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September 1999

My activities over the past month have included attendance at the Quadrant seminar on Aboriginal issues and the HR Nicholls conference. These produced important material and some highlights are summarised below. I have also focussed on monetary/economic policy and Victorian education, as well as participating in SBS TV's Insight program. The latter was supposed to be on privatisation under the Kennett Government but, with the panel including Moira Rayner (whose performance I thought to be verbose and extreme), it ranged over many issues without really getting to grips with any. It is difficult to have a coherent and sensible discussion when the opposition starts so far out left field!


Based on the evidence that has emerged so far at the hearings on the Gunner/Cubillo test case on their claim for compensation from the Commonwealth for having been "kidnapped", it is Sir Ronald Wilson (the author of the Bringing Them Home report which attempted to entrench the "stolen generation" myth) rather than other Australians who should apologise. Certainly, the church missions and others who were involved in the "rescue" and subsequent care of half-caste children are owed an apology. More generally, the Australian nation is owed an apology for having its reputation traduced.

It will be recalled that Wilson was appointed (by Keating) as a Royal Commissioner. As such, he had the power to subpoena witnesses. However, he failed to call some of the main officers responsible for administering Aboriginal affairs at the time and who would have given the real story, which now appears to be coming out at the current hearings. That story includes (in particular) the Federal Government policy of "assimilation" of half-caste children on the ground that they were generally not accepted in Aboriginal society; the consequent policy of "removing" such children to institutions with the object of assuring their education and health - but only when they were neglected and when the mother/parents consented; and where the institutions generally looked after and educated the children well.

Given the significance of the issue, it is astonishing that the mainstream media has reported so little of the evidence given at these hearings. Based on the evidence to date, sufficient has, I believe, emerged to justify a call for an apology by Wilson. One important example is the story quoted on page 141 of the Wilson report about the trauma allegedly experienced by one of the allegedly stolen children. This has now been contradicted by evidence given at the Darwin hearings, suggesting that the claims of "stealing" were not properly checked (as page 21 of the Wilson report's preface makes clear, many such claims were basically recorded rather than investigated). Again, evidence at the hearings in Tennant Creek and Alice Springs revealed that each of the witnesses who had claimed to have been "stolen" was in fact placed in missions at the instance of, or with the agreement of, one or more of their parents (indeed, one child's father requested admission and had to wait three years for a place). That may well turn out to be the position with the great majority of the children.

The behaviour of the churches over this issue is almost as bad as that of the "regular" media. At the Quadrant seminar Ray Evans suggested that the failure of the churches to defend their own missions is part of a wider failure to defend Western Civilisation against the fantasy that primitive cultures are superior or at least morally equivalent. One could not help thinking that there is parallel here with the failure of business leaders to defend competitive private enterprise.

Other points made at the seminar included:

  • According to Pastor Albrecht of the Finke River mission, the two Land Councils formally established under the Northern Territory Land Rights Act of 1976 have basically looked after the interests of a small group of Aborigines running those councils rather than the broader Aboriginal community for whose benefit the land (42 per cent of the NT) was granted. The discussion of the Reeves Report (which recommended the substitution of regional land councils for the existing two) brought out that this first grant of communal land in Australia, made by the Fraser Government, has created an economic and personal dead-end for most of those Aboriginals who were attracted by the concept that land is somehow "fundamental" to preserving the culture. In truth, if economic independence cannot be sustained, it must be doubted that separate culture(s) can survive when it is virtually impossible nowadays to exclude communication with and influence from the outside world.
  • Census statistics quoted by former Labor Minister, Gary Johns, suggest that, predictably, Western culture is in fact taking over - 64 per cent of Aboriginal unions are with non- Aboriginals, 84 per cent of Aboriginals speak English at home and 71 per cent say they are Christian. Johns pointed to the difficulty of "reconciliation" when there is no Aboriginal community per se. Migration away from traditional communities is occurring and Sydney now has the largest concentration of Aboriginals (who presumably find it difficult to establish even "kinship" with the land). The NT is thus not necessarily representative.
  • However, the educational and health problems of the "traditional" NT communities, (who have been encouraged by the land rights movement and those promoting Aboriginal culture(s)), have significantly deteriorated in recent decades. This was highlighted by the head of Darwin's Kormilda secondary college, which has about 300 Aboriginal and 500 non-Aboriginal students. He presented statistics of literacy amongst primary students from traditional communities showing a sharp decline in the last ten years to close to zero, reflecting various factors including the increased emphasis on traditional culture(s) and the (partly consequential) poor attendance rate at primary schools. He expressed deep scepticism that the recently announced Federal Government program to bring Aboriginal literacy up to white standards by 2002 could succeed under present arrangements.

Another aspect of this issue which has been neglected by the media is the role of legal aid services. Such services do not necessarily have an interest in promoting reconciliation and some of these taxpayer subsidised bodies are in reality encouraging conflict against the interests of Aboriginals themselves. One Aboriginal witness has acknowledged in giving evidence that a Legal Aid office established a book for signatures of those who wanted compensation. Unsurprisingly, he signed the book. A writ was then issued without any further consultation or instruction from the witness, who said that he had no knowledge of what was in it.

If this is true, it raises an important question: surely it is the duty of solicitors to ensure that they have instructions and that the matters pleaded are sustainable. It must also raise serious questions about the circumstances of the 2,200 similar writs which have been issued against the Commonwealth, 700 of whom are individuals claiming they were abducted and 1500 of whom are individuals claiming compensation because they are the children of those abducted. It certainly warrants an official inquiry into the issue of these writs.

Fortunately, the media are slowly starting to realise that not only have Aboriginals been "used" but they have too. One or two "brave" journos are tackling the issue (see attached).


At the HR Nicholls conference, barrister Stuart Wood (who acted for Patrick in the waterfront dispute) detailed two major recent incidents where police again failed to take action to allow those who were the subject of protests to go about their legitimate businesses. These incidents are outlined in the attached Herald-Sun article and more detail can be obtained from Wood's paper on the HRN web site.

Coincidentally, after writing the article (but before it was published) I had a ring from one of my police contacts who suggested that force morale has deteriorated further and, because of concerns that command may not back-up officers sued in civil courts, more and more police are moving their assets out of their own name. One officer who put a headlock on a protester at an earlier protest outside North has been sidelined from involvement in any such activity. (I note that 3 protesters outside North were arrested on 3 September, which must be the first time that has happened).

My informant was also critical of the employment by the Casino Authority of a private security firm (FBIS) for an investigation into the activities of Lloyd Williams. He claimed that the firm, run by former Chief Commissioner, Kel Glare, is getting $400 per hour and raised the question as to why Victoria police (which are said to be the best police force in Australia) couldn't do the job.

There are some signs that Ministerial attention is being given to the question of what policy police should adopt in handling protests and the like. The Police Ministers' Council (a body which includes State and Federal Ministers responsible for police services) is apparently actively considering "national minimum guidelines for incident management, conflict resolution and the use of force." However, the office of the Victorian Minister does not return my calls on this issue. It remains to be seen if Victoria will change from its (completely inappropriate) policy of instructing police to use "minimal" force to instructing them to use "proportional" force.

There is no reason why the Minister could not issue a direction to the Chief Commissioner to that effect. Section 5 of the Police Regulation Act 1958 would allow that. Any such directions should, of course, be published to avoid accusations that the police force is being used for "political" purposes. This is what the Federal Minister does when issuing such directions.


The attached two articles(article 1.) (article 2.)are essentially a follow-up to my discussions while overseas about the role of monetary policy and the increased difficulty of forecasting inflation. Those discussions added to my already growing concerns about the role of monetary policy given that:

  • It now appears to be confirmed that there is an unstable/unpredictable relationship between the supply of money, on the one hand, and the level of demand and inflation, on the other. Thus changes in interest rates have become the policy weapon used to try to control inflation;
  • While changes in interest rates do impact on the level of demand, the lag and extent of such impact is uncertain;
  • As nobody can be confident about what is happening on the supply side of the economy, the effect of changes in demand on inflation is even more uncertain.

Fellow economist and sceptic, Geoff Hogbin, recently drew my attention to the following statement by the University of Chicago econometrician, Arnold Zellner, who is recognised as a world authority on statistical testing and inference (his first degree was in physics at Harvard):

"I do not know of a complicated model in any area of science that performs well in explanation and prediction and have challenged many audiences to give me examples. So far, I have not heard about a single one."

Of course, policy makers point out that they do not rely entirely or even mainly on models. I attended the Forecasting Conference held by the Economic Society on 19 August at which Glenn Stevens (Assistant Governor, Economic, at the Reserve Bank) spent a good deal of time explaining the role of forecasts and judgements in policy advising, and the uncertainties involved. "Forecasts have to be made as part of the policy process"…. but…."forecasts are not and cannot be simply accepted at face value by policy makers"… who…."must take into account all the relevant uncertainties in calibrating their policy decisions."

Stevens demonstrated the problem by reference to a graph of forecasts and outcomes for US GDP since 1991. This showed for each year forecasts spread across a range of about one percentage point of GDP and an average forecast. In every year up to 1996, however, the outcome was at the extreme point of the range of forecasts and in 1997 and 1998 the outcome was quite a lot outside even that range. That also seems likely to recur in 1999.

Stevens pointed out that forecasts of inflation have been closer to outcomes - but those were presumably based on wrong forecasts of GDP! He also pointed out (correctly) that these forecast errors do not seem to have led to significant policy errors.

It may be that, recognising "all the relevant uncertainties", central banks are already exercising much greater caution and are basically letting things run along. However, while there are lags before interest rate changes take effect, the extent of the uncertainties involved suggest a case for making "pre-emptive" changes the exception rather than the norm. There may also be a question as to whether, now that inflation has been brought down to "acceptable" levels and markets are inflation sensitive, greater reliance could not be placed on those markets to make adjustments to interest rates. This has already been happening to some extent. For example, while the official cash rate (the only rate which the authorities directly affect) has been unchanged at 4.75% since December last year, the market has pushed up yields on ten year bonds from 5.01% to 6.24% in July. In short, there may now be a case for the monetary authorities to "intervene" more on a "last resort" basis only when it is judged that markets are clearly out of kilter.


Education and health are supposedly two of the most important issues in the Victorian election. My article inThe Age reviewing some of the key education developments under Kennett produce a whole column response supporting the government school system by one of The Age's staff writers. My short reply had not been published at the time of going to press but is included at the bottom of the staff writer's response.

Interestingly, a similar story can be told about State spending on hospitals, ie Victoria is spending similar per head amounts on hospital care as the average for the other States and yet the impression given by the media is that the Victorian system is in a state of collapse!