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Peter Howson is organizing a major forum on 1-2 December on Aboriginal Policy: Failure, Reappraisal and Reform. It is being held at Jika International Hotel, 550 Heidleberg Rd, Fairfield and speakers will include Professors Geoffrey Blainey, Keith Windschuttle and Boni Robertson, as well as John Reeves QC. Anyone wishing to attend should contact Peter on 03 9827 2935.




Last month I noted a glimmer of hope: one of the major dailies (The Australian) editorialized that the politically “incorrect” view on Aboriginal policy deserved discussion. However, despite some half-promises that paper has failed to publish an article by Peter Howson that would (inter alia) have exposed the fact that Aboriginal (and part- Aboriginal) children continue today to be “forcibly removed” from parents (or “stolen” as our unbiased former High Court judge, Sir Ronald Wilson, might say). In 1998-99, for example, some 4,000 indigenous children were put under care and protection orders, with most subject to the guardianship/custody of government departments. Why hasn’t this caused a public outcry?


Possibly the reason is that the children were in situations of serious abuse or neglect, including being the subject of actual or potential harm, because their parents had become incapable of managing them – and quite often their own relationship too. The removals, it should be noted, involved administrative/judicial processes designed to protect the children against indiscriminate forcible removal. Moreover, Aboriginal parents were not the only “offenders”.


The same treatment is being applied to non-indigenous children and their parents. In 1998-99 around 14,000 non-indigenous children were also put under care and protection orders – and for similar reasons. The Sir Ronalds of this world might claim these policies to be discriminatory because indigenous children had a significantly higher proportion of orders in 1998-99 (with NSW having the highest relative rate of removal of 8 times more indigeneous children). However, the Northern Territory cases of Cubillo/Gunner clearly showed the fallibility of such claims when made outside a proper court environment: they would therefore need to be subjected to rigorous checking (and in such an environment) before being accepted.


How does this policy in 1998-99 compare with what has happened in the past?   A senior journalist of The Australian, Mike Steketee, wrote approvingly on 22 September about one analyst’s reference to a 1915 expansion of the NSW Protection Board’s powers in relation to Aboriginal reserves. In Steketee’s view, this led to  “accelerated removal of children” and other discriminatory actions  “at best misguided and at worst deeply racist”, all diminishing Australia “until we face up to them”.  However, he omitted to say that a Board removal required an inquiry to establish it was in “the interest of the moral or physical welfare” of the child  - and was appealable to a court by parents. Nor did he reveal that, under the Child Welfare legislation, non-indigenous children were then also removed and had similar provisions protecting them (and parents) against indiscriminate forcible removal. Despite receiving an “honorable” mention in Steketee’s article, Peter Howson’s attempt to correct all this was not published.


By contrast with Steketee (and a myriad of others), the Herald Sun’s Andrew Bolt, The Australian’s Frank Devine and The Sydney Morning Herald’s Paddy McGuinness have been writing generally sensible material on Aboriginal issues. Even so, I have not yet seen any reversal on the apology issue amongst the journalistic profession – and this despite the latest Newspoll showing a small increase in the No Apologists to 51 per cent even after the boosting of Aborigines in the Olympic presentations. This shows just how unbalanced the media is on this subject.


With the Senate Inquiry into the “Stolen Generation” yet to report, there is still more to come on this matter. It is unfortunate that the Committee’s questioning of Sir Ronald Wilson did not press him on some key issues. In a supplementary submission to the Inquiry Peter Howson drew to the Committee’s attention several key points that were left hanging. It was particularly remarkable that Sir Ronald implicitly accepted that evidence given to his Inquiry by Aboriginal witnesses could not be relied upon! Sir Ronald claimed that evidence submitted by State Governments was the primary source of the “policies and laws of forced removal” (but see above!). Peter’s submission has been published by the Committee and is on the IPE web site


In sum, we have now reached the following situation regarding “stolen children”:


1.The Northern Territory test case dismissed compensation claims for maltreatment by two part-Aborigines and clearly established that, in the period concerned, the Commonwealth did not operate a policy of forcible removal of even “endangered” part-Aboriginal children;


2. State Governments have been operating policies of forcibly removing “endangered” Aboriginal children from parents;


3. Such policies have also applied to non-indigenous children;


4. In both cases the removals appear to have been subject to various protective administrative/judicial processes;


5. As (prima facie) there is no evidence of racial discrimination, one might ask Mr Steketee (and a few others) what precisely the rest of us have to “face up to”. There is certainly no case for an apology, as former Labor leader Bill Hayden made clear in a courageous speech calling for the sorry campaign to be “dumped”. 


It might be added that Peter Howson was not the only one to receive media rejections on corrective articles. There was also a rejection by The Age and the Sydney Morning Herald of a response sought by Keith Windschuttle to an attack in the two journals on his Quadrant paper by historian Henry Reynolds on the extent of killings of Aborigines. Windschuttle does not deny some killings but points out, inter alia, that there is a major problem in Reynold’s acceptance of missionaries’ stories of killings because his (W’s) research shows that there has been a long line of missionaries who invented such stories.(To date Reynold’s figure of 20,000 killings has come to be accepted despite his acknowledgement that it is a guess). 


One encouraging development was the success of Senator Herron in persuading some indigenous leaders and “influential” Australians to meet on 24 October to discuss possible solutions to the horrendous problems facing some Aboriginal communities. Although this does not appear to have come to grips with the underlying issues, it is a start to moving the process away from the past towards the present.




To my astonishment I have now addressed a meeting of a society devoted entirely to industrial relations – this one being the Industrial Relations Society of Western Australia (Inc). Moreover, the Society accepted the (deliberately) provocative subject I proposed – Why The AIRC Should Be Abolished – and the members will all receive copies of my address. It is also on the IPE web site and copies are available on request.


As it turned out, the 100 plus audience was friendlier than I expected and I received only a few “nasty” questions. The emphasis that Society executives put on encouraging debate suggests that even some of the diehards feel the need to learn about deregulatory thinking. This may partly reflect the growing number of lawyers who have become members and the increasing sponsorship that legal firms are providing. Of course, many lawyers like regulation because it brings cases on what the legislation actually means. But there are also some who readily understand the problems with the existing legislation and they provide an alternative view. One of the legal sponsors for this meeting was Freehills, which generally supports reduced regulation.


Subscribers will be familiar with my general thesis of replacing current legislation with contracts operating under a codified version of common law/equity. On this occasion I particularly attacked the belief that a highly regulated system is “more equitable” because it protects the low paid against the superior bargaining power of employers, viz:


  • There are over 1 million employers competing for labour and there is no evidence of any significant power to impose conditions on workers. If employers had had “monopoly” power, the share of profits and wages in GDP would not have been relatively stable over the past 20 years when there has been a reduction (albeit relatively small) in regulation;


  • Wages are now a relatively small proportion of total incomes at the bottom end of the income scale eg the latest ABS data shows that households in the bottom fifth of the income stream receive 92 per cent of their incomes from social security benefits.


  • Thus, it is social security not wages that determine the extent of income inequality (which has been stable in recent years). In fact, as the majority of low paid people live in high income households, it is absurd to have a tribunal that continues to increase wages for low paid who live in such households;


  • In any event, the “safety net” wage increases determined by the AIRC cover about 25 per cent of the work force (ie way beyond any safety net) and, by keeping wages up at the bottom end, they are inequitable because they stop some low skilled from getting a job.


Needless to say, this logic was not universally accepted, particularly by my opponent in debate, Professor Keith Hancock, a former President of the IR Society, former Deputy President of the AIRC and an author of the infamous Hancock report. He argued that, although employers’ bargaining power is limited by competition, it is superior; that this superiority led to the “repudiation of the common law because it was biased in the employers favour”; that, in a common law situation, there is no negotiation at the point of hiring, workers must obey employers and can be dismissed without notice; that international comparisons showing better performances in overseas market such as the US may be due to factors not related to labour market regulations and may not produce good social results; that existing unemployment/employment rates would not necessarily improve in a freer labour market; and that wages do complement social security. Hancock was noticeably evasive, however, in answering a questioner who asked him to respond to my accusations of pro-union, pro-interventionist bias in the tribunals.


Hancock’s views were echoed by others, particularly by the aggressive Secretary of Unions WA, Tony Cooke, who claimed there had been “100 years of unfairness under the common law”. There was considerable discussion of legal challenges made and in prospect to the use of individual agreements under the State system - the removal of any interventionist role of the State regulatory authorities under such arrangements is obviously resented by the IR club.


Particularly interesting presentations were made by representatives of Qantas and the Australian Services Union. The Qantas rep emphasized the importance of combating strong competitive forces by keeping labour costs under tight control by, inter alia, competitive tendering. Both reps were clearly concerned at the new competition from Impulse and Virgin Blue, which appear to have concluded cheaper labour arrangements with different or no unions. The ASU rep gave the impression that this product market competition was something that, by and large, has to be accepted by unions.




I was invited to an hour’s discussion with a team of four from the OECD Directorate of Education, Employment, Labour and Social Affairs undertaking a “critical examination” of various aspects of Australia’s labour market. While the focus of the examination is on public sector employment services, attention is also being given to the performance of the labour market and the institutional arrangements. The report is expected to be published in the second ahlf of 2001 and could thus appear close to the time of the next election.


Even though the team is not from the Economic Directorate, I was surprised that they appeared  to have formed the impression from their discussions up to that time (17 Oct) that the market is functioning quite well and that only minimal further reform is needed. I suggested that this was not the case and that:


  • While both unemployment and employment have improved markedly since 1992-93, that was the cycle "bottom" and both the rate and current levels leave a good deal to be desired in relation to our own past and the performance of comparable countries overseas. The reduction in unemployment is at least partly a reflection of the increase in social welfare recipients and, in the case of both unemployment and employment, after 7 years of strong GDP growth we are only just back to previous peaks in the more regulated 1980s.


  • The existing institutional and legislative arrangements regulating employer-employee relations have improved but leave considerable scope for intervention by tribunals. Further, those tribunals have intervened increasingly in recent years to the point where the discretion of employers to make decisions on employment and investment is significantly constrained. The resultant problems for employers are highlighted in the BCA interviews with 57 CEOs, which suggested concern at the level of individual companies if not their associations. I outlined some of the areas where intervention has been causing problems, of which the team seemed largely unaware.


  • The interventionist streak amongst tribunals and others is importantly based on the belief that it is necessary to protect workers against the alleged superior bargaining power of employers and (in the case of lower wage earners) the danger of lower incomes - the alleged egalitarianism of Australia. However, for the most part this belief does not stand up to close examination. I noted that a freer labour market would reduce some wages at the bottom end but that only those living in low income households would need to be assisted by social security to prevent reduced living standards (and not all those would experience reduced wages).


  • An alternative set of arrangements would be to convert the AIRC into a voluntary mediation body like ACAS in the UK, and to return legal issues to the ordinary courts under legislation that left employers and employees largely free to decide the terms of contracts.


  • Workplace relations issues would almost certainly be an important election issue, if only because of Labor's proposals to reverse most reforms by the Coalition and by the Keating Government.




As Australia approaches the November meetings that will consider whether (some) countries should enter commitments to implement the 1997 Kyoto Protocol to reduce manmade greenhouse gas emissions, alarmist global warming predictions/claims are hotting up. One recent attempt involved the dramatizing by the New York Times on its front page of a story suggesting that the North Pole is “melting”: ten days later the paper acknowledged its mistake – but not on page one!


A recent speech by US Senator Hagel recalled that the US Senate has passed a resolution 95-0 calling on the President not to sign any treaty that would cause serious economic harm to the US economy or that did not include all countries of the world (Clinton did in fact sign the Kyoto Protocol in 1998 but has not dare submit it to the Senate for ratification!). Hagel quoted several important pieces of evidence/analyses suggesting there should be no government action to impose mandatory sanctions on carbon dioxide emissions. Among these include the facts that most of the 1 per cent increase in temperatures over the past 100 years occurred before 1940 (the time since then is when most manmade carbon dioxide has been emitted), that no atmospheric warming occurred over the last 20 years according to satellite measurements and that US academic research suggests “solar activity may be the most direct factor in global warming”.    


This latter research is reinforced by subsequent European Space Agency claims that earlier climate computer models have severely underestimated the sun’s impact on the earth’s temperature. Using a sun-watching satellite and other astronomical data ESA scientists say that, by contrast with estimates that the sun has caused only about a tenth of warming, it has in fact been the primary source of temperature increases. This new analysis suggests that there has been a solar energy “surge” and a big increase in ultra-violet light that has coincided with a doubling in the sun’s magnetic field (which has reduced clouds and allowed more radiation to get through). 


Of course, although the IPCC panel of “experts” has revised down its earlier predictions of large temperature increases, it continues to predict that temperatures will rise to dangerous levels unless counter action is taken. This group claims that only its panel of 2,000 or so has the necessary climate expertise and it rejects satellite measurements because they do not measure surface temperatures.


The “outsiders”, however, point out that the majority of its US group of 17,500 has advanced scientific degrees and that satellite data has been accepted as valid by the US National Academy of Sciences. They also claim the IPCC is much less than 2,000, its reports have been written by a small group and that many who participated in the IPCC process disagree strongly with the claims. The 17,500 certainly include some with climate expertise, as illustrated by a new book* by two US established experts in climatology. This not only predicts average surface temperature will increase by 2050 by much less than the IPCC but that this will cause a decline in temperature-related mortality and a rise in crop yields that alone would feed one-quarter of today’s world population.


* The Satanic Gases by Professor Patrick Michaels and Dr Robert Balling. Michaels is professor of environmental studies at Virginia University and a senior fellow in environmental science at the leading US think-tank, the Cato Institute. Balling is Director of Climatology at Arizona State University.




Senior police continues to express serious dissatisfaction with the handling of the World Economic Forum by police command and concern about the protocol the police have with the Trades Hall Council. The latter clearly influenced Police Command to go soft on the opening day. 

There appears to have been a marked contrast police handling of the annual meetings of the IMF and World Bank in Prague.


While these meetings again brought out the supposedly peaceful anti-globalists, in stark contrast with Melbourne the attendees were not prevented from getting to the forum and the (FBI-trained) police were able to use water cannon, tear gas and even armed personnel carriers to close off streets and help control the aggressors. Why is it anti-Australian for our police to have such gear?


Of course, the Prague protesters did manage to obtain considerable focus on the large proportion of the world’s population living in poverty. But that was due in no small part to the role played by the Australian-born head of the World Bank, Jim Wolfensohn. He attracted considerable media attention through a two-bob each way approach to protesters - we need to have free trade but we also need to look after the poor. One such attempt included repeated expressions of concern that 80 per cent of the world’s population live on only 20 per cent of the world’s GDP.


But what a boo-boo! Former Commonwealth Statistician, Ian Castles, pointed out in a letter in the Financial Review that the 80 per cent of world population living in poor countries actually share 40 per cent of world GDP, not 20! In typical media treatment, Castles letter went unreported elsewhere. His analysis also implied that even the poor countries’ GDP has been increasing in line with that of the rapid growth in rich countries.


Instead of trying to appease ideologically motivated protesters, the international institutions should be expounding on how poor countries can lift their game. Last month’s newsletter highlighted the analysis by the World Bank researcher, David Dollar, who emphasized the importance of domestic policies. A new Cato book (From Subsistence to Exchange and Other Essays) by Emeritus Professor Peter Bauer, is also highly critical of the emphasis traditionally (and still) given to foreign aid.


Bauer is the author of one of the best books published on development (entitled Dissent on Development, 1971) and has continually emphasized the importance of having an institutional framework that encourages economic development. In his latest book he also correctly points to the absence of any correlation between population density and poverty. In a phrase that should be absorbed by some Australian businessmen (and others) touting for higher population, he states “economic achievement and progress depend on people’s conduct, not on their numbers”.      




The publication of data showing Australia as one of the lowest OECD producers of information technology (IT) hardware has again led to nonsensical assertions that this reveals we are at the bottom of the “new economy” class. The absurdity of such assertions is soon revealed: while the largest (relatively) OECD producer of IT is Japan (with production equal to 6 per cent of total output in 1997 compared with the US’ 4 per cent) nobody has explained why this typical Japanese picking of winners has meant that the economy has performed so poorly in the 1990s.


I noted that in the attached AFR letter and former Commonwealth Statistician, Ian Castles, also pointed out in an AFR letter (attached too) that the current promoters of Australia spending more on R and D quote a different set of horses as examples of R and D success stories than they did a few years ago.


Now, the US is widely accepted as the new economy par excellence and that perception is reinforced by the strong pick-up in total US productivity growth over the past five years. But it appears that a good deal of this growth may have come from the IT industry itself ie productivity growth in other industries has not been so strong.* By contrast, Australia’s productivity growth has been better than the US’ even though we have been a negligible producer of IT.


Could it be that we have benefited by remaining as a low spender on R and D and purchasing IT hardware rather than spending scarce resources trying to be a leading producer?  Australia has become one of the largest users/consumers of IT and that has made a contribution to the improvement in our productivity. But what it also suggests is that we are playing a new economy role by having the kind of economy that uses the latest technology.


However, that is not to say that we are a fully-fledged new economy. We may be using more technology when we could employ more labour if the regulatory restrictions did not inhibit or prevent it. The reality is that a new economy is one that is wide open to both internal and international competition in both product and labour markets, thereby encouraging risk-taking and investment. Australia is a good way off doing that – and we won’t do it simply by increasing R and D. Who is going to use the results? As we know from past experience, Australian R and D will go overseas unless we have the right economic environment here.


*See article by Dean Parham of the Productivity Commission on “Making Sense of US Productivity Estimates” in ASX Perspective (4th Quarter 2000) published by the Australian Stock Exchange.




On the surface the metal workers unions’ Campaign 2000 does not appear to have benefited by exploiting the interventionism of (in particular) the Federal Court and the resultant difficulty that employers have faced in countering union intimidation at common law. The Australian Financial Review speculated on 16 Oct that the campaign had “fallen well short of expectations, with settlements varying widely across the industry”. However, while adequate Sept Q data is not yet available, and while the wage outcomes appear to have generally been less than the 5 per cent pa sought, union claims generally have more than one “ambit” component.


Insiders suggest that, although “gains” on the wages front may be relatively small, there has been significant success in obtaining bans on the use of casuals and outside contractors. Judging by reports suggesting increased disputation, it would certainly not be surprising if such “gains” are considerable. As indicated by the above reference to the airline industry (and by the attempts by Labor States to define contractors as “employees”), the capacity to exert competition through such mechanisms can be important to management (and unions). The Campaign 2000 bans are said to be expressed in terms that are so broad that they seem likely to significantly constrain the potential for managers to bring competitive pressures to bear on workforces.


“Gains” to unions mean of course potential losses in employment.  Reports indicate that the unions are now moving the Campaign outside Victoria.




The success of the Olympics has produced many verdicts, some misleading, some instructive.


  • “It shows what can be done when Government takes the initiative” (but don’t forget the private sector ran the Los Angeles games entirely - and did it successfully);
  • The Games provide an opportunity to “make Australia just as dynamic and competitive as our athletes have shown we can be”, said John Howard. (so, perhaps the Government could make the labour market as competitive as our athletes have shown we can be without detriment?);

“The grace with which Cathy accepted her victory captured the spirit of the Games and let us know that Australians are more reconciled with one another than perhaps we ever thought”, said John Howard. (Exactly – so, why don’t the extremists recognize that reconciliation is proceeding - and can proceed successfully - without treaties and similar nonsense?)