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Rational debate on Australia-China free trade agreement is needed

Comments on James Laurenceson "Why fears over the Australia–China FTA are overblown", 31/07/2015

Thanks for the author to clear the air and to explain what the Australia-China Free Trade Agreement is about and particularly some of the issues that unions are trying to oppose.

There have been a lot of arguments, many of which are biased and based on the worst scenarios including Australia does not enforce on what they are specified in the agreement and should and will if the government or its relevant agencies carry out their duties normally.

Those arguments, including some on the Conversation website show hysteria and desperation, try to stir up nationalistic sentiments.

They ware completely unwarranted from the point of any rational analysis.


Even a Nobel Prize laureate economist can be wrong with the Aussie housing market

Comments on ABC report by Peter Ryan "Housing bubble could burn investors, warns Nobel Prize-winning economist", 30/07/2015

A Nobel Prize laureate economist, Professor Vernon Smith, is reported saying that Sydney and Melbourne's real estate markets are showing every sign of being in a dangerous price bubble, and speculating investors could get burnt when a down turn occurs.

I quote some paragraphs from the Peter Ryan's report:

'"Sydney real estate is growing faster than your other cities and Melbourne has a similar experience," Professor Smith told the ABC.'

'"In so far that it's investors speculating and wanting to resell at a profit, some of them are going to be disappointed when things turn around," Professor Smith said.'

Although Professor Smith cautioned a little by stating losses and risk taking can be a normal part of the free economies:

'"But free economies involve losses. If you're not willing to take the losses you can't really brag about the gains.

'"Prices go up and to some extent that will include some speculation. But a good bit of this might just be normal functioning of the capitalist economy."'

As I have argued before that the Australian housing market cannot analysed in isolation from its unique features and a seemingly bubble can be sustained if the external factors do not go against it.

So, in a sense, a Nobel Prize laureate economist may not necessarily always get the fact right, particularly as far as the Australian housing market is concerned. The main reason for that lies the unique Australian housing market that differs from most other industrialised countries, particular the US. Applying a general theory to a quite different market is bound to miss the mark.

How should Australia's GST compare with OECD average?

Comments on ABC Fact Check "Do Australians pay less GST than people in other OECD nations?" 30/07/2015

The comparison of GST with other OECD countries' GST or VAT, in this fact check, while apparently correct, masks the size effect of the different OECD countries and that makes a quite difference in its conclusion.

For example, the four countries which have a lower ratio of GST/VAT revenue to GDP include two of the OECD largest economies, namely the USA and Japan, as well as another G7 countries, that is Canada.

If the different sizes of the OECD economies is taken into account, then a different picture emerges and Australia does not fair too badly as the nominal comparison suggested. Australia could sit much closer to the average GST/VAT GDP ratio weighted by GDP.

So, this is an important point that the fact check should at least mention or better still discuss it.

From the second Chart in ABC Fact Check we can see that the ratio of GST/VAT to GDP is less than 5% for the US, and less than 6% for Japan, while it was stated by the ABC Fact Check that Australia's is 7/5%.

How much is China's per capita income?

Comments on Zhengjun Zhang and Sarah Du "China needs to turn its capital ideas into SOE reform", 30/07/2015

Are the facts in the following paragraph all correct?

"China has several quite unique characteristics. It has a large population (close to 1.4 billion); it is a middle income country with US$3200 per capita disposable income in 2014; and it is a transition economy that is still developing its market mechanisms and institutional systems. With these characteristics, China needs to keep a large toolbox to deal with potential challenges on its development path."

I just had a look at the China section of the CIA's World Facebook that states the Chinese economy was $10.36 trillion in 2014. With the population less than 1.4 billion, that would imply a bit over $7,000, more than double of the $3,200 used by the authors in this post.

How can the difference be so large? One of the two must be seriously incorrect.

My impression of memory is that China's per capita income was more likely greater than US$5,000 in 2014.

PS: Sorry, I didn't realise the authors were talking about disposable income as opposed to per capita income when I questioned its use. My apology.

But, why did they use disposable income in such context? Isn't it strange? Isn't per capita income better and more in line with most discussions?  It certainly caused confusion to me, at least, because many people may naturally think it was per capita income as an indicator of the income level there.

PPS: In the wake of the previous post titled "Is China a market economy?" by Gary Clyde Hufbauer and Cathleen Cimino-Isaacs, China should probably consider the potential of its SOEs and particularly its governance and public disclosure of relevant information to make the Chinese a market economy, if the argument that it is not a market economy has merits.

Only domestic consideration is not enough and any international implications must be taken into account. Otherwise, China may encounter more problems in trade and investment, including anti dumping against its SOEs exports as well as overseas investment by SOEs.

Having said that, I am personally not sure the argument that China is not a market economy is meritorious.


China is a market economy

Comments on Gary Clyde Hufbauer and Cathleen Cimino-Isaacs "Is China a market economy?" 29/07/2015

While it was understandable that at the time when China joint the WTO, it was not unreasonable to regard some parts of the Chinese economy were not market economy, it is no longer reasonable to use that as a trade barrier or as a tool for anti dumping purpose. Fifteen years have past since then and China has changed a lot. Yes, there are some sectors where there may be monopolies, duopolies or oligopolies still operate, but they are not too different from some western and industrialised countries. For example, some utility industries in Australia operate as monopolies or oligopolies.

The following paragraph from the author is telling that it is not a legal issue as opposed to a policy one. It is a form of imperialism in action:

"Whether the United States takes a hard-line mix-and-match approach, rather than grant China market economy status across the board, could well turn on policy considerations rather than legal parsing. Among these considerations will be the general atmosphere of commercial relations with China in 2015 and 2016, including the evolution of the renminbi exchange rate (devaluation would inspire a hard-line approach) and the outcome of the US–China Bilateral Investment Treaty negotiations (success would have the opposite effect)."

The authors' recommendations are not particularly unreasonable in that any firms whether they are state owned or not, should publish any information as an ordinary firm would. However, there is a danger that those recommendations could be abused and used for more than what are recommended for.

Further the accusations of China manipulates its currency does not have merits at all. One cannot use trade surplus or deficit with a country alone as a test of whether a currency is fair valued or not. China can have surplus with some countries and deficits with some other countries as well as about balanced trade with the rest. The US have run trade deficits with many countries for very long time and those countries include free exchange countries. If surplus or deficit is the sole measure, then why the free exchange rate countries have not had their currencies moved in the direction to balance their trade with the US?

PS: I have had a look at the Eastasiaforum website and could not find my comments there even by 9.23 am, 30 July 2015. Maybe the use of the phrase imperialism caused the editors some headaches. I only meant economic imperialism, in the sense similar to past imperialists which, when they were losing their former powers, tried to create difficulties for either new comers of new power or left some difficulties to their former colonies. In Chinese, the phrase "垂死挣扎“ adequately describes such behaviours.


Why is the Free Trade Area of the Asia Pacific little known?

Comments on Chen Dongxiao "China aims to set the regional cooperation agenda", 28/07/2015

It is surprising that there is little mentioning of or discussions about the Free Trade Area of the Asia Pacific (FTAAP) promoted by China and the Conference of Interaction and Confidence-Building Measures in Asia (CICA) as the author mentioned in this post.

There are plenty of discussions about the Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP)—the two leading regional trade negotiation groups in the Asia Pacific but little is known of the FTAAP, even though the author says the FTAAP "can provide an overarching framework that transcends the narratives of competition between the Trans-Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP)".

The author also says that China’s endorsement of the FTAAP demonstrates its commitment to more open, liberalised and high-quality trade and investment, as well as a more integrated regional economy.

I am a bit confused by who was the initiator of FTAAP, given that it is said China was promoting and endorsing it?

On security issues and China's initiative of New Neighbourhood Diplomacy and its guidelines, how does that link or connect with its perceived more assertive and aggressive behaviour in the South China Sea, that apparently upset a number of its neighbours?


TPP will be a mixed blessing for Australia

Comments on Shiro Armstrong "The race to a risky Trans-Pacific Partnership deal", 27/07/2015

Whether it is willingly or unwillingly on Australia's part, the Trans-Pacific Partnership (TPP) may prove to be a mixed blessing for Australia indeed, given that China is Australia's largest market and that Australia relies very heavily on Chinese economy to perform. China is excluded from the TPP and will suffer as a result of the trade diversion effects away from its exports. If China's exports is negatively affected by the TPP, then it in turn will have a negative effect on Australia.

But more seriously than that, the intention of the US and Japan to contain China's (and possibly India's too) rise economically as shown in their approach to the TPP memberships, there may be a long term and lasting damage to a number of bilateral relationships. In the future those countries which are deliberately excluded by the US and japan may take potentially remedy measures, whether it is retaliatory or purely a natural response.

The Chinese and Indians may not openly say anything but in their heart and minds it is crystal clear what the TPP is about and what it means for them. It may be forgiven sooner or later, but it will not be easily forgotten.

The damages have already been done and let's hope they would be contained without spiral out of control.

The share of world GDP of TPP members is about 54%

Comments on Shiro Armstrong "The race to a risky Trans-Pacific Partnership deal", 27/07/2015

Is the GDP of all the 12 TPP members combined really 60% of the world’s total? My calculation based on the most recent World Bank’s GDP data (in current $US) for 2014 suggests it was 53.7%, or 54%, that is a 10% smaller than 60%.

Please note that there is no data for New Zealand so its 2013 figure plus 5% was used as an estimate.

There are some other countries whose data are not available for 2014 too, but they, including Taiwan, are mostly small economies.

PS: I haven't calculate the trade shares.


An Economics professor's serious mistake

Comments on Flavio Menezes "FactCheck: is the GST as efficient but less equitable than income tax?" 24/07/2015

This "Fact Check" from Flavio Menezes is so extraordinarily wrong that it does not pass the common sense or insanity text. The first sentence in its verdict , that is I quote "The Assistant Shadow Treasurer is correct that the efficiency of the GST as a tax is similar to that of income tax", is spectacularly incorrect and wrong.

That verdict even blatantly contradicts or ignores or misunderstands the review provided by Professor John Freebairn that the so called Fact Check was presumably engaged as an expert opinion. It is a serious and appalling error or error in judgement, understanding, or simply oversight or negligence on Flavio Menezes' part. How did that happen Flavio Menezes, a Professor of Economics at The University of Queensland, is beyond comprehension.

In terms of efficiency, the GST, which is a flat with a rate of 10% as currently applied even though there are exemptions such as fresh food, health etc, is much more efficient than the Australian income tax which is very progressive in the tax rates ranging from 0 to effectively 47% if the medicare levy is included. There is virtually no argument about the relative efficiency among economists and most politicians know that also.

In terms of distributional effect, the progressive nature of the income tax is much more favourable to low income people because they are taxed proportionately at lower rates and tax the high income people much more heavily.

PS: Of course, in order to derive his erroneous conclusion, Professor Flavio Menezes used a flat income tax. We all know that is purely an assumption and is far from what the very progressive Australian income tax system is.

No good to exaggerate the uncertainty and confuse people on Watermark coal mine

Comments Matthew Currell "Shenhua mine’s water uncertainty means we should proceed with caution", 24/07/2015

The author of this post, Matthew Currell seems to think he is better positioned than the federal environment minister in relation to the environmental issues regarding to the Shenhua Watermark coal mine in NSW. The minister has reasonably adequate information before him when he approved the mine, including presumably the twice reports by the Independent Expert Scientific Committee (on large coal mining and coal seam gas) that has carefully examined the groundwater assessments done on behalf of Shenhua on two occasions, as the author acknowledged.

And there are also further processes and hurdles to be past before the mine starts. As the author put it: "Shenhua still needs a license from NSW, and approval of further plans around water management from the federal government."

Then the author strangely has argued the following:

"The Federal and NSW governments still have a chance to prevent the Shenhua mine from going ahead, and would have strong support from rural Australians and others who are concerned about the environmental impacts in doing so.

"This decision will be critical in setting the future direction and priorities of the country – continuing with business as usual, or progressing to a new era of strategic thinking about long-term natural resources protection.

"Both the economic and environmental risks of continued expansion of coal mining for export in Australia have been highlighted recently. Whether the warnings are heeded may have enormous future consequences.

It seems the author is so biased and strongly against the mine irrespective what the merit of the mine is and what the Independent Expert Scientific Committee has found and will find.

Maybe that is the best an extreme environmentalist would do.

Michael Downing's unscientific idea regarding the Shenhua's Watermark coal mine

Comments on Michael Downing's arguments in his comments on "Shenhua mine’s water uncertainty means we should proceed with caution", 24/07/2015

Why take the figure of a "best estimate" of the cost for rehabilitation of a mine site and double it and apply a license fee to accumulate that figure, as you argued? Why double the best estimate? Is that a scientific approach, or an arbitrary impost?

Isn't your argument a layer of more red types?

Further, isn't it the case that the responsibility for rehabilitation of a mine is for the miner to do? If that is the case, are you advocate that the responsibility of rehabilitation be transferred to the government that would impose the extra license fee?

No need to be arrogant and Europe centric

Comments on Maaike Okano-Heijmans and Daniel Lanting "Europe finds the China connection", 24/07/2015

This post seems completely European centric. It is quite one sided advocate for the European standards and I am not sure that is either the best way for all European countries to work with China or indeed for a better world.

First, are the European standards the best standards with no room to improve? I think those people who hold that view may be too arrogant and out of touch.

Secondly, if it is to work with China in a collaborative way, why should only the European standards need to be followed and why not also consider a compromise between the European standards and the presumably different Chinese or Asian standards?

Given the quite diverse situations among the European countries, the benefits and otherwise of working with China may be quite different. As a result, the member states of Europe are likely to seek more cooperative solutions as opposed to the authors' advocate of a consolidated approach to hold the European standards.

On China's part, it is likely to invest in countries where maximum benefits for both partners can be expected to achieve.

PS, what a title that is quite different from its content.


National Living Wage proposed in the UK: no more than a catch up with Australia

Comments on Matthew Wood "Wage policy ‘coup’ marks debasing of politics by hyper-democracy", 23/07/2015

In terms of living wages, Australia has arguably done it already. I remember reading an article possibly in the Conversation that explained the workplace relations in Australia and its minimum wages.

That article mentioned that in the past there was a case where the judge defined minimum wages as something that can sustain a reasonable family life. In another word, Australia's minimum wages are far from the market driven minimum wages when demand for and supply of labour are in equilibrium.

In reality, the minimum wages in Australia are much higher than in the US and the UK, as much as twice or more than in those countries.

In comparison, the proposal for the introduction of a National Living Wage in the UK by Chancellor George Osborne, irrespective its merits or otherwise, to the most is a catch up to the Australian practice that has been in place for a long time.

China can beat deflation if it really wants to

Comments on Yu Yongding "Can China beat deflation?" 23/07/2015

As this post suggested China may face an extended period of deflation with a negative impact on economic growth, amid its structural reforms.

It seems sensible to have expansionary of both monetary and fiscal policies to head off potentially very serious deflation and excessively slowing in the economic growth, as the author has called for, that "China must do whatever it takes to avoid falling into the debt-deflation trap".

Structural reforms should, in the short term, be done in the context of stimulating economic growth and combating deflation. There should be enough room in China for it to invest, given that China's capital stocks are still low in not only infrastructure in many locations with the need of continued urbanisation, but also in the short components of its structural imbalance. Understandably, China is still far from a high income country and it will take many years and decades to catch up with the levels of high income industrialised countries. Capital labour ratio in China is arguably still equally low as its per capita income. That indicates the needs for increasing its capital stocks not only in aggregate sense, nut particularly in the under balanced areas of its economy.

It is, however, important to channel the monetary and fiscal expansions into the right areas of the real economy and prevent any excessive flow to its stock market for speculative activities.

Although the housing market in China has seen very high property prices and the authorities have tried to dampen its further growth, the housing construction sector still have room to expand.

Furthermore, its services sector has plenty of room to expand and its growth can be combined with the Chinese leadership's push for innovation and promoting enterprenourship.

In summary, China needs expantionary fiscal and monetary policies to stimulate the growth of the economy and address deflationary pressures. Structural reforms and adjustments, in the short to medium terms, need to be done in that overarching context. In both the short and long terms, China should not loose sight that its income is low, so is its capital labour ratio. The main focus of structural adjustments, particularly in the short term, should be on expanding infrastructure (including housing in cities and towns where further urbanisation will see a rapid increase in resident population and the capacities of the services sector.


Increasing GST is indeed a fanciful fix for strained budgets

Comments on Ross Gittins "Increasing GST a fanciful fix for strained budgets", 22/07/2015

And more than what you have already put very nicely is that why the politicians aren't talking about spending restraint at all. Why don't they review the necessity of the ever increasing share of spending on health, is that really the case that each and every dollar spent on health is that important and there is no waste in all that very big and increasing rapidly spending on health? Why don't they consider making the spending more effective and reducing waste and changing people's demand behaviour so the nation as a whole can use less and do more effectively?

All that suggests that the politicians are very lazy and not accountable to the trust that the electorate provided to them. All they do is to use health spending as an excuse to increase taxes. I would suggest that we should have a measure or mechanism that punishes higher taxing politicians.

Perhaps some international comparison would be helpful, but it seems hardly we hear any such discussions..

People should not be misleading the public on Australia-China FTA

Comments on Joanna Howe "Abbott has sold out Australian workers to China", 22/07/2015

This is a very biased analysis, that is, every aspect is interpreted in the context as the worst possible outcomes and even suggests that the DFAT may relax its standard in its interpretation and administration of the agreement. It has not mentioned any positive effects of the Free Trade Agreement with China at all.

As a result, it has a lot of speculations, is misleading, fear mongering and far from the reality. It is aimed to stir up unnecessary fears among the innocent public.

And worst of all, the title is so sensational that shows the author's hidden motives to grab the headlines.

Time to be more creative for China

Comments on Mei (Lisa) Wang, NERI; Zhen Qi, ANU; and Jijing Zhang "Time for a new look at China’s SOEs", 22/07/2015

It is encouraging that the post has explained the situations of the Chinese State Owned Enterprises (SOEs) and also outlined the new round of reforming measures that will see further change to SOEs including the mixed ownership approach.

The authors argument that "as the SOE reforms evolve, so should the world’s views on them", however, may have ignored a fundamental point associated with the resistances from some western countries. That fundamental point is the ideology of a market economy with dominant private ownership and few government direct involvement in the operations of firms/corporations with government ownership. Another point closely related is the different institutional differences, such as capitalism and democracy on the one hand and communism and authoritative on the other.

When the two points are combined, not only the governments but also the public in those countries may have significant concerns that may oppose or may develop into opposition to Chinese SOEs' Overseas Direct Investments (ODI). Further, China is very big and the scale is huge that itself can be very daunting in the eyes of other nations.

Those few elements add up to natural concerns. That means it is fairly easy to instill general and/or nationalistic fears by some including politicians in western democracies.

To ally the concerns and fears, China probably needs to be more creative in its approach to SOEs and its national assets.


Thinking big for large population in Beijing

Comments on Mark Beeson "Thinking big in Beijing", 21/07/2015

Well, it seems very scary to think about it, particularly given the environmental problems such as air, water, soil and food pollutions so serious that cause many to die of pollutions, or as the consequences of pollutions.

However, the future may be much brighter in China, because the Chinese have realised the prices they have paid and are taking measures to rectify their mistakes including pollutions. Yes, it will take time to achieve and complete their goals, but nevertheless they have embarked on that road and are doing things in that direction.

Once pollutions are no longer a problem in China, who knows the so called megalopolis may or may not work.

Certainly, when the skyscrapers first appeared in large cities in America, its population was probably less than or about one tenth of China's current population. American large cities may have tens of million of population.

Now let's move to China with, let's say, ten times of Then America's population, maybe China will create proportionately greater cities, as long as it does not encounter serious dis-economy of scale when it scales up.

Of course, we are not used to that yet and in many countries it won't happen and won't have to happen. But some countries are different and so large, like China and India. Even in some countries, although their population may not as that large, the population density can be equally high. They, the Chinese or the Indians, may create a new way of living for human beings.

If the Americans created the currently prevailing large cities landscape in the past, China may pioneer a new horizon for the future of megalopolis cities.

PS: I went back to see what comments Mark Beeson's post had got on the day, 22/07/2015, following my initial comments and found the comments by Tony Xiao very interesting. What Xiao argued implies that Mark Beeson may have got the fact wrong based on incorrect understanding what is meant by the Beijing, Tianjin and Hebei project. Here is what Xiao had to say:

"The main thusts of the project is first to cap the populaion of Beijing at 23 million by 2020, second to raise the economic development of Hebei, third to move government non-core business and industry out of the Capital and fourth to coordinate the development of Northern ChinaAll the the major centres of Beijing, Tianjin and Hebei will be linked by rail, air and road transport hubs and two major express ring roads (7th ring road) one 1250 kms and one 940 kms long encompassing Beijing,Tianjin and Hebei cities are already under construction.Some of the 130 million urban population of Beijing, Tianjin and Hebei will need to relocate but most will wake up in their own beds once the project is realised. The price tag is estimated at 42 Trillion RMB.No-one is packing more people into a smaller space. The space is the same and so too the 130 million already there.A similar smaller scale proposal is being considerd for the Pearl River Delta."

I subsequently made further comments as follows:

Tony, what you are saying is that Mark Beeson got the fact wrong, based on a incorrect understanding of what it is meant by linking the few major cities together? In another word as you said, people will wake up after the completion of the proposed project in virtually the same beds and in the same locations, perhaps with relatively minor or few changes to where they live?

That would have been a huge oversight by Mark Beeson. I would rather suggest that is the result of misunderstanding due to a loss in translation/interpretation of Chinese to English.

Model citizens required of middle powers to step up

Comments on Gareth Evans "Time for the middle powers to step up", 21/07/2015

There will be justifiable places for the middle powers in Asia or Asia Pacific to play their rightful roles in building and managing regional security and other useful regional institutions.

It, however, requires the middle powers to be creative and truly independent, at least when acting to play such roles. Otherwise, some middle powers may be quite biased and may act with some outdated historical links or allies, that may be perceived by some non allied regional members as doing harmful things to them.

Perhaps that is the challenge for some middle powers, do they really act in the interests of all the regional members or do they work for their allies, one may ask?

Certainly, some and possibly lot of actions by some middle powers have either an overt or covert agenda, such as the so called “The not-quite-quadrilateral: Australia, Japan and India” posted by David Lang on the Australian Policy Online, may point to some of those. That seems to aim squarely at containing China, if judged from what the Japanese official was saying. That would unlikely make China happy and warm to ideas like that.

Australia's health insurance policy is a huge policy failure

Comments on news report by Jessica Gardner "Health insurance premiums to rise by up to 10pc a year", 21/07/2015

It is a national disgrace and possibly and particularly for the national regulator who has the right to approve the annual rises. It reflects a serious failure in regulation. Wages and salaries in the past decade and particularly in the last 5 years have not grow much, but each year health insurances increase quite a lot.

It is failure of policy and of insurance regulation. It is a failure of national leadership as reflected by federal health minister and the department of health.

And the worst part of that is the fact that it is forced by government for people to have private health insurance and it is the government health minister who approves the annual increase. For anyone having a sane mind, it is ridiculous that the federal government acts in that way.

The federal health minister should resign or at least those bureaucrats who made the recommendations for the health insurance to increase like that.

Furthermore, while the wages and salaries for ordinary workers and employees have not grown much, federal politicians' have increased a lot almost every year. What is a further disgrace of politicians is the fact that they hide behind the so called tribunal's recommendations, an organisation having virtually no accountability and eager to please national politicians.

It seems the only thing fair is for the politicians pay rise to be inversely linked to the increase in health insurance premium.

Further, their pay should be indexed with the average increase in national wages and salaries to the maximum..

Australian housing market - bubbles that can last

Comments on news report by Sally Rose "'We ain't seen nothing yet': Chinese foreign investment in Australian property tipped to surge", 21/07/2015

Rose reported that, "according to Colonial First State Global Asset Management chief economist Stephen Halmarick", "the liberalisation of China's capital markets will inflate asset prices acrosss the globe", with a surge to an unprecedented degree we have never seen.

By liveralisation of China's capital market, it is meant and I quote a paragraph from Rose's news report:

"But what will really matter for the world is how China opens up to allow its people to send money offshore. Australians might think they've seen a lot of Chinese investment in the Sydney and Melbourne property market, but we ain't seen nothing yet," Mr Halmarick said at a panel hosted by the Australian Institute of Superannuation Trustees in Sydney.

I have the view and have commented before that while there are bubbles in the Australian housing market, but those bubbles won't burst for a prolonged and extended period and could even perpetuate, simply because of the unique characteristics of the Australian housing market. Those characteristics include the following:

Australia is politically very stable with few sovereign risks

Australia is a small and open market - small population and allowing foreign investors to buy into its housing market

Australia has very large land, so its population density is very low

Australia is geographically located close to Asia, where there there are two countries, China and India, whose population are over a billion each and some other countries with population over 100 million. Population density in most Asian countries is very high

Large Asian countries, such as China and India, are emerging and fast growing economies with rapidly rising income in general and many people have become, are or will be becoming rich including multi millionaires

The property markets in some Asian countries, such China, are very expensive and many of those people are looking at overseas to buy properties for them to enjoy

Further, it is possible some in their home countries may feel insecure of their own assets and
want to find more secure countries to invest or park their money for one reason or another

All these factors suggest there are strong external factors which increase the demand for Australian housing properties.

The relatively small Australian housing market, combined with those strong and large external demand, mean a domestic housing market bubble sustained by external factors that will last for a very long time to come.

As a result, the demand for housing properties in Australia is not just its domestic demand and has a significant element of external demand that makes the demand much higher than the domestic demand alone. The housing market cannot be analysed in the conventional way that only focuses on domestic factors.

Put it another way, the Australian housing bubbles have very strong and thick layers supported, strengthened and reinforced by strong and large external factors - bubbles can last.

The "not-quite-quatrilateral" won't work

Comments on David Lang "The not-quite-quadrilateral: Australia, Japan and India", 21/07/2015

If the so called "not quite quadrilateral" are as that as the author described, it is unlikely to end up nicely.

For one thing, Australia may even have difficulties to decide in terms its relationships with China and the USA with the latter as its closest military ally and the former as by far its largest export market.

I would suggest the author compare who are more important to Australia, is that Japan and India, or the US?

Then it is not too difficult to see the futility of the attempt of so called "not quite quadrilateral" in containing China. It simply does not work.

Politicians are simply too lazy and irresponsible on taxes and spending

Comments on Kirsten Lawson "ACT Chief Minister Andrew Barr supports calls for a higher Medicare levy", 21/07/2015

Why the politicians always talk about to raise more revenue to meet an increasing costs of health and have no mention of having the health costs under control? Further, why don't they examine whether the existing spending on health is used in the most proper and appropriate ways? Are they really well used? Isn't there any way to improve the effectiveness and efficient aspects of health spending to use less and do more?

It seems that many politicians are very lazy and irresponsible to the electorate, given that they only look at spending more and the easy way out by raising taxes.

Furthermore, rather than courageous or intelligent, Mr Baird should be see as coward and silly, given the fact that the states and territories should stand up against the commonwealth for the latter's arbitrary change to funding to the former.

Politicians should not given lazy, easy and tricky ways to raise taxes. It is time for them to be much more accountable, prudent and responsible for spending each and every dollar of taxpayers' monney.


No Ms Irvine - it is not why we should pay more GST

Comments on Jessica Irvine "Why you should pay more GST", 20/07/2015

No, you are wrong on taxes, Ms Jessica Irvine. The GST is not the only option left to governments, even though the federal government has unwisely (or wisely I would say) ruled out touching tax breaks on property and superannuation. for example, the states and territories could trade their inefficient taxes such as stamp duties with a new property and/or a land tax or expanded property or land taxes. Both property and land taxes are efficient taxes.

The ACT has already started the increase in rates (essentially a land tax in its guise) and a supposed reduction in stamp duty (although the ACT government is very trick in that it may have quickly increased the rates but has been very slow in reducing stamp duties, so its can have more revenue. In another word, a supposedly revenue neutral is abused by that government to become a revenue raising measure).

So you failed to analyse the whole tax system and come up short with recommendations. Have a look at the ACT case you will understand where your miss is.

Arguably, there are other more efficient raxes beside the GST and property/land taxes.


APS management lacks common sense

Comments on Phillip Thomson "Tony Shepherd's recommendations on management structure hits Australian public service", 16/07/2015

It is interesting to observe that this needs to be mandated by the APS Commissioner - that itself reflects how bureaucratic the APS, or its top management is!

It is commonsense and best left to the management of each area to decide, given that it is not an one size-fits-all, as stated.

PS: Although the Canberratimes emailed me that my comments were published, I tried to look at it and could not see it. See the email from Canberratimes below:

We published your comment:

It is interesting to observe that this needs to be mandated by the APS Commissioner - that itself refelcts how bureaucratic the APS, or its top management is! It is commonsense and best left to the management of each area to decide, given that it is not an one size fitt all, as stated.

Go back to read what others are saying :
Tony Shepherd's recommendations on management structure hits Australian public service 

China's 'one belt' - a soft approach to international affairs?

Comments on Michael Clarke "China takes its Eurasian moment", 18/07/2015

From the discussion of the current Eurasian state by the author, it is clear that China's approach will be much more beneficial to those countries involved, with its insisting on the centrality of ‘sovereign equality’ and ‘non-interference’ in ‘domestic affairs’ as the basis for interstate relations on the one hand, and real economic integration backed by its financial support on the other. As a result, they are much more likely to warm up with Beijing's initiative in comparison to others' much more conditional approaches.

There is one point, that is, that the 'one belt' initiative is not necessarily in serious competition with Russia's Eurasian Union idea. It is not too dissimilar to the current states of either bilateral or regional free trade agreements where a country may be the member of two or more free trade agreements.

Furthermore, it is unclear whether Beijing's key focus is on geopolitical or geoeconomical aspects. It seems that it is more on geoeconomical, given its stated the centrality of ‘sovereign equality’ and ‘non-interference’ in ‘domestic affairs’ as the basis for interstate relations, as opposed to the other majors' aims.

Maybe this reflect Beijing's approach to soft power, as opposed to hard power. Is it a new strategic approach by Beijing? Quite possibly.


Negative gearing is not necessarily unfair

Comments on Antony Ting "Why negative gearing is not a fair tax policy", 17/07/2015

While a good attempt, your analysis has some fatal weaknesses. For example, you have one paragraph that reads as follows:

"Should mortgage interest on an investment property be deductible? Investment properties generate two kinds of income: rental income and capital gains (if any). As capital gains on investment property can enjoy a 50% tax discount if the property has been held for at least a year, strictly speaking only 50% of the interest expenses related to the capital gain should be deductible."

Why only 50% of the interest expenses related to the capital gain should be deducted, as opposed to 75%? Interest expenses can also be used to generate the rental income, while you seem to reason it is only used for generate capital gains.

You also argued the following two paragraphs:

"Many countries resolve this issue by quarantining losses on investment properties. It means that losses generated from negative gearing cannot be used to offset against other sources of income, for example, salaries or business income. Instead, the losses can be carried forward to future years to offset against income from the investment properties.This policy is fair in the sense that the same tax principle for deductions applies to both taxpayers with and without negative gearing. Many countries adopt this quarantine policy, including major developed countries such as the US, the UK, France and Japan."

That policy is not necessarily fair if one carries investing in properties as an enterprising, together with their other incomes. You think that is fair because you failed to understand the links between those incomes.

Furthermore, your following paragraph is in comprehensible and it may be self contradictory if you explained it better:

"Some countries have even stricter tax rules on investment properties. For example, China allows a fixed 20% deduction of the rental income, and the Netherlands tax property investors on a deemed yield rate of 4% on the value of the properties. In other words, these countries do not allow deduction of any tax losses on investment properties at all."

Another point is why didn't mention that in the US, people can deduct interest expenses even or their own principal residency.

Business leaders need to engage with politician more effectively than lecturing them

Comments on Michelle Grattan "Grattan on Friday: Our system is being consumed by the politics of demolition", 17/07/2015

It does not help much or have much an effect for a business leader to lecture the nation's political leaders in the following way (I quote from the article):

"On Thursday BCA president Catherine Livingstone called the politicians out, when she declared that “yesterday marked a low point for political leadership in Australia”.

“Within hours of the treasurer outlining a compelling case for the need for fundamental tax reform and rebalancing of the tax mix, both major parties began ruling out key elements of sensible tax reform, including changes to the GST,” she said.

“Our political representatives are elected and paid by the community to implement policies that will best serve the country. Their leadership responsibility is to ensure that there is a constructive, well-informed debate, leading to implementable outcomes; it is not to undermine the debate in the cause of party political positioning.

“Leadership requires being open and honest with the community about the challenges we are facing. It requires the energy and conviction to take on difficult and complex reform imperatives.

Political leaders are elected so they are accountable for the electorate, not as business leaders they are not necessarily democratically chosen. Business leaders don't have those political capitals gained from the electorate as political leaders have. As a result, business leaders need to find better ways to engage political leaders in an effective manner. Otherwise, it is futile on than part.

No matter whatever the weaknesses the current political system, the mechanism of the political leaders operate in the constant media scrutiny, there is ultimate accountability for the politicians, that is they have to face the electorate in an election.

A strategy of the ALP climate change policy

Comments on Tony Wood "The latest turn in the twisty history of Labor’s climate policies", 18/07/2015

Yes, it seems a revenue neutral framework with an efficient ETS as wide as possible, but with reference to what other major countries will be doing, would be a winning strategy for the ALP to take.

But tactically, there is no need for the ALP to disclose its climate change policy yet, given that the Coalition government will have to announce its policies for post 2020 soon, be fore the Paris international meeting of the year at the latest.

ALP can afford to have a better policy stance when a number of things become clearer, including the government's policy and other countries' targets, policies and strategies.

The leak of whatever it was of the ALP's discussion paper or options was unfortunate for itself. It risks being misrepresented, misused and an unnecessary target for the Coalition government with a very effective attacking leader, that is, the Prime Minister Abbott. It was self indulgent and sabotage.

Abbott's attack, both past and current ones, on the ALP's climate change policies, may scare the ALP (under stress) from developing a good policy. It is important that ALP develop an effective strategy in counter attack, as well as a strategy for its own policy on climate change. A two pronged approach may prove to be effective.

Not only poor old Europe but also miserable Greek PM Tsipras

Comments on Mark Beeson "Poor old Europe", 18/07/2015

There is at least another alternative that is the Grexit, albeit orderly with the support of the rest of the Euro zone members particularly the big ones like Germany and France.

I'd have thought that the Greek PM was preparing for that, but unfortunately he appeared to have only played with fire rather than carefully and seriously leading Greece to a better position to be really independent economically.

I thought he was using brinkmanship to secure a better bargaining for support of the others for an orderly and the best Grexit which would provide it with the flexibility of economic adjustment with its own currency and without cuts to nominal pensions and nominal wages.

What has happened in the last was his complete capitulation at the last negotiation that betrayed his earlier claim made to his people in Greece. It is disgraceful behaviour.

But there is no guarantee that this is the end of the Greece crisis and sooner or later the crisis may resurface again down the track.

Let's wait and see what will happen.


Global Citizens and Moral Decision Making too idealistic for Climate change policies

Comments on Laura D'Olimpio "Caring about Climate Change: Global Citizens and Moral Decision Making", 16/07/2015

You are indeed idealistic and perhaps too idealistic, in a real world of self interests centered with the global externality and many free riders in the climate change context. As a result, what you argued does not easily apply in the real world and countries need to come together and really negotiate agreements that specify the obligations of many countries with the possible exception of small, low income developing countries.

In such negotiations, nearly all countries have some degrees of self interests, even though ethics exists.

As a result, discussions of climate change policies domestically and internationally must conducted in the real world context.

On the property taxes of John Daley and Brendan Coates

Comments on John Daley and Brendan Coates "Property taxes", 16/07/2015

I have not read the full report and as a result I don't know if the authors have discussed and included the existing effective taxes on properties or not. There are already quite heavy taxes on properties, such as rates, not to mention the increased rates in the ACT which was supposed to replace the stamp duty on property purchases.

It is easy to say you can get so much tax revenue from this and that. It can be very sensational to make dramatic claims for so many billions of revenue could be raised and to grab the media headlines.

Why do the authors are so obsessed with increasing taxes or imposing new taxes? Why don't the author study whether all the governments' spending are appropriate or not in the first place.

There are enough taxes in Australia and we don't need more of them.

I think the authors need to take a cold shower to be intellectually sane. There is enough of this and no need for them to lecture people on this tax and that tax.

Energy productivity not very meaningful

Comments on Frank Jotzo "China could outperform its carbon pledge", 16/07/2015

Firstly, it seems there is a typo in the fourth paragraph, that is, “Yet China could do better still. China is set to outperform its existing 2020 target of a 40–45 per cent improvement in emissions intensity compared to 2025.”

The last number should probably be 2005 instead of 2025.

Secondly, while the following sentence is understandable, I am not sure that it does not mask the shortcomings of a single factor productivity, particularly the huge differences in economic structures between different economies, such as the energy productivity:

"China’s energy productivity lags that of advanced economies."

China, as it is often called by many, is the world's manufacturing factory, as a result, it is not particularly meaningful to compare the so called energy productivity with the so called energy productivities of the advanced countries which are mostly services heavy, as opposed to industry heavy of the Chinese economy.

Thirdly, some of the arguments, while understandable in terms of impact on emissions, may not be particularly strong for China to adopt, if China has an overarching economic, urbanisation and climate change strategy/framework, or as the author put it "with overarching national policy priorities". For example, "If China’s government were to once again use large fiscal stimulus measures, it would need to avoid over-investment in infrastructure and thereby heavy industries."

Although China has made enormous progress in its infrastructure, the fact still remains that China's urbanisation is only about 50% and there is a long way to go simply for China to urbanise. There is no question that urbanisation means more infrastructure, and as a result, more investment in infrastructure will be needed.

When discussing climate change policy, it would be more helpful to put it into the appropriate framework.

I would bet that China is unlikely to sacrifice its urbanisation and hence investment in the related infrastructure purely for emission purpose.

Hamilton's account of Australia's Kyoto

Comments on Clive Hamilton "Australia hit its Kyoto target, but it was more a three-inch putt than a hole in one", 16/07/2015

It is an interesting account of Australian government's strategy and tactics on the Kyoto negotiations, although we need also analyse why the rest of the world accepted Australia's demand back then.

One of the main reasons could be that studies showed that the impact on the Australian economy of an equal proportionate reduction in emissions was projected to be harder than on most other international economies. I remember that the Australian Bureau of Agricultural and Resources Economics (ABARE) had done researches and policy simulations that may have fed into the Australian government's policy stance.

Of course, research is one thing and how research is used by people and/or governments is entirely another.

Further, it is probably not too much a stretch of imaginations that each and every country would have done some studies on emissions reduction policies and adopted what it thought the best in those negotiations. ABARE's research was probably qualitatively correct, even though one may argue about the specific results ABARE had got and supplied to the Australian government.

On another point, the author has argued quite reasonably why Russia got its bargain. If that argument is true, then the quoted of being "bracketed Australia with OPEC and Russia as the principal obstacles to progress in the negotiations", by two German analysts, Sebastian Oberthur and Hermann Ott, that was "two years later, when the dust had settled", as follows was unreasonable at least as far as Russia was concerned as it didn't take into account Russia's special circumstances:

"The Kyoto targets surely have two main winners: Russia and Australia… The considerable increase in emissions allowed to Australia … has set a bad precedent for future negotiations, especially with regard to developing countries."

If those two Germans are serious researchers, their arguments showed significant weakness. As a result, it simply demonstrates that even serious people can get their arguments wrong, either deliberately to be misleading or unintentionally as innocent errors.

Bank capital reserves - need an appropriate balance

Comments on Rodney Maddock "Australian banks are strong; should we pay for them to be stronger?" 16/07/2015

I think it is important to get the balance right, as opposed to a moving goal post. It requires both the banks and the regulators to be flexible and responsive enough to deal with changes in the banking and finance industry, both in Australia and globally.It is not advisable for a capital reserve ratio that is too low to manage risks.

Equally, it is not advisable for the banks to hold capitals that are unnecessarily too high to be efficient.

Holding too little or too much capital is not good for the banks, the consumers, the economy and the regulators.There is no need to be too mechanical.

Further, the ratio may or should change with changes in real circumstances.

A winning strategy for the ALP to make its climate change policy

Comments on Michelle Grattan "Labor conference is Shorten’s next test on climate policy", 16/07/2015

It is not a particularly big or hard task for the ALP to do in terms of a credible climate change policy that is supported by the majority of Australians and accepted by the international community.

It can start with seeking the best international policies including the targets and approaches adopted by the majority of the international community.

By building its policy on best and majority of the international community, it would be ambitious enough, progressive enough, efficient enough, effective enough and explainable (sellable) enough.

In that way, it can distinguish itself from the current Coalition's stance and approaches. So it will be a very clever strategy and a winning strategy.


A short comment on a small point

Comments on ABC News Report "Bank strong but economy needs reform to maintain current living standards: NAB boss", 15/07/2015

This is a very short comment on only one small point. Mr Andrew Thorburn is National Australia Bank boss.

I don't know if Mr Andrew Thorburn really said this or not, but it is a paragraph (the seventh paragraph) in the ABC news report online that I read: 

Mr Thorburn said that change will not happen unless political and business leaders can clearly communicate why it is needed and how it can be implemented, and he fears if that does not happen, living standards will inevitably fall.

The point I would like to point out is the part "if that does not happen, living standards will inevitably fall".

I would argue that it will not be inevitable living standard will fall, it may be that the living standard will not rise as quickly as opposed to the case with some major and meaningful economic and structural reforms.

It is either an error (i.e. a misquote) of the reporter, or an oversight by Mr Andrew Thorburn, or a showing of the tendency of over sensationalising an issue or a point.

PS: for some background of the report, the following two paragraphs are the third and fourth paragraphs from that report as they are:

"There is no doubt that we cannot be complacent and we must recommit to further economic reform," he told the Trans Tasman Business Circle.

"I think the reality is that it has been quite some time in our country since there has been major economic and structural reform. I think we would have to go back to the GST in July 2000."

A practical joke

Comments on Michelle Grattan "Come to Paris climate conference, prime minister: French ambassador", 15/07/2015

Well, if the government pays a moderate amount of expenses, I, as an Australia citizen and an independent representative of Australia, don't mind going in stead of the PM, should he decide not to go.

By moderate amount, it only be a small proportion of that for the PM's, perhaps even only a quarter will do.

Having said that, I am not mad, by the way.

In terms of credential, I was, as a researcher, involved in the climate change policy back to the Kyoto Protocol days.

To the French ambassador: why not invite a keen citizen as part of the people's power?

One should be able to see the practical joke side of my commenting/posting.

Are Chinese authorities scared of the economy and stock market?

Comments on Peter Drysdale "No need for China’s leaders to lose nerve over market", 15/07/2015

Some may also argue that the rapid slowing in the growth of the Chinese economy would have been a major piece of evidence of poor handling of or leadership in the economy on the authorities behalf, even though the phrase of the so called "new normal" was probably the authorities attempt to prepare the public for the slowing.

The problem is that the slowing may have been or still be too much for comfort for the authorities.

Of course, should the over slowing of the Chinese economy and the panic in dealing with the stock market may, in turn, have implications for the pace of reforms. Some in the authorities may be really nervous now, so their confidence in reforms may be affected. In a Chinese saying "惊弓之鸟“ - the birds scared of bows.

Having said that, the piece today titled "China’s challenges drive experiment-driven reforms" from Andrew Sheng and Xiao Geng, provides some timely encouragement to Chinese economy observers, particularly overseas ones. And that is reassuring, indeed.

Queensland government accounting manipulations

Comments on Fabrizio Carmignani "Reducing debt without austerity: Queensland govt strikes fair compromise" 15/07/2015

From what you described, it is purely accounting manipulations and tricks that produce the outcome. If my understanding is correct, accrue accounting as opposed to cash accounting, is a better approach to reflect the real costs (and revenue for that matter) of government activities. It seems that the QLD government is relying retreating to the cash accounting to present a good look but a worse accounting performance by the accrue accounting standard, if my understanding of the author is correct.

The debt shifting to corporations, while still tricky, may be acceptable if those debts are really belonging to those corporations. That makes the QLD government's book look better, but it does not change much in terms of QLD's public debts. It is only a separation of state owned corporations from the government and an accounting shift.

It is interesting that the author applaud to QLD government's accounting manipulations as "strikes fair compromise".

This kind of behaviour from government should not win praises as a matter of standard, particularly from an academia.

States are better positioned to run public hospitals

Comments on Stephen Duckett and Peter Breadon "Forget health takeovers, here’s how to fix hospital funding and chronic disease care", 15/07/2015

The best approach still remains to have one layer of governments to be responsible for funding and running public hospitals and it would be better for the state and territory governments to do it with a reallocation of taxes so that the states and territories have a greater tax revenue share than its currently have, so the funding of state level public services comes from their own revenue as opposed to from the Commonwealth.

Alternatively as a second best, it can be shared in terms of funding with a fixed ratio between the states/territories and the Commonwealth, and the states and territories still run the public hospitals.

The Commonwealth should not be given the responsibilities to run public hospitals, given that it lacks the local knowledge and the relevant other expertise to do so. It is not well positioned to run the public hospitals in Australia. With the states and territories retaining the responsibilities to run the public hospitals, there will continue to be the inter-states competition and that is a good thing for the efficiency and quality of public hospitals services.

The Commonwealth should not be greedy in terms of both responsibilities and tax revenue. Otherwise Australia would end up to be a poorer place in terms of health and Australians will suffer from that as a result.

An encouraging side of the Chinese economy

Comments on Andrew Sheng and Xiao Geng "China’s challenges drive experiment-driven reforms", 15/07/2015

In the mist of gloom and concerns about the potentially excessive slowing of the Chinese economy, this piece presents some encouraging and more positive perspectives to be reassuring. Having said that, it is very important for the Chinese authorities to pay close attention to economic growth to ensure the world’s second largest economy not to fall off the rail.

I am particularly delighted to know “that China would produce four of the top ten global internet companies (by number of visitors) — Alibaba, Baidu, Tencent, and Sohu — as well as innovative multinationals like Huawei and Xiaomi.” Of course, they reflect also the fact of China’s large population (still the world largest one) as the users (market force) to be one of the key factors.

It is also very exciting to know “It was the combination of broad-based education, openness to science and innovation, investment in advanced telecommunications infrastructure, and knowhow in manufacturing smartphones that fuelled China’s rapid advancement in the e-tail and internet industries. This openness to innovation — along with what some say is lax regulation — also allowed platforms like Alibaba to integrate payments and logistics before many Western players did.

The Alibaba story and the smartphone producers story are excellent examples which may point to the way ahead for the Chinese economy that is likely to overcome the so called middle income trap. Innovations will play an important role in that process.

I thank the authors for their work that made me a little happier today.


PBoC is innovative in monetary policies

Further comments on Guonan Ma "A compelling case for Chinese monetary easing", 14/07/2015

I think some of China’s monetary policy approaches are innovative. For example, the differential treatments of first home buyers and other property buyers is a good example, as I mentioned earlier. The People's Bank of China (PBoC), China's central bank, has used different requirement of Loan Value Ratios (I am not sure it also applied differential rates) for the two different buying groups.

I would suggest that the central bank could charge a non-zero interest rate to commercial banks for home loans for non-first home buyers. That can regulate the property market and at the same time acts as a revenue to the country as opposed to let commercial bank to reap the benefits of higher rates applied to non-first home buyers.

Secondly, the use of reserve ratio, though it has been available to the monetary authorities but seldom used in the west advanced countries, provides another flexibility in applying monetary policy. That is because the monetary authority can maintain a particular target interest rate and at the same time to regulate the level of money supply.

Having said that, I would caution that the Chinese monetary and fiscal authorities in unduly intervening in the market activities, such as the authorities’ words and actions in the stock market over the last year and including the most recent interventions to proper up the market. The government and monetary authorities should not be in that market in that way.

In summary, the addition of additional tools or the allowance of more flexibilities in the monetary policies in China should be studied for the more widespread application of the better ones.

In response to Guonan Ma's reply on 15th July, 2015, 10:43 am: "To Lintong Feng: Policy issues involved are multiple in China. A threshold question is whether Chinese monetary policy stance should become less restrictive. Then the next question is what tools should be matched with which particular targets. The issue you raised hence relates more to the choice of instruments. In principle, the Chinese government might also tax mortgage for the second or third homes rather than regulating their mortgage rates, especially in a more liberalised environment."

Thanks Dr Ma for your reply.

I agree with your point on an easing monetary stance in China.

My argument for the imposition of an interest rate on the banks from the PBoC is effectively a tax in nature. I think we are on the side of that argument. There is no disagreement between us on that.

The PBoC may be relatively better positioned to initiate and enforce the "tax" as part of its monetary policy tools than the Department of Finance or the Taxation Bureau. In fact, monetary authority should probably have the responsibility for the health of asset markets, i.e. preventing bubbles and the so called exuberance (is it the correct word that the former Chairman of the Federal Reserve, Alan Greenspan used?)

Modern devices for noting lectures

Comments on Claire Brown "What’s the best way to take notes on your laptop or tablet?" 14/07/2015

It seems there is another very good way of use the modern devices that the author does not appear to have mentioned in this piece, that is, why wouldn't the lecturer provide a electronic copy to those students who would like to have it on electronic devices?

Once the electronic copy of the lecturer's note is available, they don't have or need to take full notes, only some points they find it more useful than just a general or ordinary note.

I think the online access to lecture notes is very handy, efficient and more productive.

Online access to lecture notes is very handy, efficient and more productive. Lectures should all provide online access opportunities, as long as conditions allow it, as in most high income countries.

Why is soil non-renewable?

Comments on John Gunn, Neil McKenzie and Paul Bertsch "Science can drive the sustainability of our precious soils, water and oceans", 14/07/2014

I find it difficult to understand the following statement by Paul Bertsch, that is, why soil is a non-renewable resource? I would have thought that it should be renewable unless it is not properly used. Certainly it is not very intuitive to me and likely to many readers.

Soil and land, even after misuse by some land users including farming not to mention appropriate uses, can still be rehabitated, one would think.

Perhaps Paul Bertsch can clarify and elaborate it in more detail.

"First, specific recognition of the soil resource is not common in national strategies. This is even though soil is a non-renewable resource (on multi-generational time scales) that underpins key life support systems, such as nutrient cycling, carbon sequestration, food, fibre, animal feed and biofuel feedstock production. It also represents one of the earth’s most complex and biologically diverse ecosystems."

While it is understandable that the soil in Australia is generally poor and we must pay attention to its proper and appropriate use, we should also guard biased arguments from interest groups, so we get a full and correct picture and do not over capitalise in soil related activities including probably research on it.


Ma has a good point on Chinese monetary policy

Comments on Guonan Ma "A compelling case for Chinese monetary easing", 13/07/2015

It is regrettable that the deleveraging process earlier on and the response to the possibly excessive fiscal in the wake of the GFS took a rather mechanical approach in China, particularly in the global context of extremely easing monetary policies in the major economies as Dr Ma has mentioned. That mechanical approach reflected either inexperience or some silly ideological approach by some advisors or policy makers.

Further there was a weaker external demand and macro policies should have been aimed at stimulating domestic demand, including either or both of monetary and fiscal policy tools. I have elsewhere argued that there is an issue of optimisation even when dealing with excess capacities, as opposed to simply tightening in both monetary and fiscal policies.

On one point, though, I would not necessarily agree with Dr Ma, that is, the role of the PBoC in credit allocation. It appears that China's approach to financing housing market with a differential approach to first and other residential properties is commendable.

On the contrary, in most west advanced economies, there is a lack of monetary tools apart from the economy wide and market agent wide tool, that is, one interest rate for all, reflecting the weakness of their approach to monetary policy of being unable to deal with the requirement of more than one tasks. In that regard, China's differential approach is superior in my view.

We need more tools to deal with more tasks. The Chinese approach, in principle, is in the right direction. Of course, there is a degree or limit to that approach and one cannot expect all problems can be solved through monetary policies.

Having said that, the exact way the Chinese authorities has managed its stock market over the past year or so has created the problem of moral hazard and is not commendable at all. It should not have intervened as it has done, creating a bubble and then trying to sustain the bubble.

Make reforming Australian federation simple

Comments on Cheryl Saunders "Let the Constitution and democratic principle guide us to renew federalism", 13/07/2015

We need to approach the reforming of the Australian federation in a practical and effective way and there is no need to make or describe the current problems unduly harder or unnecessarily complex than they need to be.

Many of the real and perceived problems in the Australian federation have its origin of the relatively large fiscal imbalance between the federal and state and territory governments as a whole. To make the federation work better, therefore, should focus on this key issue. There is no need to change the constitution in any substantial way, given that the constitution has adequate provisions (alternatively the absent in prohibiting a change to the fiscal imbalance) to deal with most issues the federation faces including the revenue realignment.

Correcting the vertical fiscal imbalance by allowing the states and territories a sharing of some taxes such as the income tax to a reasonable degree so that the vertical fiscal imbalance is largely resolved, will suffice for the reform of the federation. All other issues remain in the proper domains of the federation's constituents including both the federal and State and Territory governments.

The paper will benefit from making this point clearer than the current form. It is also advisable to those who have prepared the issues paper and the discussion paper: don't make the reform unnecessarily difficult than it should be and take a simple and realistic approach.

Don't overdo it and don't introduce unnecessary details to distract from that main task.

The Australian federation is not broken, but a further reform of it by addressing the vertical fiscal imbalance will make it work better. And that will benefit all the governments through better accountability and effectiveness and as a result, all Australians will benefit from such a simple yet effective reform.

Bureaucrats have a tendency to make and are used to making things more complicated than they are. And this should be avoided in the processes of reforming the Australian federation. Political leaders should display the required leadership including disallowing bureaucrats' unnecessary complexity.

Why is it called a draft discussion paper? It is an indication of  an immature bureaucratic approach and the tendency to avoid accountability of actions and results.

If you cannot make it a discussion paper, just say it!

Japan may need some reflections

Further comments on Lionel Babicz "A new chapter for Tokyo–Seoul relations, 50 years on?" 13/07/2015

These comments on responding to the reply from Lionel Babicz.

While I welcome your reply, I do think that it is probably japan that needs a fundamental rethink of its attitudes towards its neighbours including South Korea, for at least two things.

Firstly, it should not exhibit any arrogant attitude towards others, irrespective its economic achievements and its past glories including its militarism past and its colonisation of other countries. Any revisions of Japan's militarism past will always be a very sensitive issue to its neighbours.

Secondly, it should not use a third country to advance its any containing China, particularly as South Korea is concerned. South Korea is unlikely to warm to any such attempt, given its strong and close economic and political ties with China. South Korea's relationship with China will be strong and possibly more important to South Korea than the relationship with Japan. China’s economy is larger than Japan’s and will continue to grow strongly over the next two decades with strong implications for both South Korea and Japan.

China and Japan must work towards closer and faster Asia integration

Comments on  Seungjoo Lee "The politics of Asian integration", 13/07/2014

It is pity that Asia, particularly East Asia has not moved to a much more closer institutional framework to reflect its underlying economic integration or links. While it is understandable that Asia including East Asia, is more diverse than Western Europe and North America, every country, particular the bigger ones, must overcome historical legacies and difficulties to look forward to a new, more dynamic, more prosperous and more closely integrated Asia, so every country can benefit much more from it.

As I have remarked somewhere else before, the major countries in Asia, particularly China and Japan, need to be more creative in handling its bilateral relationships.

For any country or countries, the aspiration to be a global leader must start with an effective, constructive and inspirational regional leader first. Without being a good regional leader, it is impossible to become a global leader.

Both China and Japan, even though Japan is a US ally and China may face from time to time an attempt of containment by the US, must reflect on their strategic relationship and approaches with each other and come up with a better strategy to make Asia as a more integrated region economically, politically and from security point of view.

They have a greater responsibility in leading Asia.

For China, more confident and assertiveness should not be aggressiveness and being perceived as bully from a bigger brother. It need to pay attention to its leadership style. And it must approach territory issues/disputes with some other countries from a regional and global leadership point of view and to resolve those issues under international laws. If there are difficulties and or ambiguities with international laws, it should seek a solution peacefully, more creatively and more constructively with other parties.

For Japan, it will probably serve its interests much better if it acts independently as opposed to using and relying its ally with the US in dealing with China and being a partner of the US's China attainment. It will simply not work and will damage its own interests more than China's.


Clever ways for getting reforms done

Comments on Stephen King "We know what to do, but how do we do it", 12/07/2015

If the difficulties in reforms for the good of the majority are the minority losers intensive lobbies at the expense of the silent majority, then it seems the experience of the Stockholm referendum may prove to be a successful strategy, that is, to have a referendum on a major reform, so the majority have their says heard. A referendum would neutralise lousy minority's disproportionate influence through lobbies.

Of course the method from the Vancouver experience with carbon tax is also a very good approach, particularly its revenue neutrality and linking any misuse of the carbon tax with the minister's pay cuts as a penalty is excellent.


Sense and sensitivity

Comments on Lionel Babicz "A new chapter for Tokyo–Seoul relations, 50 years on?" 11/07/2015

Are the following statements correct?

"Furthermore, the deepening American involvement in the Vietnam War was also a key element of this rapprochement. Japan was required to contribute large sums to the South Korean economy, while Seoul agreed to send some three hundred thousand troops to Vietnam, making it the second largest military contingent after the United States."

Did South Korea really send 300,000 troops to Vietnam? That is a huge number.

I am not sure the author's interpretation of the two leaders' separate statements or remarks was correct. To me, the South Korea President's statement is likely to imply a very confident and equal South Korea, a strong message to the audiences of both countries. South Korea now is certainly very different from the South Korea back 50 years ago then.

It seems both audiences would be much more sensitive and attuned to what have been said than the author does, who is a lecture in Japanese history.

Population aging is not a grey tsunami

Comments on Sri Wening Handayani "Is Asia ready to face a ‘grey tsunami’?" 11/07/2015

It is an interesting and probably timely article. That said, the use of "grey tsunami" is unfortunate, because it is not a very good analogue at all and certainly not funny by any means. The author used quote, probably realised its not that.

I understand the author works at the ADB and its efficient to use PRC. But there can be many readers who may have difficulties to understand what it means, so it may be better to fully spell it out before the its use.

More importantly, the article did not fully explore the "opportunities" that may exist for older people. For example, many people at existing retirement ages can still be engaged in working or even volunteering activities to be an asset of labour force, particularly because that many types of work today may not necessarily hard labour but of office nature that uses more brain. And that trend of more work of office type will continue with increasing speed. By engaging in some of those potential activities, the older people can expand the areas over which to maximise life experience, content, happiness and fullness of their lives.

One if not the key one of the purposes of the article is to prepare for more aging societies, but the author did not seem to have prepared himself enough.

How advance of experiment economics - depending on capacity to model and understand models

Comments on Andreas Ortmann "Economic theories that have changed us: experimental economics", 11/07/2015

I am an economist myself by training, although my formal training was derived back to the early 1990s, more than 20 years old. As a result, I don't really know much about the experiment economics, although I have certainly heard of it and aware of it.

That said, it seems one cannot get too much into the differences between agents/people in formulating a realistic and workable economic model, simply because of the complexity that poses for modelling and to get consistent result. Everyone can be different from another. and there are billions of people on the world. People are consumers and agents, in economics. How can you model billions of different minds as individually represented ones in a model?

Again, having said that, it is possible to incorporate some key insights from experiment economics into slightly more complex economic models, so both worlds of the traditional economics and the experiment economics can be married into one workable model.

Most economic models are some abstraction of the real world, so they can capture the main aspects but simple enough to understand and apply. Of course, with computing technology advances more complex models are constructed to simulate the reality in more complex and more realistic ways.

Experts can also cause confusion: see this as an example

Comments on John Quiggin, John Rolfe, Martine Maron and Samantha Hepburn "Controversial Watermark coal mine approved for New South Wales: experts respond", 11/07/2015

There seems some potential errors, inconsistencies, confusion or something that may need clarification in the article and the introduction, otherwise they may be misleading. For example, in the introduction, there is the following paragraph:

"In an economic analysis the mine, proposed by Chinese mining company Shenhua, was valued at A$1.3-1.6 billion. The mine is expected to produce up to 10 million tonnes of coal each year over the its 30-year lifetime."

What does the value of A$1.3-1.6 billion mean, given John Quiggin states that the company's analysis was based on a coal price of A$140 a tonne? It is inconsistent with the sentence following it, that is, up to 10 million tonnes of coal each year over the next 30-year lifetime. What does 10 million tonnes coal value and how much the total would be for 30 years of production at that level?

Secondly, in the section of John Rolfe, the very first sentence reads "The potential development of the Shenhua coal mine for coal-fired power plants in China expose the differences between aspirational goals and what is happening in reality." That sentence is also misleading in connection with what was followed and also in terms of China's commitment to emissions targets and its energy use/growth.

China has committed to reduction in its fossil fuel intensity of GDP very significantly by 2020 and by 2030. It also commit to the target of peak fossil fuel use or emissions by 2030. They are very ambitious targets. Those target can be seen by the presentation of an energy expert and adviser to the Chinese government at the recent China Update (10/07/2015) at the ANU. It may also be in the book that the China Update released/published as the main outputs of this year's update. Those commitment, however, do not conflict or contradict to some absolute increase in its fossil fuel use by 2030.

In the third paragraph in that section, the following sentence is also misleading and does not reflect accurately what China has committed to as I have outlined above :"The World Energy Outlook 2014, summarised by Ian Cronshaw, predicted that total global energy use will increase by almost 40% to 2040." I assume it is about to say China's energy use and particularly emissions to increase too. In contrary, China has committed to the target of peaking of its fossil fuel use by 2030, meaning its fossil fuel use will not increase after 2030. The mention of 2040 confuses the readers.

The fourth paragraph is itself contraction with each other in logic: "While the share of renewable energies grows, and the share of fossil fuels falls over that time period, the absolute share of fossil fuels is predicted to increase." What does it mean when the share of fossil fuels falls and the 'absolute share' of fossil fuels is predicted to increase? It is illogical.

The following paragraph is also confusing in the context of the mining will have a lifetime of 30 years (as opposed to China's commitment to reduce emissions absolutely from 2030) and the commission of the mining is at least a few years away:

"Would the development of the Shenhua coal mine lead to an increase in global greenhouse emissions? The answer depends on whether the coal contributes to a growth in coal consumption, or whether it is part of the substitution story. Both scenarios are plausible but uncertain."

While John Quiggin's broad analysis is appealing, there is also some confusion in his section. For example, the second paragraph reads: "This is based on the high price for metallurgical coal that prevailed when the project was proposed. The boom in such coal derived from a massive multi-year construction boom experienced in China. In the last two years of construction the boom, has slowed and there is now a substantial risk of a disorderly collapse."

What does the last sentence mean? Isn't it confusing, at say the least? This mine has not started yet, has it? The author and/or the editor have left the readers with confusion.

In the section with Martine Maron, we can see the high arts of an environmentalist for doing nothing and allowing nothing to change, as reflected in the following paragraph:

"The Shenhua offset proposal does a bit of both: it plans to restore woodland and protect some existing habitat. The bottom line is that clearing 771 hectares of woodland means there will be even less of this threatened ecosystem than there was before. Offsets can help, but the only sure-fire way to recover threatened ecosystems is to avoid losing them the first place."

The reading of the last section with Samantha Hepburn also further reinforce the ambiguity the authors use to cause confusion.

After argument back and forth including "The approval includes strong water usage conditions – Shenhua is only entitled to use 0.09% of available groundwater; it must complete water, biodiversity and rehabilitation management plans prior to mining and any impact on groundwater allocated for agricultural purposes; it must complete annual compliance updates and; should an impact on agricultural interests be proven, would be required to provide compensation."
Then it ends with the following paragraph:

"The jobs, economic growth and community funding generated by Shenhua, including for example, an upgrade of the maternity ward of the Gunnedah hospital, donations to aged care and renovations to the Gunnedah town hall are important but cannot act as a substitute for rigorous protection of a groundwater system that supports such a strong and established agricultural industry."
Readers are left with impressions that the mine should probably not go ahead.

PS: I think the feasibility of the mine is highly questionable, given that the analysis of the mine by the applicant was based on very high coal prices that have been a past thing and now the coal prices are much lower than those. Although it is likely that coal prices will bounce back higher, it is unlikely to see its high days in the past. China's economy has been in transition and its future demand for coal is also unlikely to be as predicted in the past when the Chinese economy was red hot with annual growth was double digits. Further, as some of the experts stated, there are also hurdles for the applicant to get over before it can plan when to start the mining, should coal prices can be high enough for the mine to open. It can be years away assuming the applicant is still interested in moving forward with the mining project.


RBA staff: Australian housing 30% undervalued

Comments on Peter Martin "House prices 30% undervalued. Buy, don't rent, says Reserve Bank official", 9/07/2015

I got a shock when I saw the headline of this article, wha, Australian housing is 30% undervalued.

After reading the article, my shock has increased further as opposed to eased. Now I am worried about the country because I am concerned with the whether our RBA, the monetary authority in charge of the nation's monetary policy, is able and capable enough to discharge its monetary policy duty to contribute to the welfare of the nation, given such a claim of 30% undervaluation of Australian housing came from RBA staff members.

Many Australians are entitled to ask: are they competent to do their job properly? I think many may also pose a more stringent question: are they insane or sane intellectually? Do they have common sense? Where do they live, on the earth as we are? Or they are from Mars and are Martians?

It is interesting that the RBA even allow this kind of research results to be presented at the Australian Economists conference. Does the RBA have any quality assurance in place?

A balanced approach not a particular ideology is needed

Comments on John Daley and Danielle Wood "Fiscal challenges for Australia", 9/07/2015

It is all increase tax or have another new tax or reducing superannuation concessions. Why not reduce government spending? Why not to regard spending as so needy? You say the following on the one hand:
The Commonwealth Government has run deficits for six years, largely due to a rapid increase in net spending on older households. The costs of repaying these deficits will fall primarily on younger households."

Then on the other hand, you say to reduce superannuation concessions, its uttally self contradiction.

Further it is worst behaviour to pit the old against the young, as your statement of the last sentence in the paragraph implies. Isn't it a fact that Australia is among the lowest government debts to GDP ratio and even IMF argues for Australian government to increase spending to stimulate the economy due to our relatively low debt to GDP ratio?

It all seems a particular ideology at working.