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GST should be in this year's tax summit

Comments on Annabel Hepworth and Siobhain Ryan “Call to put GST in tax summit”, 31/01/2011, http://www.theaustralian.com.au/national-affairs/call-to-put-gst-in-tax-summit/story-fn59niix-1225997120225

While including GST in the tax summit this year is without doubt a perfect argument, some of the arguments here or in the Henry tax review report are just purely elementary school economics or politics.

For example, why should own home be subject to capital gains tax? Why should property investment treated differently from other investment in terms of deductibility?

Further, it is a horrible idea to have an all inclusive land tax even including own homes. It is fundamentally inconsistent with the approach of allowing low income earners not to pay or exempt from income tax.

There are some areas that the Henry report recommendations got it off the mark, including the mining tax approach that has been shown already by the failures of the Rudd/Swan SRPT.

Failing Gilalrd government

Comments on Mirko Bagaric “Flood of bad decisions from Gillard”, 31/01/2011, http://www.theaustralian.com.au/national-affairs/flood-of-bad-decisions-from-gillard/story-fn59niix-1225997082458

Gillard and her government have been playing a divisive game with the Australian public:
  • use politics for a flood levy to generate a division between the flood areas and the rest; and
  • to tax higher income earners to create a division between them and others.

Further, as you pointed out, their wasteful spending in so many programs in such a short time also has an effect of division: those who might have benefited from those wasteful programs and the rest of taxpayers.

This is a poor government under poor leadership with poor management skills.

The independents really need to think hard and tackle the wastes by this incompetent government for the good of the nation.

PS: given the poor performance and rating at the election and ever since, ALP should consider whether Gillard is really better than Rudd in the first place for whatever shortcomings the latter has or might have.

Rudd at least could generate high ratings for a considerable period. Gillard does not appear to be able to do so.
Rudd had some appeal to the public and Gillard does not appear to be able to show she can too.


Wage increases in China

Comments on Cai Fang and Wang Meiyan “Chinese wages and the turning point in the Chinese economy”, 29/01/2011, http://www.eastasiaforum.org/2011/01/29/chinese-wages-and-the-turning-point-in-the-chinese-economy/

There are a few points needing some clarification.

The second reason given for worrying less about wage increases is moving westward of labour intensive industries inside China, because labour costs are lower there presumably. But earlier on in the post it was said that wages rises in the western regions are faster. It requires a bit reconciliation between the two arguments.

The third reason is that wage rises will create more domestic demand that would sustain production. That obviously has some truth, but also may confuse the change in the comparative advantages between China and other countries. The newly created demand may choose to buy cheaper imports as opposed domestic products.

Further, the figures in the post suggest that the wages for the bottom income class of migrant workers increased very rapidly over a period that may indicate a reduction in income inequality. This seems to be inconsistent with what many people are saying that income inequality has been rising in China. Which is correct?

Measures for improving housing affordability in China

Comments on Li Shi “Social security and housing the poor in China”, 28/01/2011, http://www.eastasiaforum.org/2011/01/28/social-security-and-housing-the-poor-in-china/

AS Professor Li said, there are no easy solutions to social affordable housing.

Beyond the three schemes, I think the government should consider a specific tax that targets the wasteful empty properties that exist in many Chinese cities, as opposed to the currently various proposed property taxes. The huge waste of housing resources contrasts with the housing difficulties and is probably very uncommon in other countries. If the many empty properties can be rented out, then it would be easier for people to rent a property at more affordable rents.

That tax could be supplemented with an excessive resource using tax that targets some people who may spread their family members too thinly to occupy more properties that they would not normally do if no resource wasting tax is in place.

On top of this, low income tax reduction and a housing subsidy for low income people can be implemented.
PS: both taxes can assist in reining in the run away housing market in China.


No alarm for Australia's aged care

Comments on Mike Steketee “Problem of the ageing boomers won't go away”, 29/01/2011, http://www.theaustralian.com.au/news/opinion/problem-of-the-ageing-boomers-wont-go-away/story-e6frg6zo-1225996154932

Australia should not be too alarmed by the so called population aging issue.

Australia is different from Japan and most Western European nations because of its capacity to absorb immigration.

For Australia, there is the luxury that it does not need to make some hard decisions now and can afford to wait until those nations have resolved the issues associated with population aging and learn lessons and avoid making unnecessary mistakes in tackling those issues.

Further, population aging is a gradual process and will take a very long time to see big differences in age structure and their impacts on social policies.

Australian political governance means the party in government may have a tendency to postpone or avoid making hard decisions that may have long term benefits but short term political damages.

So one has to be realistic about any aging issues and the political processes in Australia.

The best policy any government has to make in relation to population aging and aged care is to realise that it is both the government's and individuals' responsibility for everyone's aged care when it comes to that time and introduce a mechanism that every individual has the incentive to look after their own interests and prepare for his/her care when becoming aged persons.

Government should provide reliable and authority information for the public to enable them to make informed decisions for preparing for their aging and aged care.

Maybe the government can create a system of universal minimum voucher per person based on some sort of tests and a mandatory system for aged care providers to make that minimum care available to those who demand it. They, of course, can and should provide higher standards of cares with private contributions.

Gillard's sinking PM leadership

Comments on Jennifer Hewett “Gillard's smooth sell upset by a few critics”, 29/01/2011, http://www.theaustralian.com.au/news/opinion/gillards-smooth-sell-upset-by-a/story-e6frg6zo-1225996389875

A very nice and can I say balanced analysis of Gillard's levy tax.

Gillard, though smart enough, has shown an unfortunate tendency to do stupid things, such as the BER school halls huge wastes under her education ministership.

Wasn't the cash for clunkers scheme introduced under her prime ministership too, or just before the election or at the campaign?

Weren't the dramas over her ministries just after the election registering some warning on her prematurity in policies and decisions?

They have not contributed positively to her reputation as the prime minster with leadership skills.

This completely unnecessary flood levy shows another her interesting and seemingly clever but often poor political instincts – hit the rich to be popular and win over politically.


More stringent constraints needed on government's wants to increase taxation

Comments on Stephen Bartholomeusz “Gillard's spinning in a straitjacket”, 28/01/2011, http://www.businessspectator.com.au/bs.nsf/Article/Julia-Gillard-floods-levy-politics-pd20110127-DH7J5?OpenDocument&src=sph&src=rot

There should be more stringent constraints on any government that does spin and hurts taxpayers.

There should be more stringent constraints on any government that wants to increase taxation, otherwise a government can so simply rob taxpayers off to pay for its waste and mismanagement of its budget.

Governments should work within its means under the taxation scheme at the election time. If it is absolutely necessary to increase taxation, it should seek approval from the voters by specifically a referendum.

Parliament scrutiny alone does not necessarily provide the best answer, given that the government normally controls at least one chamber and can easily do deals with some minor parties to get most bills through.

While a government may have got majority of votes by some counts, it does not necessarily mean that the voters automatically voted it for increasing taxation.

The current situation is highly unsatisfactory because the budget constraints for most governments in Australia are not stringent enough and governments can relax them by increasing taxation, temporary or permanently.

It is high time that real and hard political reforms be undertaken by governments and parliaments throughout Australia.

The one similar to what California has should be considered as the starting point.


Shame Gillard's 'Gang' group

Comments on Ben Packham and James Massola’s update on “Wealthier to bear brunt of flood levy as victims, low-paid are exempt”, 27/01/2011, http://www.theaustralian.com.au/in-depth/queensland-floods/flood-victims-and-low-paid-to-be-exempt-from-flood-levy/story-fn7iwx3v-1225995364583

It is disgusting for a government and prime minister that wasted billions and billions taxpayers money to impose another hefty levy on taxpayers, to say the least.

The government, its Treasurer and Prime Minister are gutless to impose a levy on businesses, but to target only personal taxpayers.

They don't have the gut to rein in their own wasteful spendings.

They don't have the gut to change the schedule to surplus to be afraid of being accused of incompetent in budget management.

What they do is no different to rub defenceless people off their income and savings to pay for the government's mistakes.

Shame, the government! Shame Gillard! Shame Swan! Shame Senator Wong!

They should have been tucked out in the election last year. They were, but they were shamelessly forming a minority government with the Greens and some self interested independents, at the expenses of voters' will.

Gender inequality and equality

Comments on Steve Harris “Find room at the top for women”, 27/01/2011, http://www.theaustralian.com.au/news/opinion/find-room-at-the-top-for-women/story-e6frg6zo-1225995061393

This kind of mechanical approach to gender equality, that is, by "fixed targets of 40 per cent female representation on boards and senior management teams for July 2013 for all publicly funded bodies, and July 2015 for all publicly listed companies, with real financial incentives or penalties across contracts, accreditation, research grants, subsidies and taxation to drive it home", is nonsense.

It is inherently unequal if the market mechanism is to be based. It is not based on the principle of rewarding according to performance.

The use of Norway, a tiny country, as an example or model in this respect is appalling. Norway in a number of areas is on the extreme and what it does has serious efficiency effects. Why should Australia learn from that?

If people with the responsibility to educate others are thinking like this or fixated with such a poor approach, how can we expect that Australia can improve its efficiency and equality?

Harris' idea is no different to asking for man to give birth to babies so man and woman are equal! That is his concept of gender equality!

Freer trade - why so difficult to reach international agreements?

Comments on Craig Emerson “Doha round key to continuing global prosperity”, 27/01/2011, http://www.theaustralian.com.au/news/opinion/doha-round-key-to-continuing-global-prosperity/story-e6frg6zo-1225995061033

While it is a matter of faith for free trade and free market, there is always a puzzle for the fact that if free trade is such panacea to economic growth and welfare why it has always been so difficult to reach an international agreement on more-free trade?

Dr Emerson mentioned that it has been 10 years for the Doha round negotiations already!

Why have people been so stupid so that they could not see the benefits of freer trade and reach agreements in much shorter times?

Can Dr Emerson explain this simple dilemma to us in plain language please?

Can Dr Emerson explain why China was imposed many unfair conditions when it was allowed to join the WTO as a member? And why EU and the US resort to trade restriction measures to punish China’s exports?

It is probably high time to be more frank about free trade, especially for developed countries to preach free trade on the one hand and protect its own industries and firms on the other.

The effects of free trade are more complex and politicians should be frank about that and tell the truth and nothing but the truth, no matter how inconvenient they are!

Say no to SGX taking over ASX

Comments on Maurice Newman “Say yes to Singapore merger or risk irrelevance”, 27/01/2011, http://www.theaustralian.com.au/news/opinion/say-yes-to-singapore-merger-or-risk-irrelevance/story-e6frg6zo-1225995058830

It is rubbish, isn't it?

Come on! It is not a merger, is it?

Some commentator have pointed out that SGX is smaller than ASX and is less efficient that ASX. So why should the ASX be taken over by SGX?

Further, isn't SGX partially owned by the Singapore government? Is it as free as the ASX?

Don't confuse a merger with being taken over!


Businesses versus labour and residents' interests

Comments on Judith Sloan “Regulation and red-tape compliance a huge burden on companies”, 26/01/2011, http://www.theaustralian.com.au/business/opinion/regulation-and-red-tape-compliance-a-huge-burden-on-boards/story-e6frg9if-1225994486336

The debate on population growth and especially immigration has always been dominated by businesses and their lobbies, mostly at the expenses of existing residents, because the latter normally don't have representations as strong as businesses. A rational and muture debate should include assessment on the impact on existing residents, their wages and pay, their working and living environments, because that is what government should do, to look after their constituents and the nation's.

In terms of business taxes, of course it would be better to have lower taxes, but that principle of lower taxes should also be applied to personal taxes too.

A main problem with the balance of business taxes and personal taxes is that now it is easier to argue for a lower business tax, but harder to argue for personal taxes, given the split between lower and higher income earners.

The Productivity Commission, though generally very respectable in its work, is too much leaned to so called efficiency at the expenses of other equally if not more important issues. For example, it may focus more on total economic growth when immigration is concerned. Equally when business taxes are concerned, it may focus too much when simple international comparisons of business tax rates or burdens, but ignore other issues.

As far as carbon pricing is concerned, businesses should live with political uncertainties and price in based on the probability of future costs of emissions when making investment decisions just as they do with other uncertainties. It is unreasonable to have the government as the sole undertakers of future risks on this.

Albrechtsen diabolic to the education union

Comments on Janet Albrechtsen “Class warriors prepare to ambush private schools”, 26/01/2011, http://www.theaustralian.com.au/news/opinion/class-warriors-prepare-to-ambush-private-schools/story-e6frg6zo-1225994520017

Let me declare that I am not a union member let alone the education union, at outset.

Having declared my non-conflict of interest, now let me begin my comments.

It seems that Janet Albrechtsen is diabolic to the education union and to what the union's view about public funding of education.

While she is accusing the education union many things, she is also committing some of the tactics she accuses the union does, such as the union wants to penalising parents who send their children to private or non-public schools.

To me that itself appears to be highly misleading.

While even at the very improbable scenario that the union asked the government to completely stop all funding to non-government schools and the government did that, that would still be far from being penalising parents of non-government school students.

It is correct to say the more choice is good.

But there is nothing wrong for government to fund government schools and government schools alone, and to provide every child with the same opportunities to enrol and to being educated. By doing that is not penalising anyone including parents both schools' children, because the parents who choose to have their children to non-government schools are completely their own choice and no one is forcing them to do that or to forgo the opportunity to have their children in government schools.

Of course, what Albrechtsen implies is probably compared to the current situation where government already fund partially non-government schools. Although that is not a bad starting point of comparison, it stretches the imagination too much to imply that is the only point to compare, or even the only and right point to do so.

Albrechtsen's tactics is neither wise nor commendable at all.

Albrechtsen appears to be union bashing and oppose whatever unions are saying irrespective what they are or it is about, right or wrong, correct or incorrect.

Swan's levy of essentials

Comments on Siobhain Ryan “Flood levy in frame as Wayne Swan rules out cuts”, 26/01/2011, http://www.theaustralian.com.au/national-affairs/flood-levy-in-frame-as-wayne-swan-rules-out-cuts/story-fn59niix-1225994545370

Mr Swan opportunistically says "But I don't think the Australian people would want us to respond by hacking into essential expenditure in health or education, sacking teachers or nurses."

But he conveniently conceals the fact that few Australians want them to waste billions in the pink batts scheme and building the school halls programs. What happened?

If the government had not wasted in those schemes and programs, then we would have them available for rebuilding the floods affected areas.

When those wastes were happening, why didn't Swan or anyone from the government say anything those wastes could do to those essential services?

What a joke!

Swan, Gillard and the government always have a reason to do whatever they want to do, irrespective it is really reasonable or not. What is the point for Swan to say that?

But it serves the point that it is not too difficult for the public to see their hypocritical side.

Swan tends to be an embarrassment. What a awkward duck!


Brown's cheap politiking

Comments on ABC report “Greens want means test for flood levy”, 25/01/2011, http://www.abc.net.au/news/stories/2011/01/25/3121040.htm?section=justin

Mr Brown got it half right, that is, all taxpayers including corporate taxpayers should pay it should a levy is imposed.

But he is wrong to have it means tested.

The tax is already too progressive to be fair for further increasing those who pay a large tax.

While it is easy for Mr Brown to make a political argument to tax even more heavily on higher income earners, it is much more unfair given that they already pay so much. In per capita terms, they pay as much as many low income earners combined pay.

Mr Brown’s argument is misleading and conceals such facts.

There is no use to try to be politically popular and be really hypocritical in terms of facts and truth.

It is politically coward to simply to be ‘rich’ beating to score political points!

Why Swan needs to warn about price hike?

Comments on James Massola "Inflation figures are good news for rates, but Wayne Swan warns of looming food price spike", 25/01/2011, http://www.theaustralian.com.au/national-affairs/treasury/inflation-figures-are-good-news-for-rates-but-wayne-swan-warns-of-looming-food-price-spike/story-fn59nsif-1225994289457
Wayne Swan said the impact of the floods, in economic terms, was the worst the nation had seen.

That is unlikely to be true.

We have very large scale droughts running for years that affected agriculture in Australia and affected other industries as well, such as the gardening industry with water restrictions in many places. Some people even didn't have water to shower.

So what was Swan talking about!

Some politicians are used to scare people and conceal their own deficiencies.

This is a good example.

From his role in the RSPT fiasco, it is not too difficult to know how good his economic management skills are!

We shouldn't expect too much from him. Otherwise we would be bitterly disappointed.

AS the Treasurer, his warning of price spike next quarter is neither warranted, nor helpful to expectations, see the following from the report.

TREASURER Wayne Swan has warned of a looming spike in inflation as the impact of the floods is felt in food prices at the checkout.

He welcomed soft inflation figures released today, which make an interest rate rise less likely next week.

But the March quarter consumer price index won't hold such good news.
“Despite the fact that these figures are lower than anticipated, we do know the next quarter figure - the March quarter - will see a spike, particularly on vegetable and fruit prices and that will have an impact on the March quarter,” Mr Swan said in Canberra.

Tasmania will be just fine

Comments on Tony McCall “Old enmities cloud Apple Isle's future”, 25/01/2011, http://www.theaustralian.com.au/news/opinion/old-enmities-cloud-apple-isles-future/story-e6frg6zo-1225993845801

The following statement is half correct at best"

"Tasmania faces significant employment losses in the forestry sector and in GST revenue at a juncture when the federal government, squeezed by flood reconstruction priorities, will be reluctant to hand out yet more funds to compensate forestry companies, employers and employees exiting the sector."

Tasmania's GST revenue will not decrease. How could it decrease?

Tasmania now has a very strong leverage on the Gillard minority federal government because of the Independent MP from Tasmania. So how will it not use that advantage is beyond belief and common sense, just as it did during Senator Harradine’s time.

There is little immediate and excessive budgetary pressure for Tasmania now. No point now to frighten the first time female and new premier.

As for the intermediate and longer terms, Tasmania needs to take advantages of its natural environment and natural resources, and relatively lower costs of living.

It needs to deepen value-adding to resource uses. it should increase the efficiency of transport within the island. It needs to lower travel costs between it and the mainland Australia to attract more and younger people, including international immigration, to Tasmania.

Too early for G2

Comments on Amitav Acharya “Hu visit ends any dream of a US-China duopoly”, 25/01/2011, http://www.eastasiaforum.org/2011/01/25/hu-visit-ends-any-dream-of-a-us-china-duopoly/

It appears that the second last paragraph provides a very good summary of why China is reluctant to accept the notion of G2, although in any real sense it is a bit too early to a factual G2.

China has only just passed Japan as the world second largest economy and still is a fraction of that of the US' as mentioned by the US president. It is not really a roughly equal sized G2.

Why some people advocate G2? Who knows? Maybe there is a strong element of asking the Chinese to make sacrifices in global affairs.

So, it is not G2 now and China is right not to be carried over by such a flattering concept at this stage. An empty or symbolic vanity hat of one of the G2 members does not really contribute to anything meaningful to China’s national interests.

Of course, it does not mean that China should shed its international obligations and responsibilities, such as climate change, global economic growth and global security.

China, for example, should proactively promote international actions on climate change, such as emissions mitigations and international agreements on actions to be taken.

It has been seriously taking actions domestically, yet it has failed to articulate a strong, efficient, effective and internationally equitable framework.

It is a pity that China, a country with such ambitious actions taken and plan for the future has stood being accused as a spoiler in the Copenhagen conference a little over a year ago.

With no effective articulation, it is likely that it will continue to subject to strong but unfair criticism on climate change and emissions reduction.

Leave the decision making to people concerned!

Comments on Ian Harper “Unlock home savings to fund old age”, 25/02/2011, http://www.theaustralian.com.au/news/opinion/unlock-home-savings-to-fund-old-age/story-e6frg6zo-1225993848749

Is it true that "AGEING baby boomers are haunted by two questions: will I have enough money to live comfortably in retirement; and how will I pay for aged care when the time comes?"

I don't think that is in Australia.

Don't get me wrong on this. Yes, people would say they are concerned when asked this sort of question. But deep in their heart they also understand that that will not be their problems alone and future and then taxpayers will be part of the problem and solution too.

So that statement is misleading and is nothing short of frightening people into accepting the author's argument.

By all practical sense, the author failed to understand that what his proposal is simply from an ivory tower idea and is impractical in the Australian context.

Why don't people transfer or give their houses to their children and ask the government to provide whatever is needed before they confront the aged care problems?

Let's be practical about it and don't be too naive on this complex issue.

PS: the most equitable and efficient way is to have a government aged care voucher system which entitles everyone over the specified age with a base amount that can purchase the base level aged care. Aged care providers should be allowed to provide above the base level cares with extra charges that is paid by individual receivers.

How each person funds his or her aged care should be left to themselves to decide, as opposed to the proposal in Ina Harper’s post.

Why does he have to worry about other people’s decision?


Lazy journalists

Comments on Phillip Coorey “Gillard has time to levy and recover”, 24/01/2011, http://www.smh.com.au/opinion/politics/gillard-has-time-to-levy-and-recover-20110123-1a16v.html?posted=successful

Please don't misrepresent the public, its sentiment is not for a levy to help those flood victims, but the government uses the revenue it already has to do so.

Further, why should be an increase on Medicare levy that only tax personal taxpayers and leave company taxpayers out? Tell me why shouldn't they also shoulder the burden, should a levy be deemed as necessary?

Is that fair to all taxpayers?

Why don't you people making so much fuss for the government to make a levy consider a better policy?

Why are you guys so lazy in your work?


A chance itself is not enough

Comments on Tom Dusevic “Chance to rebuild a reputation”, 22/01/2011, http://www.theaustralian.com.au/news/opinion/chance-to-rebuild-a-reputation/story-e6frg6zo-1225992591673

Although there is a chance for Gillard and her government to redeem themselves, they are likely to run the risks of making a repeat of the BER disaster on topic of the natural disasters in Queensland and Victoria and of imposing an unnecessary levy at the taxpayers' expenses that funds their mismanagement.

If either the former or both materialise, then it will almost certainly be the political end of this government.

The government has not shown its competency so far. When under greater pressure, it is even less likely that it will perform better.

PS: To redeem itself, the government needs to break with outdated thinking that any infrastructure building will be good no matter how it is managed and how wasteful it is. It needs to improve its big project management skills, to say the least.


Australian aged care and homes of aged people

Comments on David Uren and Lauren Wilson “Assets-test reform for aged care”, 21/01/2011, http://www.theaustralian.com.au/national-affairs/assets-test-reform-for-aged-care/comments-fn59niix-1225991995093

It is funny nowadays that the Productivity Commission is used for any inquiry, irrespective whether it has the expertise or not.

What the hell why it should have been asked to inquire into aged care funding issues and whether aged people should sell their homes or not?

What the hell do they have anything to do with 'productivity'?

Is it a joke?

Further, Australia is used to have hundreds of pages reports. This report is reportedly more than 500 pages. The Henry review is few hundred pages.

Why so many hundred pages?

Why so complicated and complex reports?

Isn't it similar to our tax laws running thousands pages that very few people can comprehend?

PS: by the way I do not find the idea attractive of including own homes in means test for aged care and forcing older people to have to sell their homes.

Asia financial reforms

Comments on Andrew Sheng "Asia must reform financial institutions in its own image" 13/01/2011, http://www.eastasiaforum.org/2011/01/13/asia-must-reform-financial-institutions-in-its-own-image/#comments

A few comments on the post.

Firstly, the following statement may not be correct: ‘In terms of the global architecture, the dollar and the euro will remain as global reserve currencies within the next two decades at the very minimum.’

Twenty years are a very long time. The underlying reason Shen used for that statement ignores the international dynamics and the rapid shifting in world economic weight and trade. The current lack of consensus on an Asian currency or currencies is likely to be very temporary.

Secondly, the idea of using a Tobin tax for fx transactions should at least be complemented with a tax refund mechanism for non-speculative transactions after they can be proved to be, to reduce the undue impact on market efficiency of such a tax

Thirdly, the ‘too big to fail’ dilemma should not be that hard to address. Shareholders and bank and financial executives must be held to account, no matter how big a bank or financial firm is. They must be made to pay for their mismanagement and / or neglect of duties. Moral hazard issue should never be allowed. The worst outcome for a country can only be nationalisation temporarily to prevent any financial fall out. If that does occur, it would wipe out all shareholders’ value, and allow both the authorities and shareholders to prosecute company executives for their neglect of duties and or mismanagement.

Gillard's pondering a new levy

Comments on ABC report “PM flags levy to pay for flood recovery”, By Alexandra Kirk, 21/01/2011, http://www.abc.net.au/news/stories/2011/01/21/3117858.htm?section=justin

This is how Gillard will achieve both - by a special levy.

One can guess that when she realise she cannot deliver a surplus, she will probably have another new tax to cover the budget hole to achieve her surplus.

She says the economy is strong and will be running hot next year. Then why does she need to introduce a levy, particular given that she also says higher food prices. So why would the consumers have to pay extra taxes when the prices they have to pay are also higher?

Will she also impose a levy on businesses? If not, then why should only consumers shoulder her levy, for whatever purpose? This is exactly how the government treats personal taxpayers with contempt!
All what she says is illogical and in defiant of common sense, isn't it?
This is what she will be remembered for her leadership of lack of it during her very likely short term Prime Ministership.

Poor Gillard.


Labor's deficit and arrogance

Comments on Mumble Blog (Peter Brent) “Labor’s debt and deficit problem”, 20/01/2011, http://blogs.theaustralian.news.com.au/mumble/index.php/theaustralian/comments/labors_debt_and_deficit_problem/

Peter, your concluding remark is: "This government could do with a dose of arrogance."

I don't know what you meant exactly.

I would have thought that this government does not have a deficit of arrogance: it has enough but what it has is the wrong sort of arrogance, I am afraid to say.

Do I have evidence to back that up? Yes, of course!

When Gillard says it is not either rebuilding or achieving budget surplus and the government will do both, that is not only arrogant of her, but boasting without any clue of where the money will come from!

When the government says the NBN will be making a commercial return, it is not only arrogant, but close to cheating that can only be made with the reliance of parliamentary privilege. Any private company executives making that sort of comments would find themselves in deep trouble of misleading their shareholders.

When the prime minister and the government say to achieve consensus on carbon pricing but does not allow the opposition parliament members to participate in its committee, it is a display of arrogance to disguise its hypocrisy and political cowardness: one can always get a consensus if that person is the only one to decide.

So, what the government needs is to change the content of its arrogance to the right sort!

PS: seriously, the current government is having big deficits in economic and budget management skills, reflected in its policies. It is skilful in creating committees and task forces. And the Prime Minister is reportedly having more number of staff working for her than Rudd. Presumably that is to make those members not work in dog years as Rudd did or claimed!

No new tax please!

Comments on Ben Packham “Coalition revives 'great big new tax' slogan as it urges Gillard not to impose floods levy”, 20/01/2011, http://www.theaustralian.com.au/in-depth/queensland-floods/coalition-revives-great-big-new-tax-attack-as-it-urges-gillard-not-to-impose-floods-levy/story-fn7iwx3v-1225991733800

Leaving the politics aside, there is no need to bring in any levy to deal with the rebuilding.

It would be ridiculous to lower business taxes and at the same time to make new levies on personal taxpayers.

Unfortunately most governments just do not regard the public seriously because they don't have a strong voice as those represented by special interest groups do, so personal taxpayers always find they are on the receiving end of any increased tax bills.

Taxpayers pay enough tax and the government has enough money to do what is required them to do – it is only a matter of cash flow management using borrowing and repaying debt as the means to achieve so.

Any argument or even thinking of a levy now would show how incompetent of the government could be in managing its budget: there can and will always be something unexpected to occur and it would be ridiculous for a government to simply bring in a new tax, levy or charge whenever there they occur.

Standard flood insurance cover may not work

Comments on Andrew Fraser “Insurance rules need to change for flood-prone”, 20/01/2011, http://www.theaustralian.com.au/news/opinion/insurance-rules-need-to-change-for-flood-prone/story-e6frg6zo-1225991310180

Standardisation of flood definition is one thing, but the argument for standardised flood cover can be problematic.

Different locations can mean quite different risks of being flooded; even two locations may be very close due to the high-low positions.

Unless insurance firms choose to have standardised cover, they should be allowed to charge differently for different locations and positions of a property based on assessed risks.

The argument for standardised flood cover can be misleading and is certainly impractical.

It lacks a common sense.

Politicians should not take an easy way for a difficult issue, particularly immediately in the wake of a flood disaster when emotions are running very high.

Government should not provide a universal cover indiscriminately at taxpayers’ expenses. It can, however, mandate people to have insurance cover for certain natural disasters and panelise those who don’t, just as the federal government’s private hospital insurance.

The latter is not a good policy from public policy point of view, because it simply forces many people (and the government) pay for insurance but they don't use private hospitals and hence there is not much reduction in the pressures for public hospitals. It was an ill-considered policy with good intention.


Wong follows Gillard and Swan

Comments on Ben Packham “Rebuilding Queensland after floods won't alter budget surplus timing: Penny Wong”, 19/01/2011, http://www.theaustralian.com.au/national-affairs/rebuilding-queensland-after-floods-wont-alter-budget-surplus-timing-penny-wong/story-fn59niix-1225990976483

It seems some of the federal Labor ministers are really fool headed with no strategic political sense.

Swan is one - the Treasurer who presided over all Rudd government's ill conceived and ill managed government spendings, such as the pink batts, the BER wastes etc, and the disastrous SRPT policy. He, however, got promoted to Deputy PM after Gillard deposed Rudd from the prime ministership. What did that say of the quality of federal Labor politicians?

Wong had a record of failed climate change policies in Australia - she was the climate change minister, failed in negotiation with the Greens to pass her climate change legislations in the parliament. What her accountability was? She got the key finance minister, albeit she left the difficult position of climate change minister where she was assisted by the current climate change minister Greg Combet.

The PM, Gillard, having deposed Rudd and being very skilful in negotiations with the independents (unfortunately at the expense of the nation I am afraid to say), was nevertheless the education minister who presided over the BER wastes. Now she is seen clueless to key policies.

Maybe that is the result of a minority government. But that is exactly the time real leadership can shine. But she hasn't, not since she became the PM.

Change with changed economic reality

Comments on LaborPhil Quin “A flood levy would not break”, 19/01/2011, http://www.businessspectator.com.au/bs.nsf/Article/A-flood-levy-would-not-break-Labor-pd20110119-D8R9H?OpenDocument&src=sph&src=rot

While Quin may have considerable experience in political advice, I think his proposal of a federal flood levy by the Gillard government is nothing short of political suicidal. The public just does not trust the government in its governance and economic management, and hence anything beyond and out of the ordinary political course.

Ironically I think it is an absolutely expected and extraordinary political opportunity for it to give up its impossible task of its promise to deliver a budget surplus by the due year.

The strong $A just makes it harder for many exporters to maintain their profit levels and deliver enough tax revenue to the federal coffer.

Rather than continuing saying to deliver a surplus and failing to do it by the time of the next election will be on, it can say now it is responding to the unexpected Queensland floods and changing its budget priorities.

It does not need a levy, but needs to redress budget priority urgently. Any delay in seizing this opportunity from Mother Nature and god is political amateurship.

Incidentally, it can also address indirectly the poor impression that Gillard is lack of compassion and has been unable to demonstrate it.

That will be politically smart.

Gillard and Swan need to see the point and wake up from the mindset that budget balance is the king. It may be, but not now and not in the next 2-3 years.

Wivenhoe Dam's dual roles

Comments on Andrew Dragun “Far too much water left in the dam”, 19/01/2011, http://www.theaustralian.com.au/news/opinion/far-too-much-water-left-in-the-dam/story-e6frg6zo-1225990589929

The question is whether some Brisbane residents or property owners who have been flooded will take legal action against the dam management authority and the State government for their failures for their duties in managing the dam for flood and prevention and control.

They may have a case.

But seriously, how did the modelling of the dam management perform in this recent flood? How long is their modelling horizon? How was it prepared for likely flooding? How was judgement exercised by the relevant people in charge?

There are indeed lessons to be learnt.


Labour laws and industrial relations

Comments on Richard Blandy “Labour laws can hurt the weak”, 18/01/2011, http://www.theaustralian.com.au/news/opinion/labour-laws-can-hurt-the-weak/story-e6frg6zo-1225989811394

It would be fair to say that both the efficiency of the labour market and fairness of industrial relations are equally important and neither should be sacrificed.

A key problem with industrial relations is that employers are in much stronger positions over employees and there are significant problems with transparency in employers' decisions to show they are fair.

No industrial system is perfect, although the Gillard reregulation may have gone a bit too far in correcting the previous one.

I think a good industrial relations system should be a balance of the interests of both employers and employees, especially to ensure that the weaker is not exploited by the stronger.


Gillard needs leadership and spontaneity

Comments on Niki Savva “PM could make up for her passionless performance”, 17/01/2011, http://www.theaustralian.com.au/national-affairs/commentary/pm-could-make-up-for-her-passionless-performance/story-e6frgd0x-1225988984426

Most of the post and analysis makes sense. However, the casual statements don't appear to be sound:

"It will be hard to quibble with a temporary increase in tax if necessary to help fund the massive rebuilding program.

She will have to do that, or something like it, to deliver on her pledge, repeated even after the magnitude of the devastation became obvious, to bring the budget back into surplus in 2012-13, and Abbott, given history, will be hard pressed to oppose it." Why should it be a tax increase, given that the government has consistently argued that the level of government debt is very low? Why can't the government increase a bit of deficits, or rein in more spending?

Why is it so important to keep the pledge of returning the budget to surplus by 2012-13 when the circumstances have changed dramatically and the fact that she has broken so many of her pledges before just in order to get into power and stay as PM? Isn't it part of her lack of emotions or lack of spontaneity and also strategy at key and critical times?

This sort of advice does not appear to be terribly helpful to a prime minister struggling to find her own feet on the ground.

Gillard could say that the government will assist Queensland people and people in any other states who have been affected by natural disasters, even if it means it has to increase deficits and borrowing and will not be able to return the budget to surplus as earlier stated.

That would be much more passionate and compassionate than acting according to scripts.

The ADF should not be above the nation!

Comments on Paul Dibb “Conflict must remain the clear priority for ADF”, 17/01/2011, http://www.theaustralian.com.au/national-affairs/conflict-must-remain-the-clear-priority-for-adf/story-fn59niix-1225988987306

The UK has been reducing military spending and the US is also doing the same.

If government budget needs fixing, why shouldn't Australia be doing the same? Further, as the post indicates, military spending is growing faster than government spending.

Australia is not a superpower in the world and it cannot be. The argument as if it was is completely ignorant and arrogant.

At a time when the nation is in some sort of disaster, we should put people in priority and everyone should share some burden and pain. So shouldn't the ADF!

So let's get on with it and don't just cry foul as special interest group lobby!


Kevin's change of heart

Comments on Kevin Rudd “The 10 big global challenges facing Australia”, 16/01/2011, http://www.smh.com.au/opinion/politics/the-10-big-global-challenges-facing-australia-20110115-19rsb.html

First, it is interesting to note that Rudd's 10 big global challenges facing Australia only include his greatest moral challenges of human kind, that is, climate change and emissions reduction as a sub item to food security, energy security and climate change.

What a change from K Rudd, after falling from Australian Prime Minister in June 2010!

Is that a change of heart, or change from learning?

It will be interesting to see and know.
Second, some people would observe the difference he describes China's rise and India's, perhapsa sign that the shadow of his advice to the US on using force against China still lingers. Closely related is how his APC idea will go in the region. It is likely that will go down the drain, together with his ambition to become the UN Secretary General.
Third, Rudd puts the continuing global democratic deficit before his number 10 challenge - the problem of global governance – so central to dealing with practically all the above challenges. This must be wrong order of priority for him.

PS: the site where Rudd's post appeared did not allow normal comments but on twitter, so I could not submit my comments, so you will not be able to find my comments there.

Greater Mekong Subregion and ASEAN as well SIGs

Comments on Geoff Wade “ASEAN divides”, `5/01/2011, http://www.eastasiaforum.org/2011/01/15/asean-divides/

The recent floods in Queensland in Australia have generated new debates on various issues, including dams or the lack of dams, or the ideology by some especially the Greens opposed to building dams in Australia.

Those opposed to building dams have some problems on their hand, or contradictions.

Dams, apart from a useful regulator of flood waters, can be a source of clear energy. The Greens, however, are opposed to this sort of clean source of energy even though they are opposed vehemently to coal power generation plants.

In the Australian context, dams can also have another very important role, that is, fr fresh water supply, given that water restrictions were in most places, like Sydney, Melbourne, Canberra where people were even not allowed to wash their cars.

Leaving the issues of dams aside, one should realise the natural or inherent advantages of some regions, as opposed to some people liked or promoted ideas of advantages. This is reflected in the Greater Mekong Subregion.

Some people outside this region may have their own ideas on the projects in this region, but their ideas may not necessarily in line with the interests of the people in this region.

Special interest groups can also work against the interests of this region.

One should be aware of this kind of international lobby groups or special international groups and their often different motives.


In defence of states' rights in federation

Comments on Peter van Onselen “States' rights back on table”, 15/01/2011, http://www.theaustralian.com.au/news/opinion/states-rights-back-on-table/story-e6frg6zo-1225988004962

An interesting article on the state of federation politics.

There should be some remake or amendments of the constitution to safeguard the most proper federation structure and the rights of each levels of government.

The mining tax is dressed up by centralists or the federal Labor government as: 1. a more efficient tax on use of natural resources, 2. a policy response to the two speed economy.

But it disguises the real invasion of or grab by Canberra into states taxing power on natural resources.

If the core purpose of the new mining tax is for an efficient minerals tax, then the revenue should belong to the states where the minerals are. That will certainly avoid the dilemma that states may want to increase their royalties and shift the burden to the Commonwealth that has been a controversy for sometime with the MRRT.

The Labor government's messing up in the SRPT and MRRT will make tax reforms even harder, given the tax grab tendency by Canberra and the states will be very wary about reforms that erode their tax powers in the guise of more efficient taxes.

Canberra should give up its tax grab tendency and stay true with improving national efficiency. That will be assist in getting the states on board of economic and national taxation reforms.

Don't blur the responsibilities

Comments on Anthony Bergin “Response needs commonwealth co-ordination”, 15/01/2011, http://www.theaustralian.com.au/news/opinion/response-needs-commonwealth-co-ordination/story-e6frg6zo-1225987433114

This is another idea that is a bit off the mark in the context of the Australian federation and the division of responsibilities between the two levels of government.

The only areas that might need a national or Commonwealth response are cross border issues and the mechanisms where a State in emergence can call on national / commonwealth resources such as the army, as well as consistency in dealing with different States for similar disasters and overtime as the recent inconsistency between the PM offers for Queenslanders and Western Australians reflects.

It is far better for the responsibilities lie clearly with one level of government, such as planning, coordination, and emergence responses.

Further, there should be accountability for poor planning, information supply, and non-compliance and insurances that lie with both government and individuals. Government should take its responsibilities in settlement and building planning, regulations and supply information. Individuals must consider the costs of potential natural disasters in deciding and choosing where to build, buy and or live, and take out the appropriate insurances.

Clearly, one of the lessons from the recent floods disasters is the forecast and modelling of the likely scenarios. That work should be strengthened to minimise losses. This may be another area where some national resources could achieve better economies of scale.

On "a new climate change paradigm"

Comments on Mutsuyoshi Nishimura “In search of a new climate change paradigm”, 15/01/2011, http://www.eastasiaforum.org/2011/01/15/in-search-of-a-new-climate-change-paradigm/

Mutsuyoshi Nishimura's underlying core concept is attractive, that is equity and entitlement for global space.

It must be reasonably simple and practical and justifiable on the current global human rights.

That would lead naturally to equal per capita emissions entitlement globally and the subsequent global allocation of revenue from taxing emitters on an equal per capita basis.

The second point is a global carbon tax as compared to a global carbon market.

These international equity issue and efficiency will also naturally be able to deal with funding for developing countries, because they will get more revenue from the equal per capita allocation of global carbon tax revenue due to their lower per capita emissions.

Of course, a secondary question is how to deal with changes in population, given that countries have different growth rates.

But that could be dealt with after the first order principles are dealt with and an international framework agreed.

PS: 2 points: first, the difficulties in global emissions reduction could be attributed to the fact that it is the industrialised countries that don't really front up their responsibilities because they know very well that they will need to transfer any global carbon revenue to their developing counterparts under a fair game as opposed to they didn't understand the problem or did not have the analytical capacity to come up with a fair and effective framework;

second, the most efficient and equitable framework is a global carbon tax and equal per capita distribution of revenue among global citizens irrespective poor or rich, and the tax rate should be set to achieve reduction or emission levels.


Be realistic on historical problems

Comments on “The indispensable incarnation”, see The Economist, 6/01/2011, http://www.economist.com/node/17851411

The Economist is seemingly very naive, or trying to be naive on this issue.

Dalai Lama is not simply himself. The people surrounding him all have an influence on him and on the negotiations with China.

I have heard that China was serious at stages in negotiating with his representatives, but they probably demanded far too much than what the Dalai Lama publicly states what his stance is on autonomy.

For example, is that right or even feasible to have all Chinese move out of the greater Tibet his representatives demanded? Why should they be forced to move out?

If that demand is justified, then most Americans might need to be forced out from the US if the same justice were to be applied there.

Is that acceptable nowadays?

There have been international migrations and population compositions always change from time to time.

It is not always possible to say clearly which lands belong to which.

One has to be realistic and practical on difficult issues.

Natural disasters and lessons to be learnt

Comments on Henry Ergas “Neglecting to place a price on risk”, 14/01/2011, http://www.theaustralian.com.au/news/opinion/neglecting-to-place-a-price-on-risk/story-e6frg6zo-1225987393351

A good article and analysis from a respected economist.

What governments have done was to exacerbate the moral hazard problem. Undoubtedly many people either did not pay enough insurance in line with the risks, or were unaware of the risks due to the lack of information.

The government should consider how to balance compassion with right incentives.

Some lessons will need to be learnt, so we make progress, become wiser collectively and reduce future losses in events of natural disasters.

PS: my earlier comments on a proposal to make insurance accessible to all has foreshadowed this point.

No point to be pessimistic or complain

The following is my comments on a Chinese post on economics and economists, from a young student probably.

Comments on “现代经济学无法解决的最大问题”, see dayansui的日志, 8/01/2011, http://www.pinggu.name/space-924303-do-blog-id-79474.html

It may be useful to re-read the dominant economic theories in the 1950s, to early 1970s, i.e. the mixed economy, as opposed to the free market economy or pure market economy.

Among them, those who took a pragmatic view of fiscal and monetary policies, like Samuelson, may offer more than some of their more recent counterparts.

In that light, Keynesian should be broader than just active fiscal policies and include good monetary policies too.

On top of that, two or three points worth noting:

1. the long term consequences of fiscal policies, especially large government deficits and resultant government debts.

2. the target of macro policies, especially monetary police, should also target asset markets and their price stability or stable paths. Further, there is an issue of how to best deal with the sort of economic recessions like the current one experienced in the US and Europe as well as in Japan earlier.

3. the use of income and taxation policies and social welfare policies to deal with income inequality.

Along this line, it is not too difficult to advance economics in terms of macroeconomic policies (and some implications for microeconomic policies such as the avoidance of the sorts of economic behaviour like those reflected in the US sub-mortgages problems).

But, it is important to note that over regulations of the markets can be counter-productive and reduce efficiency. Another is not to create disincentives to not work.

Also, one should be mindful that in every field there is also a frontier where there are questions but their answers are yet to be found.
Comments on Barry York “Seeing red on dams, not green”, 14/01/2011, http://www.theaustralian.com.au/news/opinion/seeing-red-on-dams-not-green/story-e6frg6zo-1225987397128

Leaving Marx, left, the Greens and all ideologies aside, one question I'd ask is: Could weather forecast have been better, so that the Wivenhoe Dam could have released more water earlier and, firstly to increase its capacity to hold more water at flood peaks, and secondly to reduce the release of water around flood peak times?

How good is our weather forecast system and other related modelling?

From the fact that the Brisbane river did not peak at the predicted worst level of around 5.5 metres made at the time of the first peak at around 4.3 metres and just less than 24 hours before the events, it does not appear that the modelling result was good enough, although it is always good not to have the predicted worst peak reached.

Australia should strengthen its modelling and forecasting of natural disasters and rapid response system when they happen or are about to happen. China has reported that its fastest computers have been used in weather forecasting.

The dam seems to have played some useful role before, as the author indicates:

"The Wivenhoe Dam on the Brisbane River worked effectively in mitigating bad floods around Brisbane in 1999 but, alas, despite its 1.4 million megalitre flood mitigation capacity (on top of its water supply capacity of 1.1 million megalitres) it could not stop the extensive damage that occurred during the current floods."

So, while we need to learn lessons from these recent flood events, we need to learn them from both positive and negative sides. It would be wrong to ignore the positive contributions of the Wivenhoe Dam.

PS: It would have been better had the federal minister of transport and infrastructure focused more of his effort on these ongoing floods across eastern Australia, as my earlier comments post suggested.

Better focus on own responsibility and do a good job

Comments on Anthony Albanese “Boycott of Israel is beyond the pale”, 14/01/2011, http://www.theaustralian.com.au/news/opinion/boycott-of-israel-is-beyond-the-pale/story-e6frg6zo-1225987394895

It is interesting to see but hard to understand why an Australian minister with no relevant portfolio responsibility in relation to Israel wrote such an article.

It is like the saying a dog is biting mice – doing irrelevant things.

This is despite the fascinating fact that Queensland is experiencing very bad floods and he is the minister for transport and infrastructure.

An article related to that might be more pertinent.

"Water a minister"!

PS: that could be one of the reasons why the Labor federal government has been performing so poorly!
I would further say that I am not anti Israel, or anti Arabs or Palestine.


Good intention but poor idea

Comments on Rahel Carter “Flood insurance must be accessible to all”, 13//01/2011, http://www.theaustralian.com.au/news/opinion/flood-insurance-must-be-accessible-to-all/story-e6frg6zo-1225986572360

This proposal might appear to be a good idea at a time of a floods crisis, it is highly likely that people will realise it would be wrong to do that when cool heads prevail after the heightened emotions during the current crisis.

Rachel Carter may ask why.

The simple reason is that doing what she proposed would make some people reduce their own responsibilities in considering the location of their homes and residences, that would in turn make the impacts of any natural disasters unnecessarily much more severe in terms of damages to properties and lives.
It is a typical issue of moral hazard.

It is not a good idea to take away insurance agencies the right to determine the costs of insurance according to the real circumstances and risks.

Government regulations may be necessary, but undue legality prescriptions can be very harmful.

There must be sufficient information available to the public for them to consider location matters in terms of potential natural disasters.

The recommendations from the inquiry into the Victoria black Saturday bushfires have implications for the issues here.


Sometimes facts and claims hard to distinguish

Comments on Yuriko Koike “Cold War with China is not inevitable”, 11/01/2011, http://www.theaustralian.com.au/news/opinion/cold-war-with-china-is-not-inevitable/story-e6frg6zo-1225984624335

While the article's conclusion or intention is good and should be applauded, some of the materials presented in the article are confusing.

For example, Yuriko Koike states the following “It is this grim history that makes China's present disregard for Deng Xiaoping's maxim that China "disguise its ambition and hide its claws" so worrying for Asian leaders from New Delhi to Seoul and from Tokyo to Jakarta. From its refusal to condemn North Korea's unprovoked sinking of the South Korean warship, Cheonan, and shelling of South Korean islands, to its claims of sovereignty over various Japanese, Vietnamese, Malaysian and Philippine archipelagos and newly conjured claims on India's province of Arunachal Pradesh, China has revealed a neo-imperial swagger.”

Those claims had been there, just as the countries on the other side on the disputed territories have also maintained their claims. They are disputed territories and have some history with them. To be fair, there are some territories that are under China’s control but also claimed by some other countries including some of the above mentioned ones.

Yuriko Koike’s presentation makes the claims as if new claims. Further, his characterisation those claims as revealing a neo-imperial swagger is completely wrong, just as any saying that the other sides are neo-imperial by maintaining their claiming of some of China’s held territories would be wrong.

Further, to include China’s “refusal to condemn North Korea's unprovoked sinking of the South Korean warship, Cheonan, and shelling of South Korean islands” as part of the basis of the argument is at least one sided and potentially biased. While most western countries accept the argument that North Korea's sank of the South Korean warship, Cheonan, China and some other countries have not accepted that as a fact. If one is not sure, then how can you condemn North Korea as the culprit?

Equally, the “shelling of South Korean islands” by North Korea is a fact given that it did not deny it, but which side was the first culprit is still unclear. The two sides have blamed the other side to have provoked the chain incidents.

Clearly South Korea has conducted many military drills very close to the borders with the North. For a truly independent observer, it is indeed difficult to simply accept the South’s claim, or the North’s for that matter for the same basic reason.

PS: I don't believe that Yuriko Koike is deliberately misleading in his post, it may have been a result of simply accepting one-sided arguments or claims.

GST should be on the tax summit agenda

Comments on Siobhain Ryan “GST not on the tax summit agenda, says Julia Gillard”, 11/01/2011, http://www.theaustralian.com.au/national-affairs/gst-not-on-the-tax-summit-agenda-says-gillard/story-fn59niix-1225985226619

It was a mistake that Rudd/Swan explicitly excluded the GST from the Henry Review, as reflected in what was said about how the exclusion of the GST had reduced options for change by Australian Industry Group chief executive Heather Ridout, as a member of the Henry review committee:

"I think the business community generally is very much in favour of the GST being part of the discussion on tax. Clearly, good tax theory would support that".

It will be another mistake by Gillard if GST is excluded in the tax summit this year.

Why does Gillard adopt this stance now? Is it because of Swan, still the Treasurer, and Deputy PM now?

Gillard has not learnt from the Rudd government's failures in its terms of reference for and its response to the Henry Review after its handed to them.

Have the GST on the agenda or not is one matter, and how to deal with it if it is on the agenda is another. Clearly Gillard is doing damages to her own reputation as the PM.

Who are Gillard's political and economic advisors? What are they doing? They should be closely in touch with the public and have a common sense.

Productivity, inflation and wage growth

Comments on Peter Anderson “Wages policy undermines productivity quest”, 11/01/2011, http://www.theaustralian.com.au/news/opinion/wages-policy-undermines-the-productivity-quest/story-e6frg6zo-1225985225840

While I agree with the notion that wages growth should be in line with the growth of productivity, I find the following paragraph from the post confusing:

"Our annual productivity growth at present stands at 1.1 per cent. This is half of the average during the 90s. Wages are rising three to four times faster than productivity. Across the longer term, that is not sustainable."

Let me start with last sentence. Wages growth is nominal that is inclusive the effects of both productivity and prices change of inflation. Anderson's statement did not mention how inflation was, and that makes it unclear whether the wages growth of 3 to 4 times faster is too fast or not.

Secondly, the differences in productivity growth between now and the average of the 90s can be the effects of many factors, including both domestic and international influences. For example, if the world productivity, especially the industrialised economies also has similar differences, then our productivity slow down may not necessarily a purely domestic issue.

Thirdly, there should be a balance between productivity agenda, as important as it is, and other equally agendas, such as proper, legitimate protection of labour rights.

PS: Further, the growth of labour supply can also be an influence on productivity, other things equal. Labour supply is affected by population growth and participation rate. Population growth is also affected by immigration.


State taxation and competitiveness

Comments on Christian Kerr “High tax hurts the laggard states”, 10/01/2011, http://www.theaustralian.com.au/news/high-tax-hurts-the-laggard-states/story-e6frg6n6-1225984687845

A few questions:

1. Are the GSP growth rates listed in the table at the beginning real or nominal? They appear to be nominal. If nominal, then do changes in prices especially mining products affect the real growth rates?

2. Do different industrial structures have different implications on tax regimes or taxation revenue as a proportion of the GSP?

3. What about per capita growth by states? Do they have the same or a different pattern?

4. What about real per capita growth by states? Do they have the same or different implications for the relationship between the taxation regimes and growth identified by the author?

It seems the study may have possibly created biases due to use of an incorrect comparison methodology.

If that is so, then a more sound study is needed to derive reliable conclusions.


Climate science more complex than thought

Comments on Mike Steketee “Global weather disasters a sign the heat is on”, 8/01/2011, http://www.theaustralian.com.au/news/opinion/global-weather-disasters-a-sign-the-heat-is-on/story-e6frg6zo-1225983256858

To Mike Steketee, is this statement correct?

"So far the increase since the mid-18th century of all greenhouse gases has been 38 per cent, including a 27.5 per cent rise from 1990 to 2009."

It does not seem right, given the the longer history of industrialisation.

Secondly, you say that "The temperature of 46.4C in Melbourne on Black Saturday was more than 3C above the previous highest for February." Are you sure the causation, that is which caused which or which proceeded which?

You cited a number of individual example, such as Moscow. Are you sure there were no worse conditions before in the long history?

Your approach does not appear to be scientific, I am afraid to say.

From these few points, it does not suggest that your argument is convincing. It may actually do disservice to the cause and undermine the global efforts on climate change.
In the long history of the earth, there have been more extreme weathers and a few individual locations or years can be drown out easily.


The Obama needs Conroy argument absurd

Comments on Paul Budde “Obama needs Conroy”, 7/01/2011, http://www.businessspectator.com.au/bs.nsf/Article/Telstra-NBN-Barack-Obama-Verizon-broadband-pd20110105-CT2QW?OpenDocument&src=sph&src=rot

If you insist with your headline, then the American debts would be much higher.

The NBN has so great uncertainty and there is no indication that it will be economically viable if it were a private company.

By any standard, it is premature to use the Australian NBN to argue for other countries to follow suit. The evolutionary process of the NBN is a disgrace for any public policy: from initial planned about $4 billion public funding to over $40 billion.

Is there any other more irresponsible government in the world than the one that did that?

You mentioned vested interest in the US, what about here in Australia?

In that light, where do you stand?

Abbott's dam solution not a bad idea

Comment on Sid Maher and Jared Owens “Tony Abbott's dam solution for flooded rivers”, 7/01/2011, http://www.theaustralian.com.au/national-affairs/tony-abbotts-dam-solution-for-flooded-rivers/story-fn59niix-1225983272814

It is encouraging that a major political party is talking about building more dams in the wake of the recent floods in Queensland.

I have thought that a country that often experience draughts and floods as Australia should build a system of dams and canals to mitigate both droughts and floods.

See the following for a proposal that was developed for a AIC competition, though it was not awarded as a winner in that competition: http://mrlincolns.blogspot.com/2010/05/dam-and-canal-system-or-systems-in.html

Given that the flood damage in Queensland this time could be in billions, it should make sense to consider building such a system.


China's liquidity issues

Comments on Yiping Huang "China 2011: risks are from liquidity not liability", 2/01/2011, http://www.eastasiaforum.org/2011/01/02/china-2011-risks-are-from-liquidity-not-liability/

A few minor points.

Firstly, in terms of housing prices in China, it is interesting to note that the Chinese government has been talking down the prices and attempting to get them down significantly.

While a government engineered fall in housing prices is good news for buyers, it is not that good for house owners. Whether the approach is politically viable or sound in the longer term is yet to be seen.

The government had the responsibility of keeping housing prices in check in the first place. It failed to do that and now it is forcing them down and directly creating losers and winners because of its past policy failures. Isn’t that interesting?

What the government should do is to manage the bubble over time, rather than to burst it suddenly.

Secondly, in terms of liquidity, it has been reported that the Chinese authorities are either considering or have already allowed the direct deposit of foreign currencies overseas by Chinese exporters, that would reduce the pressure for the authorities to deal with them, lowering liquidity and increasing the degree of the limited monetary autonomy.

The authorities should consider allowing most Chinese to buy foreign currencies and consume or invest overseas that would further reduce the autonomous pressure on liquidity of future trade or current account surpluses.

In terms of the hot money, it is interesting that Chinese stock markets have performed poorly relative to others, including the US. Where has that money flown to or what has it bought?

There is also report that the IMF is considering to relax its stance on control of international capital flows that may make it easier for authorities to deal with international ‘hot money’.

Thirdly, in terms of inflation and the Chinese authorities’ monetary policy approach, what is the target or are the targets? Clearly public concern is the CPI because it affects their lives, whether it is due to structural or not. While there is a point to dealing with unhealthy speculative activities if appropriate policy tools are available, the government’s administrative measures are a step in a backward direction.

The reluctance to using interest rates as the main tool of monetary policies is a poor approach given that it robs from those who have deposits that earn interest.

Convergence in income and divergence in growth

Comments on Martin Wolf “In the grip of a great convergence”, 5/01/2011, http://www.businessspectator.com.au/bs.nsf/Article/China-US-economy-inflation-interest-rates-pd20110105-CT3VY?OpenDocument&src=sph

I think the divergence and convergence story should bring benefits to all nations, just like voluntary and free trade is beneficial to all trade partners involved.

So, while the currently advanced economies may be in a relative decline, they will also benefit from the relative and absolute rise of the large and rapidly industrialising economies.

This should strike a key note on all nations.

And it is in this win-win outcome that all should embrace and celebrate the convergence of income.

PS: I share Wolf's view that the current information and communication technologies mean that China and India can acquire the knowledge base that has underpinned the industrialised economies; and there are unlikely events that will stop the current convergence trend for the foreseeable future.

Barry Cohen's solution to "stem refugee flow at source"

Comments on Barry Cohen “Stem refugee flow at source”, 6/01/2011, http://www.theaustralian.com.au/news/opinion/stem-refugee-flow-at-source/story-e6frg6zo-1225982614288

While I don't have a considered or well developed opinion on the refugee issue we are facing, I can't help thinking whether this post is too much one sided.

Maybe Barry Cohen is attempting to position himself on the other extreme to counter balance those he criticises in this post.

If that is the case, how convincing is Barry Cohen's argument?

Among those countries he mentioned in the "not free" category are Afghanistan and Iraq, the two countries that the US led coalition has been fighting for a number of years. And withdrawal of military forces will start soon.

So, how Barry Cohen would do to sheet the problem of refugees back to them?

It would be interesting to hear from Cohen on this.

PS: it would also be interesting to know how many of the refugees prior to the invasion of Iraq were coming from Iraq and perhaps Barry Cohen can provide us with more convincing figures and theories on democracy, free, not free countries and the sources of refugees and how to sheet them back to the sources.

But I doubt how many people would believe his theories.


China’s low-carbon transformation - more effort needed for international agreement and actions

Comments on Jiahua Pan “China’s low-carbon transformation”, 4/01/2011, http://www.eastasiaforum.org/2011/01/04/chinas-low-carbon-transformation-2/

This seems to have been written sometime last year, given that it mentioned Copenhagen as last December.

While China's effort should be understood, it would be much more effective internationally if there is a rational, scientific, efficient, effective and equitable international framework on emissions reduction or mitigation.

It seems that a mechanism that incorporates an implicit global carbon price on emissions and an international distribution of the implicit carbon revenue based on equal per capita would make Professor Pan’s argument much more forceful and persuasive.

Countries are always different in many ways. It would be futile and unproductive to argue those differences and therefore it requires special conditions in emissions reduction. Every country can find an argument to suit it.

Carbon emissions and their impact on climate change are typical of negative externalities of emission activities and underpricing of such activities.

Climate is a public good or public property. Everyone person has a right to a climate that would be as good as possible. That is the basis for equal distribution of the implicit global carbon revenue.

Countries have talked about human rights. Emissions and climate change is an important issue of international human rights, or as some would say universal human rights.

Once that is understood, it is not too difficult to develop an international framework on emissions reduction.

How high should the implicit carbon price be? It should be sufficient to achieve the set target of the global emissions level that in turn can achieve the limit for temperature rise by end of century, or whatever the international consensus based on scientific evidence.

PS: media reports shortly after the Copenhagen conference were that China even did not allow other countries (say Germany, as the German Chancellor was alleged to complain about her frustration by China’s tactics) to agree on their target of emissions reduction. What exactly happened there then? If those reports were true, why had China not been prepared for that conference?


Swan - what can we say about him?

Comments on Wayne Swan “Conservatives are the new nabobs of negativity”, 3/01/2011, http://www.theaustralian.com.au/news/opinion/conservatives-are-the-new-nabobs-of-negativity/story-e6frg6zo-1225980655211

Swan says: "Almost alone in the world, we now have the luxury of setting ourselves up for the big economic opportunities by investing in the things that will give us an edge: knowledge and skills, environmental sustainability, and the digital economy."

Let's look at the 3 areas he included here: education, environment and digital one by one. For education, Labor government undoubtedly had the BER. But unfortunately the BER has had so many wastes that greatly reduced its effectiveness.

For the environment, the Labor government has had the home insulation program that it had to stop it due to rots through abuse the program and the safety problems that program generated.

For the digital issue, the government has got the NBN going now. The difference between this and the other two is the very long time of the NBN project and the huge investment. Further there is no business case study and cost benefit analysis.

Swan in this post argues the negativity by others. Looking at what the Labor government has done the above so far, how can people not feel negative? How much more wastes will Swan oversee as the Treasurer?

Swan should look at himself to find where the problems lie.

PS: due to length limit, the original comments could not include more. But when I read more of that post, the more I felt Swan's hypocrisy. On resource taxation, they had to scrap their RSPT and replace it with their MRRT. They had done it not because of pressure from the opposition, but from the mining sector. Further they brought down their own first term prime minister, due to problems with their RSPT.

On the NBN, the government tried to prevent the release of relevant information to the parliament and delayed and delayed releasing the limited information they promised to do it.

So whose problems are they? Who are more negative?

He should be ashamed what he has done to the nation in terms of wastes, his role in them and his role in replacing Rudd and being promoted.