obvious implications
for Labor’s decision to “outlaw” such agreements. The ACTU obviously sees this
as a major threat to unionization and has reportedly joined in the battle with
the CBA. The
case for major reform is considerable. The OECD’s report for the June
Ministerial Council Meeting noted that “diverging labour market performances
were a major factor setting apart countries where growth increased over the
1990s from those where it fell”. Unfortunately, it now appears that the only
prospect of worthwhile deregulatory reform here would be for the Coalition to
make such reform a major issue at the next election. But to appeal seriously to
the electorate would require there to be more exposure of the problems with the
existing arrangements, including the judicial tribunals. |
