Productivity Commission lost its strategic insight

Comments on Productivity Commission "Superannuation policy for post-retirement", 8/07/2015

I agree with the former Treasurer Mr Peter Costello (who was interviewed by the ABC's 7.30 program that was broadcast yesterday evening) that the public has lost confidence of the superannuation system/policies, given the nature of frequent changes in government policies. In that light the Productivity Commission (PC)'s inputs are not helpful at all.

The Productivity Commission, as its name suggests, should focus on productivity so people work smarter as opposed on force people to work longer and to retire or access their own superannuation more late in their lives.

As a result, the PC has lost its overall strategic insight on good or better policies in Australia.

Has the PC also become simply revenue driven?

Further, the PC may be helpful if it does research on how to improve older Australians' employment in the context of a strong age based discrimination that people over 50 are finding it difficult to find new employment once they are out of employment for one reason or another.

Another point is that even its title is deceptive or misleading when compared to its content and intention. If it is post-retirement, then why do not allow them to access their superannuation after retirement? It is a bit of inhumane, isn't it?

That is regrettable on the PC part.

A sensible approach to Qantas by Hockey

Comments on Mark Kenny “The storm facing Qantas was one Joe Hockey couldn't ignore”, 13/02/2014, http://www.canberratimes.com.au/federal-politics/political-opinion/the-storm-facing-qantas-was-one-joe-hockey-couldnt-ignore-20140213-32lkr.html

While it is sensible to provide a sovereign debt facility to Qantas in the short term, it would be better to revoke the Qantas sales legislation, particularly the restrictions of foreign ownership, so Qantas can compete with other similar airliners on an equal footing.

Providing such a debt facility can be justified due to the restrictions of the Qantas Sales Act. In that sense, Joe Hockey is not inconsistent at all in his approach to corporate welfares.

It has been a long while since the privatisation of Qantas and many arguments, such as the needs for a national carrier in case of emergence for it to be used in transport Australian worldwide, or excuses underpinning that legislation no longer hold. Irrespective what ownership of Qantas, it can be reasonably expected that it will meet the needs whenever they arise. Further, commercial charted flights can also be used to meet government obligations to its citizens in case of emergencies.
It is time to re-examine that legislation and the federal parliament needs to act and the sooner it does the better for Qantas and the nation. For Qantas it needs to compete on the same footing as other carriers. For the nation it would avoid unnecessary government subsidies to private businesses.
Qantas has been and still is a very good air carrier even in the face of extremely strong competitions particularly in the wake of the GFC. A strengthened position will enable it to perform better.

Set a revenue to GDP ratio to improve policy making and service delivery

Comments on John Freebairn "Federal Budget 2013: Why our unsustainable structural deficit must be tackled", 29/04/2013, https://theconversation.com/federal-budget-2013-why-our-unsustainable-structural-deficit-must-be-tackled-13723

I largely agree with the remark by the author that "The mix of tax increases and expenditure reductions require society to make judgements about the relative roles of government and the private sector, and about the relative merits of more or less limited income and resources allocated to government goods and services versus private sector provided goods and services."
Personally, I think there should be a ceiling of taxation revenue to GDP ratio to constrain any government irrespective to their political persuasions, otherwise, it is too easy for politicians to raise tax rates, increase new taxes and levies. Politicians' mandates should be set with a clear limit, so they can focus better on better policies and efficient service delivery.
I personally think that all government revenues to the GDP ratio should not exceed a third for the near future; that would leave two thirds to the private sector. In the longer term, 30% should be aimed for.
Within that broad parameter, the three levels of government should have an agreed shares of the different revenues according to their service responsibilities.

How to get Sydney moving?

Comments on Henry Ergas “Mere money won't get Sydney moving”, 4/04/2011, http://www.theaustralian.com.au/national-affairs/more-money-wont-get-sydney-moving/story-fn59niix-1226032905744

Only having read the concluding paras without reading the whole article, couldn't it be better both logically and politically, to combine immediate actions with longer term structural design at once?

Given the existence of the problem for so long, surely there must be some no-regret transport projects that can go ahead immediately, no matter what a longer term structural consideration will result in.

NSW/Sydney people are sick and tired of of spins and inactions, or worse wastes of taxpayer's money and expect action.

They have just voted for action and they deserve rightly it.

Of course, Ergas is right, only simple action without a long term best design can only lead to more wastes and more serious jams.

So, O'Farrell should and must combine the two to provide both assurance and best policy, for taxpayer's money and improve people's lives and living standards.

Economists also need to be aware of the real world too and combine long term perspectives with short term actions as well as a dynamic optimal trajectory, I am afraid to say.

Is IMF credible in lecturing other governments?

Comments on David Uren “Labor facing storm clouds: International Monetary Fund”, 30/09/2010, http://www.theaustralian.com.au/national-affairs/labor-facing-storm-clouds-international-monetary-fund/story-fn59niix-1225932014281
I used to have high respect for IMF the fund, but not any more since its appalling responses to the Asia financial crisis in 1997.

It has changed any bit for any better ever since.

It always lectures other governments in the world on this or that, even though it itself cannot do its job properly.

Isn't that enough to ignore what it says?

A need for effective and innovative economic policies

From my earlier comment today on the issue of the international Financial Stability Board issue and international financial stability architecture, raised by Masahiro Kawai and Michael Pomerleano of ADBI, it is clear that little innovation has been seen in the international scene on international financial stability issue.

There is an urgent need to be practical, effective and innovative in policy designs. Many people just fall back to their comfortable zone in developing new policies and recycle what has been there and repackage them a little, that is all.

That will not work, unfortunately.

If the existing convention does not work well, then one has to consider why it has not work well and deal with it not just in the conventional framework that can be very limiting, but also considering in new frameworks.

Respect consumers' preferences

Comments on Peter A. Petri “Let growth engines drive the recovery”, 12/10/2009, http://www.eastasiaforum.org/2009/10/12/let-growth-engines-drive-the-recovery/

While the new engines of growth sound nice, there might be some significant risks in government policy generated products that so not match consumers' preferences and demand.

If the two go out of steps, there will be potential for huge waste.

Economists, businesses and governments need to study consumer preferences. Unless there are market failures, governments should refrain from intervention.

For example, in terms of savings and consumptions, as long as intertemporal budget constraints are satisfied, consumers’ preferences should be respected.

That is just one point in the current debate of international imbalances many people have got it wrong, or attributed to the wrong causes. Many arguments are simply red herring.

Conroy's heavy hand on Telstra is showing now

Comments on Stephen Bartholomeusz “Conroy's Telstra ultimatum”, 15/09/2009, http://www.businessspectator.com.au/bs.nsf/Article/Conroys-Telstra-ultimatum-pd20090915-VW3YV?OpenDocument&src=sph

The government and Senator Conroy have been acting like an economic terrorist, as a revenge to Telstra's hard tactics in the past! They are forcing Telstra to separate.

That does not show true government leadership in economic management. Instead, it shows how small their minds are.

They need to go back to school to learn more economics and how to live with a natural monopoly in a small country in a sophisticated economic world where efficiency may dictates the size of businesses.

ACCC has been very disappointing in this regard for too long as well.

Questions mount on PM spending and can't be ignored any longer

Comments on Dennis Shanahan “Questions mount on PM's spending”, 1/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26008616-17301,00.html

From the beginning, Labour's stimulus packages had stings and did not smell right, despite being covered by the pitch and excuses of jobs and employment.

While one cannot avoid every waste, the way Labour approached its spending programs showed its poor economic management skills and credentials.

There was no question that the government needed to intervene earlier and at those times. But the key question was how.

To use an example can illustrate this point. One cannot imagine that cash handouts were the best way to use taxpayers’ money to stimulate the economy through stimulating consumption. Why didn’t the government use a consumer purchase rebate/subsidy program that would be directly linked to consumer spending and avoid hoarding? Why did the government use debt that will increase burdens for future taxpayers, to do those cash sprees?

The government’s cash handouts, especially the first one, also had a strong redistribution consequence that was not necessarily optimal given its hastiness.

Now we have all heard the waste in spending on schools and the problems including both waste and no result with Indigenous hosing.

Compared to this, the government has the $43 billion NBN project in its plan. Imagine how big the waste will be with this huge project, considering what has emerged from what has been spent and been shown as waste already?

The Rudd government needs to have a cold shower to become rational. It needs to wake up now and to reflect fundamentally on its economic management, approaches and policies. It must take hard decisions and act responsibly as a government, even though there is not any effective pressure from the very weak opposition so far, because things can change soon and they will change.

Another case of lack of accountability by government and bureaucrats

Comments on report of “Overseas-trained doctors warned: 'Don't come here'” by DANIELLE CRONIN, The Canberra Times, 24/08/2009, http://www.canberratimes.com.au/news/local/news/general/overseastrained-doctors-warned-dont-come-here/1603704.aspx

This case shows how inefficient government and bureaucrats are and how that inefficiency is affecting the lives and well beings of many Australians. It is totally unacceptable and must be changed. But the sad fact is that it is by no means an isolated incident. On the contrary, similar things can occur very frequently at both the federal and state government levels. One, for example, cannot forget the much talked and delayed project of over $600 million for Indigenous housing. So long time has passed and there is no single house built.

Government and bureaucrats must improve their efficiency of services and make policy more effective. On the one hand, there is a significant shortage of medical doctors and a long waiting list of patients. Yet on the other hand, we have seen cases like this that it took 28 days for the bureaucrats to work out a medical provision number for a newly arrived overseas doctor to work in Australia.

Both the government and bureaucrats should and must be accountable to the public and the taxpayers. The heads of those politicians who are responsible, but more likely of the relevant responsible bureaucrats should roll. Otherwise the lack of responsibility and accountability means inefficiency and more inefficiency, red tapes and more red tapes.

A true reason for delaying the ETS legislation

Comments on Dennis Shanahan “Time to hit the brakes on ETS”, 18/07/2009, http://www.theaustralian.news.com.au/story/0,25197,25944030-17301,00.html

It should not matter whether Australia passes the ETS bill or not before Copenhagen, give both the flexibility of the varying voluntary targets of that bill and the goodwill shown by other countries including the US and China so far. So Rudd and Wong do not have a strong rationale for Australia having to pass that bill before then. It has a strong enough mandate to go to Copenhagen and represent Australia in the best possible terms to achieve a good international agreement.

There is a strong reason for delaying that legislation, that is, to make the best possible policy among all options available with the least costs for any given targets, like analyzing the Frontier Economics modeling. So it makes sense for the government to hit the brakes on ETS now.

Rudd and Wong should be courageous enough to realize this and not to return the bill to the parliament before Copenhagen.

Separate the making and and implementation of fiscal policy for economic interventions

Comments on Michael Stutchbury “Beware rent-seekers”, 11/08/2009, http://blogs.theaustralian.news.com.au/currentaccount/index.php/theaustralian/comments/beware_rent_seekers

This raises two points. One is that the government should not intervene unless it is clear that its intervention will certainly bring good. The other is that it is better to trust major interventions to organizations independent of the government and get them done at arms’ length, if the government is to intervene.

It is unavoidable that government has to intervene in special circumstances when and if warranted. The financial and economic crises are examples that government needs to get involved and intervene. But that does not mean any government interventions have been necessarily done in the most effective and efficient way, or in a satisfactory manner.

As far as government spending is concerned, it may be a good practice of public policies to separate the government’s policy initiative and its implementation in general, including any significant spending measures contained in its normal annual budget. To have the policy formulation and making separated from their implementation will enable closer scrutiny of the implementation processes and improve their effectiveness, but does not impede in any way government’s policy direction or its ability to take any policy initiatives. It will reduce the potential for political favours and a lot of inefficiency by incompetent bureaucrats with little commercial expertise and experience.

In a sense, some of the government implementation processes can be out sourced and subject to market competition.

Let Australian banks compete with other banks on their own feet

Comments on Michael Stutchbury “Bank props must go”, 4/08/2009, http://blogs.theaustralian.news.com.au/currentaccount/index.php/theaustralian/comments/bank_props_must_go/

Stutchbury is absolutely right in that the bank guarantees should go as the danger of the global financial crisis is passing and over.

Australian banks have been the safest and most resilient among the world in the financial crisis. They are very profitable. There is no need for continued government guarantee. They should be able to stand on their own feet and compete with any banks.

Unnecessary government supports will distort the market and the price signals, hence alter the behaviours of private businesses. Further, there is no need to put taxpayers at unnecessary risk for the profit of private businesses.

Enjoy freedom and don't ask for too much government intervention please

Comments on IAN KIERNAN “Move on bottled water inspires”, 22/07/2009, http://www.canberratimes.com.au/news/opinion/editorial/general/move-on-bottled-water-inspires/1574349.aspx

While government may have a role to play in the issue, it is not clear what the government should or should not do just responding to the single issue bottled water alone.

Ultimately it is each person's responsibility for their own finance. It is generally better for government to interfere with everyone's own life as little as possible. We don’t want the government to become the police looking over our shoulders all the time, do we?

There might be a market failure or externality in the issue of bottled water that may justify for a government intervention. But government may have more important and far-reaching jobs to do than looking at minor individual or specific issues.

We should not think to ask government to intervene in this or that so freely. We should respect ourselves and others to make our own decisions for our own sake.

Close the gap of Indigenous disadvantage

Comments on Kevin Rudd “Reformed COAG a one-stop co-op”, 1/07/2009, http://www.theaustralian.news.com.au/story/0,25197,25715209-5013480,00.html

The Rudd government has done significant reforms to the federal relations and should be congratulated for those achievements.

The main agenda item for the next meeting is an important one. The gap of disadvantage facing our Indigenous people is big and should not be tolerated by decent Australians. The federal and state governments must find more effective ways to narrow that gap.

While I don’t necessarily share the view of big government and spending as the PM does, I do wish him success in his effort in closing the gap between our Indigenous people and our other people.

There is also a responsibility for the leaders of our Indigenous people in closing the gap. Indigenous people themselves have an important role to play. Let’s hope that all relevant people play their part wherever and whenever they can to do their bits to close the gap.

An urgent need for government accountability to taxpayers money

Comments on Michael Stutchbury “Projects Keynes would approve”, 19/06/2009, http://blogs.theaustralian.news.com.au/currentaccount/index.php/theaustralian/comments/projects_keynes_would_approve/

Michael, it has to be (d). (note: (d) is one of the choices of answers Michael asked in his article. The choices are: whether (a) cynical politics, (b) questionable education policy, (c) guaranteed to produce stuff-ups and, consequently, cover-ups or (d) all of the above? To provide some context, I include quote from his article as follows:)

HOW ironic that the Rudd government’s “education revolution” has been conscripted into its crash-bang budget stimulus.

The short-sighted priority of Julia Gillard’s Building the Education Revolution program is not to ensure that the next generation of kids get better schooling.

Instead, the explicit $14.7billion priority is to hire brickies, chippies and sparkies to build libraries, halls and gyms rapidly at thousands of primary schools in every federal electorate, ASAP.

It’s the classic policy conflict of Keynesian short-term budget stimulus packages.
The demand to boost the economy now means much of the debt-financed investment will be wasted.

John Maynard Keynes even suggested the unemployed could be paid to dig holes and fill them in again.

It should be the second best prize of simplistic Keynesian after the dig and fill best prize. This is another example that Rudd / Swan Labour government is incapable of managing the economy and budget.

Shouldn't we have an economic court to bring the economic vandalisms to justice? They should include some top bureaucrats, probably. Otherwise, taxpayers money will be continue to be wasted, because there are few constraints to a government to do it. We have prosecutions of business people for fraud. Why don’t we have prosecutions of politicians for such obvious public economic fraud?

Political debates, spins and government policies

Comments on Lenore Taylor “Former treasurer nails debate”, 17/06/2009, http://www.theaustralian.news.com.au/story/0,25197,25648362-5017906,00.html

While it is understandable that there will always be political spins and every political side will try to twist and make arguments in their favour, politicians, especially the government should be sober behind the scene and formulate strategies and make public policies according to the reality and sound reasons, rather than apparent political spins.

In that light, the Rudd government should probably need to acknowledge that it inherited an economy in excellent shape and a fiscal position that few other countries could match at that time. That, in conjunction with Australia’s sound banking system and banking regulations/supervisions, was the solid basis for Australia to weather the current global economic crisis.

What the Rudd government should and must do is to stimulate the economy in the most effective and efficient ways and at the same time to keep government deficits and debts as low as possible. While those are past already, the government should realise that both the cash handouts and the schools stimulus have generated some undesirable effects. They were not done in the most effective and efficient ways. There have been wastes in them, or soem unnecessary government spendings at least. The government could have achieved the same stimulus and education investment effects while using less government / taxpayers’ money.

There are lessons from those, but it is not too late for the government to become more effective and more economically responsible. We have a long way ahead before the global economic crisis is over. Besides every government policy or spending can be a test of economic management.

For example, while the government’s new national broadband network proposal is well intended and has the potential to boost productivity and the efficiency of the economy as well as the welfare of the nation, how the project will be designed and handled by the government and the industry will have a long lasting effect on national welfare.

I think the government should approach the NBN with an open mind and conduct extensive consultations. It should use several independent business and economic cost benefit analyses (not every one of them needs to be very complex) to ensure that the most effective and efficient and economic option or options are adopted and implemented. It is a huge exercise and must be done very carefully. There is a lot of money involved and either the wastes or savings would be huge.

The government should not be captured by particular special interest groups, including Telstra and others in the industry as well. It also needs to resist the urge to revenge Telstra for its confrontation with the government. Particularly, it should ignore the ACCC’s view on competition regarding Telstra's monopoly. The ACCC’s behaviour is of revenging nature and also reflects its failure in successfully managing a monopoly in its regulatory approach. It has outdated views and strategies in regulating industries and firms. The ACCC needs reforms and catching-up with the trends in globalisation and economic integration.

The government, Telstra and other players should work together, recognising each other’s interest. So the government needs to stand above the position as a simple player or competitor. It needs to remove emotions from managing the process. It needs to analyse what is the best way to move forward for the nation as a whole. Further, everyone should avoid falling into the trap of the argument that if the technologies are the best, they must be good economically. You have to take account of cost and benefit and also consider demand and supply.

Treasury and the Communications department need to be effective in their advices and policy formulations. They need to learn from the lessons in the stimulus packages, in the NBN bidder process and its failure and in the new NBN proposals. Bureaucrats must resist the urge to revenge and need to work in the nation’s interest and not driven by personal emotions.

Choices are better than forces: a comment on budget changes to the age of aged pensions

Comments on Robert Gottliebsen “A new age for old age”, 19/05/2009, http://www.businessspectator.com.au/bs.nsf/Article/Waiting-for-a-new-age-pd20090519-S6TY5?OpenDocument&src=sph.

Both the government and the Treasury officials have adopted authoritarian approach to public policies, because they saw no accountability for whatever they could do. So they, at a flip of a hand or a pen (or a stupid though, one might say), they dictated people to have to work two years longer for them to be able to receive aged pension. What a bunch of powerful people they are!

Clearly, this, as so many things in the budget, appears to have been made on the run. They are the dark-room products of an inexperienced government and incompetent officials. They should congratulate themselves for what is a difficult job that they are still employed at the time of a great recession!

What a remarkable achievement! Congratulations, your majesty – the government politicians and Treasury officials!

Why don’t they provide choices that people of old age can work if they so choose and can retire if that is what they choose to do? By working, one can have more revenue and a better living standard. By retiring they will be satisfied with their income levels and enjoy being free from working. That is a choice of life style that everyone can make for themselves, why must the government and the Treasury officials force people to have to follow their policy mistakes and myopic view of the world?

Don't you see the costs associated with your mistaken "regulations"?

Another example of poor polciy by government

The ABC reported that the government is to spend $10 million on building a war trail to commemorate the Australians who fought and died along the Western Front in northern France, announced by Veterans Affairs Minister Allan Griffin.

In normal times, this should be a very good thing and a commendable act. However, with no disrespect to the heroic forebears who made great sacrifices and fought on behalf of the country, it could be argued that it is not the appropriate time now to spend more money now with little benefit to the economy. To be fair to the government, this is a down graded alternative to the former government's $35 million plan to build a memorial at the battlefield of Villers-Bretonneux.

Everyone knows that we are currently at an extremely tough time economically, experiencing a global financial and economic crisis and a possibly severe domestic recession. Unemployment is rising sharply. The government, after a long period of denial, has now finally acknowledged that Australia is likely to experience a recession when it virtually does not have any other choices other than to do so. The IMF has just released its most recent update of the world economy and forecast the Australian economy will shrink by 1.4% this year, with unemployment rising to 6.8% by end of this year and 7.8% next year. A lot of families are already struggling to make ends meet now and the news means that more are expected to fall into this category in the coming year.

The government and the Treasurer have been talking up the prospect of an inevitable big budget deficit in the may budget to be out soon. The PM, the Treasurer and the Finance Minister have been arguing the need for making tough decisions over priorities and the need for further fiscal stimulus on top of the two packages in last November and more recently. People would have rightly taken the message to mean reprioritising, to spend more in areas that can boost stimulate the economy and limit the rise of unemployment, such as education and training, and appropriate infrastructure works that can enhance skills and future productivity. Where non-urgent and lower priority spendings can be saved or reduced, do it now, or if some spendings can be postponed to some time in the future, do it later. This is common sense. But the public has unfortunately been badly mistaken.

Tens of billions cash has been handed out, most of which have been or will be saved rather than being spent with little impact on demand to boost the economy, contrary to the government's wishful thinking, though not to its hidden agenda to bribe votes with an eye for the next election. The sad of the matter is that the government's first cash handouts in last November had been proven before it made the second stimulus package that contained another big component of cash handouts, effectively a repeat of its failed policy. Further, after a much delayed and an unsuccessful bidding process for its electoral promise to building a national broadband network (NBN) of around $10 billion, the government hastily announced a new initiative with a sky rocketing increase in the costs to over $40 billion to build a NBN of optical fibber to homes (as opposed to the original fibber to nodes), in the name of higher speed. This has occurred against the background of a declining economy, rising unemployment, a budget falling from respectful surplus to an ever increasing deficit to be filled up by borrowing and debt.

The minister stated that it is particularly important to act now as Australia moves towards the centenary of its involvement in the war, and the international focus that will occur in the years ahead. But Mr Minister, while it is not wrong to say this, how many years will be until the centenary? Do we really run out of time to build it before that? Can't we build it later after our economy has returned to its normal growth and unemployment is reduced rather than rising? Or, will this stop businesses from closing and save jobs? Has the government got its priority right? It is high time for the government to wake up, and wake quickly and do some sobering thinking and reflection. While the current global economic crisis is not Australia’s or the government’s doing, one has to wonder why Labour federal government is most likely to create more debt for the nation. The government will need to change course to better manage the economy and national affairs to enhance rather than diminish the nation’s welfare with an unnecessarily large burden of debt for future taxpayers. Please don't make avoidable mistakes such as this one.