Only the title of Cohen's article is correct and at half at best

Comments on Barry Cohen “All Australians are entitled to be insured against natural disasters”, 7/02/2011, http://www.theaustralian.com.au/national-affairs/all-australians-are-entitled-to-be-insured-against-natural-disasters/story-fn59niix-1226001071520

While your idea of government help on insurance may attract some applauds, it will in fact make the matter worse and will result in more losses of lives and properties.

With government assistance on insurances, people may falsely think that they will be safer and may take less responsibility to take the most appropriate measure to mitigate risks to natural events.

Government must learn lessons from those natural disasters. But there is the right way and wrong way to lean them.

Government should never encourage people to take unnecessary risks and should never create moral hazard problems for the public and taxpayers.

Instead, it should provide sufficiently the required and appropriate information for residents to make the correct decisions as to where to live, to buy and/or build their properties and bear the consequences of their own decisions.

Further, your idea that the costs of some government or local councils decisions or mistakes should be shared by all taxpayers is grossly unfair to those governments or councils that have done the right thing and those people who have avoided to take those risks, or insured by themselves out of their own pockets.

Gillard's sinking PM leadership

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

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

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

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

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

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

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

Is Treasury Secretary Henry independent enough from the government?

Comments on Jennifer Hewett “Adviser backs up his design principle”, 19/05/2010, http://www.theaustralian.com.au/business/opinion/adviser-backs-up-his-design-principle/story-e6frg9px-1225868408907

First, what else could Ken Henry say? Did he have any choice but to back the government line that is partly the making or Treasury?

That is the big problem with such this particular tax design, why should the government do it this particular way?

The answer is it needs quick revenue/money to balance its short term budget.

So, taxpayers' interests are sold in favour of short term partisan politics.

That is the source of the problem.

Unfortunately, normally perceived independent Treasury assisted in such a poor design. That is a lesson for public policy making.

There is a strong need for more institutions much more independent from the government of the day to be apolitical in policy advice and evaluation and be more transparent and open.

Because of that, namely pursuing short term political interest, Australia's sovereign risks have increased to unprecedented levels.

PS: in an email to a colleague re a news report of Henry's speech, I made the following observations yesterday afternoon:

Henry uses Treasury modelling. That modelling uses assumptions. Those assumptions would have to be strange, either in long term prices or the share of marginal versus non-marginal mines, to produce the results he is relying on.

In econometrics, there is the term of spurious estimation.

It seems in Treasury modelling, there should be a similar term existing and applying, that is, spurious modelling.

See below for Henry's arguments.

http://www.abc.net.au/news/stories/2010/05/18/2902825.htm?section=justin

My colleagure had teh following reply:
Thanks. I'm inclined to mostly agree with Henry without having seen his assumptions. I think there will be an impact on new investment to make it less attractive in the case of some larger projects, but for existing projects, the view that China and India's demand are likely to persist for some time yet is probably true. Mining companies will have a choice of using their existing investments and production at marginal cost to fill orders or look to new, riskier Greenfield ventures with long lead times. If I were a miner, I'd wear the profit reduction and make incremental investments in existing projects so I could keep filling orders now.

In the end, only time will tell though. I suspect the govt will be as conciliatory as possible when negotiating the details of the new tax given the looming election and public opinion on this.

Cheers
*****

I further responded with the following this morning:

I don't like to give blank cheques to politicians especially when they have shown to be lousy.

But seriously, a few basic principles of economics should be useful. One is the direction of a change. The second is price is determined by demand and supply, with short term supply constraints, but long term cost as key determinant. A third one is global demand and supply and capital mobility internationally, so Australia is only part of the story.

Further, I notice an interesting thing: In China, people are more critical of the government though not say it openly and can't do much about it; in Australia people are more kind to government and have a low expectation of them and their quality, though they can vote them out but are reluctant to do so. Of course, when all politicians from both sides are dumb, then there is not much choice. Abbott is no better and probably worse. That limit choices.

Lintong

Views from academic economics and business people

Second comments on Christopher Findlay “Taxing Australian mining: A new way of doing business”, 10/05/2010, http://www.eastasiaforum.org/2010/05/10/taxing-australian-mining-a-new-way-of-doing-business/

From this post, it appears that there is a big gap between people in academics and businesses on this issues.

For example, see the following comments from equally respected Australian business commentators"

Stephen Bartholomeusz: "The RSPT is utterly misconceived", 14/05/2010, http://www.businessspectator.com.au/bs.nsf/Article/The-RSPT-is-utterly-misconceived-pd20100514-5ET5A?OpenDocument&src=sph

Robert Gottliebsen: "Only action will alter the RSPT", 14/05/2010, http://www.businessspectator.com.au/bs.nsf/Article/A-miner-complaint-pd20100514-5ES2W?OpenDocument&src=sph

And from an not so well known commentator as well: “Distance between good economics and good public policies” 14/05/2010,

http://mrlincolns.blogspot.com/2010/05/distance-between-good-economics-and.html
 
Should each camp be closed to each other and be self congratulating oneself, as seen and done here?

Bureaucrats need to be held accountable

Comments on Robert Gottliebsen “Time for a Canberra shake-up”, 23/03/2010, http://www.businessspectator.com.au/bs.nsf/Article/Kevin-Rudd-Tony-Abbott-JSF-pd20100323-3SS56?OpenDocument&src=rab

Absolutely right!

There is a need for the APS to be accountable to its outcomes and responsibilities be taken when necessary.

Bureaucrats cannot simply hide behind the scene and escape their responsibilities.

The design and implementation of a number of big policy items in the stimulus programs should be accounted for, so future APS advice and services can learn from them.

The cash handouts (to necessarily increase deficits, debt and future taxpayers liabilities), the NBN, the pink batts, the BER, you name it.

Some people must take responsibilities for them.

Who are they?

Politics and economics don't always mix well

Comments on Stephen Bartholomeusz “NBN profits could be a fiction”, 2/10/2009, http://www.businessspectator.com.au//bs.nsf/Article/nbn-stephen-conroy-telstra-optus-nbnco-sol-trujill-pd20091002-WF58M?OpenDocument

This just shows how unreasonable for a government to ask a private firm to subsidise customers in its operations.

It is the government's responsibility to provide subsidise and account for any such decisions and be transparent about them.

Both government and regulators got it wrong to force Telstra to do unreasonable businesses.

Now let's see how its NBN fairs in this regard and exposes how government's approach is irrational economics for businesses.

On Corin McCarthy's social democrat

Comments on Corin McCarthy “Markets bring mobility”, 1/10/2009, http://www.theaustralian.news.com.au/story/0,25197,26147805-5015664,00.html

Corin McCarthy has some wishful thinking.

Everyone should realise and acknowledge that in modern society, everyone has a responsibility for him/herself and it is not enough just relying on the government or others.

Government policies should encourage that one takes up his/her responsibility with a safety net.

If a particular person does not live up to his/her responsibility, then it is his/her choice not to do it and we all should not bother with him/her for that choice.

High tax, big government and intruding into people's private lives as opposed to encouraging self-responsibility are what Corin McCarthy's new social democrat. But such new social democrat will not be able to get support of the public as a whole.

So their wishful thinking will be withered by the cool responses of the society, unfortunately for them.

Appalling story that shouldn't have happened

Comments on ABC news report “Territory evicts 14yo, days after dad's death”, 3/09/2009, http://www.abc.net.au/news/stories/2009/09/03/2674987.htm?section=justin

This is an appalling story, especially considering that it is the housing commission or department, a public organisation or government department did this.

While those people who did this may have followed normal procedures, it shows a gross lack of judgement and compassion.

It is a fourteen year old girl, just days after the death of her farther. Where is humanitarian? What is public housing for? Isn’t it for the neediest ones?

Don't ask carbon tax to do too much

Comments on Robert Gottliebsen “Our carbon bubble danger”, 4/08/2009, http://www.businessspectator.com.au/bs.nsf/Article/Our-carbon-bubble-danger-pd20090804-UKT7J?OpenDocument&src=sph

While the merchant baker’s idea of a revenue neutral carbon tax and tax reduction on consumers sounds attractive, it may be difficult politically. One of the main difficulties might be how to cut income taxes and raise social benefits. Different implications may render the carbon tax as a revenue grab by some to derail the carbon tax scheme altogether.

It may be a long term policy goal, but in the shorter term, it is better to focus on using the tax collected from carbon to fund other energy alternatives, or address some transitional issues.

Don’t attempt too much at one go and be practical about political processes.