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2010-11-08

How the PM can deal with the crisis of authority

Comments on Paul Kelly “Prime Minister's crisis of authority”, 6/11/2010, http://www.theaustralian.com.au/news/opinion/prime-ministers-crisis-of-authority/story-e6frg6zo-1225948547720
While those issues “arising from the resources boom, the finance sector, federal-state relations, climate change and boat arrivals” as Kelly put it, are challenging, they are not insoluble.

The two issues related to resources boom and federal-state relations can be dealt with by allowing resources booming states to retain a reasonable portion of their resources rent/tax with no redistribution among the states, similar to what Canada does.

Climate change can be dealt with by introducing a low carbon tax that is revenue neutral and trade neutral, with the provision to raise/change the tax rate consistent with international actions on climate change. This should be politically possible.

In terms of the finance sector, much stronger competition should be introduced with strong enforcing measures. It is interesting to note that when superannuation funds are concerned, there has been talk about default low fee funds. Why isn’t it possible to consider a similar mechanism for mortgages? It is more complex, but there is considerable scope in this field.

The issue with boat arrivals can be more difficult, mainly because of Labor’s refusal to use Nauru as the solution. But it could use it as an intermediate step until a new regional agreement is reached. Australia has provided aid to Nauru in relation to the detention/processing centre there. Why could Australia re-use it temporarily?

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