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- THE BAS “DIVERSION”, GST AND MONETARY POLICY
- VOTE MANIPULATION – THERE IS A MUCH BIGGER STORY
- HERE TO STAY – THE MUA OR PETER REITH?
- THE UNFAIRNESS OF VICTORIAN INDUSTRIAL LAWS
- THE AMERICAN ALLIANCE – ALSO HERE TO STAY
- THE MYTH OF SOCIAL WELFARE REFORM
- VICTORIAN ELECTRICITY SHORTAGES AND THE COMMON LAW
- WHY MANDATORY SENTENCING IS JUSTIFIED
- CRIME AND PUNISHMENT – THE US EXPERIENCE
THE BAS DIVERSION, GST AND MONETARY POLICY
Due to the lateness of this “November” newsletter I have had
to make it a combined November-December one, for which I apologise. I can only
say that I was “diverted” by having to complete the BAS for my business (and my
wife’s!). The compliance costs for this new,
“simplified”, tax system suggest that major procedural changes need to
be made, at least for small businesses. There are signs that this may happen.
But at least the price effects of the GST seem likely to be
less than some feared (?hoped). Although the “low” 3.7 per cent CPI increase in
the September Quarter (compared with the Treasury estimate of 4.5 per cent) is
not necessarily the final story on GST effects, competitive conditions seem
likely to keep the price effects down. An “experimental” examination by the ABS
concluded that it could not adequately make an estimate – and that the
experimental research showing only a 1.7 percentage points GST contribution for
the September quarter was (rightly) “unbelievable”!
The potential for maintaining low GST price effects has
helped change the previously popular view on monetary policy. Pre-GST many were
concerned that, particularly with the (alleged) “stimulatory” effects of tax
reductions and increases in “compensatory” social security (which resulted in
the government sector experiencing a reduction of about $2.3 billion in
net income from these sources in the September quarter) further interest rate
increases would be required. However, the September Quarter national accounts
and other data since suggest that households have so far largely used the
additional handouts to rebuild savings, which were run down prior to the GST -
partly because so many apparently believed that prices would increase by 10 per
cent!
Subscribers will know that I have been arguing for some time
for the monetary authorities to be slow to tighten, to put less emphasis on
pre-emptive action and to wait to see whether there are dangerous flow-throughs
of one-off effects from sources other than the GST. It now appears that, even
if some price increases from the exchange rate depreciation do creep through,
they are likely to be one-offs – the exchange rate does seem to have bottomed
and has already appreciated a bit (an analysis by Morgans of Brisbane suggests
that, paradoxically, a slowing US economy has not previously prevented a rising
$A). Similarly, the petrol etc price increases from oil price rises are now
being reversed as, consistently with largely ignored Treasury forecasts, oil
prices falls.
Now, the more popular view has switched, expecting slower
growth and reductions in interest rates!
While the GST and the Olympics make it particularly difficult to read
the national accounts figures, ABS trend estimates appear again to confirm the
progressive slowing in GDP growth that has been occurring for some time and,
even with the on-going boost to exports from the lower exchange rate, that may
continue until the domestic sector adjusts to the post-GST environment. (It is
somewhat ironic, however, that after experiencing trend growth rates of only
just over 3 per cent per annum not so long ago, some commentators are talking
of anything less than 4 per cent pa as if that would be a setback!). Whether interest rate reductions become justified
will largely depend on whether the combined effects of competitive conditions
and productivity growth lead to lower inflation and, perhaps, higher
unemployment.
VOTE MANIPULATION – THERE IS A MUCH BIGGER STORY
The branch stacking to ensure pre-selection of the “right”
candidate revealed at the Queensland inquiry is only scratching the surface of
the Australian story on vote manipulation. The fact that some journalists on
the right of Labor have jumped in to try to make light of the skullduggery
suggests a serious potential problem beyond that wing of the Party if all
likely union-manipulated shenanigans were revealed. The astonishing attempt to
downplay the problem by quoting former Commonwealth Chief Electoral
Commissioner, Professor Colin Hughes, as an
“authority” who denies any serious problem may even backfire: Hughes was
appointed by a Labor Minister whose nickname was reportedly the “Minister for
Winning Elections”.
The story obviously extends beyond fixing the pre-selection
of party candidates, or the “buying” of preferences, serious as those
manipulations are for the political system. The HS Chapman Society’s video (and
other HSC analyses) show that the Australian electoral system is wide open to
fraudulent manipulation of votes in marginal electorates and, although proof is
difficult, there is a high probability this has occurred at both the Federal
and State levels.
Indeed, there is a high probability that it has determined
election results. My February Newsletter, for example, pointed out that Labor
won the 1993 Federal election by only 1550 votes across Australia, with very
close margins in a number of seats. Suffice to say here that one Liberal Party
candidate who lost by less than 200 votes subsequently discovered that 315 of
those on the roll who do not vote as a matter of conscience did nonetheless
have votes recorded against their names!
As the Electoral Commission has not had the capacity to
check the residential genuiness of those who register in an electorate in the
last week before an election, the 400,000 who did so before the 1993 election
left the system wide open to fraudulent voting. This appears confirmed by the
removal of many names in some electorates after the election! Even with the
passage of new legislation last year, the checking at enrolment leaves much to
be desired and the system also remains open to fraud at the polling booth
itself.
The denial stance to date of the current Electoral
Commission certainly implies a degree of attempted “cover-up”. In particular,
the approach of putting the onus on complainants to pursue their case, rather
than the Commission initiating inquiries, is wrong.
Although Labor is almost certainly the main culprit here,
the worry is that none of the parties or the Electoral Commission may want to
have a full-scale public inquiry into electoral reform that could reveal the
system’s grave deficiencies. The call by Denis Shanahan (The Australian)
for such an inquiry is appropriate, but unlikely to occur.
HERE TO STAY – MUA OR PETER REITH?
The “here to stay” slogan of the MUA during the waterfront
dispute is looking increasingly tired and dated. The early resignation of John
Coombs as union secretary; his admission that the MUA is now too small to be
viable; and (most importantly) the confirmation that the average crane rate now
appears to have settled around the target of 25 lifts per hour set by Peter
Reith at the time of the dispute (but declared impossible by Coombs) - all these surely confirm that the union
lost the waterfront battle despite retaining its monopoly labour supplier
position thanks to our biased courts. Once again, the majority media opinion
has been proved totally wrong in criticizing Corrigan and praising the
(original) outcome. Award winning journalist Pamela Williams (AFR) is a
particular sinner.
Full credit should go to Chris Corrigan, Executive Director
of Patrick Stevedores, one of few CEOs who have been brave enough to tackle
directly the issue of managing workplace reform. Of course, even with the
(modest) reduction in stevedoring charges, there is more reform to be done.
But, as IPE pointed out at the time, this will come in part through increased
mechanization, which Corrigan now appears to be undertaking. The union’s
appalling restrictive practices ensured that it would cost jobs in the longer run
– another union “victory” could leave it with no members!
Corrigan should be a candidate for Australian of the Year.
And it should not be overlooked that Reith has demonstrated considerable
personal and political courage in supporting the cause of waterfront reform.
Despite his appalling treatment in the media, it now looks increasingly likely
that he could stay as Minister of Workplace Relations.
THE UNFAIRNESS OF VICTORIAN INDUSTRIAL LAWS
THE AMERICAN ALLIANCE - ALSO HERE TO STAY
THE MYTH OF SOCIAL WELFARE REFORM
VICTORIAN ELECTRICITY SHORTAGES & THE COMMON LAW
Many Victorians have been led by the media to believe that
they will again face electricity shortages this summer and this possibility is
being attributed to there being inadequate electricity capacity to cope with
possible surges in demand in hot weather. However, in a AFR letter of 11
December the managing director of NEMMCO (the National Electricity Management Company)
has stated that “there is adequate capacity to meet customer needs, even at the
peak of summer”. Although this statement has been challenged in the AFR, it
does not (surprisingly) appear to have been reported in the Melbourne media.
More importantly, the author was brave enough to state that
the “supply problems that occurred in Victoria in February and November were
related to the removal of generating capacity due to an industrial dispute.
Taking the November supply incident as an example, I doubt if any power system
anywhere in the world would be able to sustain the sudden withdrawal of more
than a third of its generating capacity without having to cut some supply to
customers”.
The reality is that, for about 18 months now, a union group
within the CFMEU has not only disobeyed CFMEU instructions but has been allowed
by the Federal Court to resist attempts at reform by Yallourn Energy and other
electricity companies. At one stage
Justice Marshall even stopped an AIRC Commissioner from a move that would have
required the parties to engage in bargaining! The partiality of the Court is a
serious on-going concern and there seems little doubt that it has played a part
in the decision of Yallourn’s UK parent to sell out (and at a significant
loss).
This partiality has also probably influenced the decision of
the ACCI to adopt a proposal by the Australian Mines and Metals Association
(AMMA) that companies be allowed to opt out of regulation under the Workplace
Relations Act and move to regulation under the common law. Such a move would
require the approval of two-thirds of employees.
This proposal is moving in the direction I have been
advocating. However, to escape the clutches of the judiciary would require more
than simply to allow companies to opt out. Legislation would be needed to
reduce the scope for judicial intervention by codifying the common law in a way
that gave maximum decision-making powers to the parties to an employment
bargain.
Meantime, there can be no guarantee that unionists from what
has long been one of the centers of Australia’s industrial troubles – the
Latrobe Valley under the grossly over-staffed SECV – will not again cause some
blackouts this summer. Should that occur, some will doubtless attribute it to
the consequences of electricity privatization.
WHY MANADATORY SENTENCING IS JUSTIFIED
One of the highlights of the past month was the 11 November
meeting of the Samuel Griffith Society at which a number of excellent papers
were delivered, and will be published in due course by the Society. The
highlight, however, was one by the Chief Minister of the Northern Territory,
Denis Burke, on mandatory sentencing. His paper was preceded by a presentation
by the President of the NSW bar and NSW Law Society, Ruth McColl, who strongly opposed
mandatory sentencing, arguing that there were many examples of disproportionate
sentencing by the NT Administration that were inconsistent with the need to
make “the punishment fit the crime”.
Unfortunately for McColl, Burke effectively knocked her case
for six. He pointed out that the allegedly disproportionate sentencing examples
quoted by McColl and reported in the media constituted extraordinary
misreporting of the cases. This included one oft-quoted alleged mal-sentencing
for the stealing of food which involved important events not reported, such as
the breaking and entering of the home of an 85 year old pensioner, the
imposition by the magistrate of double the minimum sentence, and the failure of
the defence to appeal the sentence!
Burke stated that “in every case of mandatory sentencing
highlighted by the media, the basic facts are so wrong that you would have
difficulty reconciling the media reports with the court transcripts.” He also
pointed out that an article by McColl claiming very large increases in
imprisonment rates of juveniles and indigenous women was completely wrong:
there have been decreases in imprisonment in each case and only one juvenile
was currently in NT prison as a result of mandatory sentencing, compared with
30-40 in the late 1980s.
Burke also made a number of important and relevant points
about the considerations and processes involved in introducing mandatory
sentencing, including:
- It was
developed not in Cabinet but in the CLP Party room, originally supported
by the Labor Opposition and widely advertised in the 1994 election at
which CLP members won 17 out of 25 seats including (for the first time)
the seat of Victoria River, which has a majority of Aboriginal voters;
- In the
1997 election the CLP increased its majority by winning another seat with
majority Aboriginal voters despite the (new) opposition of Labor to
mandatory sentencing;
- The
offences of Aboriginals mostly occur against Aboriginal families who want
their property rights defended and often do not understand attempts by
white lawyers to persuade offenders to lie. (Incidentally, it appears that
quite a few law-abiding Aboriginals in the NT are keen to join the police
force and some are in fact working as police aides);
- Compared
with mandatory sentencing regimes in the US and the UK, “the Territory and
Western Australia look positively wimpy”;
- In
1981 the High Court specifically recognized that Parliament may provide
mandatory sentencing;
·
Each of the Commonwealth and States maintains its own
mandatory sentencing laws for a range of crimes.
Burke also commented critically on some of the extraordinary
obiter dicta statements on the subject by various judges. He suggested that the
Australian judiciary should agree a similar resolution to that adopted by the Judicial
Council of Canada that “the judiciary should avoid taking part in controversial
discussions except only in respect of matters that directly affect the
operation of the Courts”.
More generally, Burke showed considerable political savvy
and could clearly go further if he chose to leave the Territory. Incidentally,
The Australian was the only major paper to report Burke’s address and some of
the other papers. But the reporting of Burke’s address did not bring out just
how devastating it was for McColl.
CRIME AND PUNISHMENT
- AUSTRALIA AND THE US
The bottom line in the mandatory sentencing issue is, of
course, is the (growing) community dissatisfaction with the apparent increase
in interventionism by many un-elected judges on what appear largely to be
political/social grounds, such as recognizing Aboriginal problems by imposing
light or no sentences on offenders. This judicial tendency is widespread in
other areas of the law too, most notably in industrial relations. The most
notorious recent example is a Federal Court decision that the expulsion from a
club of a misbehaving drug addict constituted discrimination! NSW Premier Carr
has apparently written to the Prime Minister seeking legislation to deal with
this situation.
The Herald Sun deserves congratulations for its attacks on
bad sentencing by some Victorian judges and for its compliments when sound
sentences are imposed by others, including the jailing for 13 years of a man
who had bashed and robbed 13 elderly women. It has also given some publicity to
the Crime Victims Support Association, which proposes to hold a rally next
March 2 to protest at “the lenient attitude of some of our judiciary”. That paper has also been drawing attention
to problems, particularly but not only for businesses, from the apparently lax
treatment of supposed loiterers and beggars, some of whom are drug traders
and/or fraudulent. This appears to have stimulated police into a more active
approach. What is needed is a return to the legislation that used to apply to
vagrancy and made it easier for police to control such people.
A major point that is frequently overlooked in this debate
is not that proper sentencing of criminals will result in reform of the
individuals but that it will keep the individuals away from causing harm to
others. Dr Richard Stone, who
has undertaken a study of the dramatic drop in US crime rates (especially
violent crime) over the last 8-10
years, points out that, while there have been many causes, two have probably
been the most significant, viz a radical change in the philosophy of policing
and sentencing, accompanied by a supportive change in public attitudes and
community expectations; and a large increase in the number of prisons and
prisoners.
The most important change in policing policy has been not to
ignore low-level crime (like fare-evasion, graffiti, vandalism, petty theft and
gang activity) in order to focus on major violent crime. Police have accepted
that such low-level crime can often provide the path by which individuals take
their first steps toward becoming violent offenders. Hence community policing
and a much more visible street-level police presence have returned, youthful
gangs forming on street-corners and generating an atmosphere of intimidation
have been dispersed, vandals and pick-pockets have been arrested and read the
riot act rather than being ignored, and repeat offenders have faced serious
penalties.
This change in police policy has received considerable
public support. The previous permissiveness towards crime – preoccupation with
root causes, emphasis on rehabilitation rather than public safety, and pressure
to limit police powers and reduce sentences – has been replaced by a greater
acceptance of zero tolerance, of stiffer sentencing, of public safety over
criminal rights, and of impatience with waiting for root-causes to be overcome.
The expansion in the number of US prisons in the 1980s and
1990s, which allowed a restoration of more severe sentencing, is reflected in
the following:
- Between
1960 and 1970, when crime first exploded, the US prison population fell
from 213,000 to 196,000 and average time served for violent offences fell
too.
- By
1990 the US prison population reached 690,000, then 1.1 million in 1997
and now over 1.3 million. Over half of the increase between 1990 and 1997
consisted of violent offenders. As a consequence the average time served
by violent offenders increased from 43 months (only 47% of sentence) in
1993 to 88 months (or 80% of sentence) today.
Some will see the increase in prisoners as a “bad thing”.
However, as released felons commit a large number of crimes, this has been a
major factor in cutting violent crime. In a 1991 Justice Department survey,
felons back in prison for parole violations in 1991 had committed 6,800
murders, 5,500 rapes, 8,800 assaults and 22,500 robberies while on parole.
Based on these figures, one estimate suggested that, if the prison population
had not risen as it did after 1975, there would have been an additional 390,000
crimes in these four categories in 1989 alone! Another estimate suggests that
each extra imprisonment averts between two and three violent crimes per year.
Although our crime problem is much less than the US’, we can
learn from that country’s experience. It is better to do so than to experience
the trauma that the US went through.