Month: December 2012

TANSTAAFL

John Quiggin77 Comments

At about the same time as announcing that Queensland was an economic basket case, requiring large scale sackings of public employees to balance the books, the Newman government called for tenders for a project that, among other things, involves demolishing the 1970s office tower in which the Premier, Deputy Premier and Treasurer work, and replacing it with a spiffy new one. Some might see a contradiction here, but according to Treasurer Tim Nicholls, the new building “won’t cost taxpayers a cent“.

I’m tempted to say “if you believe that, I have a bridge for sale”, but of course Australian governments of both parties have become adept in bogus sales of bridges, roads and assets of all kinds. So, I’ll quote the famous aphorism, There Ain’t No Such Thing As A Free Lunch.

In the case of the “free lunch” apparently offered by US bars in the past, it’s clear enough that you are unlikely to get the lunch more than once if you don’t order a beer or two, and that the price of the lunch is included in that of the beer. In a complex transaction like the current one, it’s not immediately obvious how we are paying for Mr Nicholls’ new office. Some of it is in the 15-year lease payable to the owners of the new building, some of it in land being given away with the deal and some of it, probably, in valuable rights being handed over free of charge. What we do know is that, when you can’t see the price of what you are buying it’s almost certainly higher than if you paid upfront.

Of course, we have a Commission of Audit, headed by former Treasurer Peter Costello, that is supposed to expose dodgy transactions in the State’s books. The Committee prepared its draft report over the same period as this deal was going down. The government hasn’t released the report. An amusing, but unlikely, possibility is that the Commission actually did its job and criticised this boondoggle, leading the government to bury the report. More likely, Costello has done his job by helping to create the panic needed to justify 20 000 sackings, and is now just an embarrassment.

A belated victory for good sense

John Quiggin33 Comments

Wayne Swan has finally announced the abandonment of the promise to achieve a budget surplus this financial year. Some observations

* Everyone with any understanding of economics knows this was the right thing to do. The idea of trying to maintain a balanced annual budget regardless of economic conditions is recognised as nonsense even by anti-Keynesians. In the absence of active fiscal policy, the standard recommendation is to maintain settings consistent with medium-term balance.

* Both parties have made an awful hash of this in political terms. Labor was silly to make the promise of a return to surplus on a specific date, and sillier to reaffirm it in ever stronger terms until very recently. Abbott and Hockey made a mess of their response. They could have used Swan’s announcement to dump their own surplus fetishism saying something like “since the government refuses to reveal the true fiscal position, we can’t promise to fix it in one year”

* With any luck, some of the appalling fiddles of the last few months, most notably the recent reallocation of aid funding to domestic funding on refugees can be reversed

* We still need a long term discussion about revenue and expenditure in the light of the global failure of market liberalism. I plan to address this in another post

Update Hockey has indeed backed off the surplus, showing more good sense than Abbott. I’m nearly alone in this view, but I think he is under-rated. Not a towering intellect, but still among the stronger performers on the LNP front bench.

Poll blackout

John Quiggin58 Comments

The big political news yesterday was a national opinion poll showing, on its face anyway, that Labor would easily win an election held right now. you didn’t see it? I wouldn’t have either, except that it was in my Twitter feed for about five minutes and I happened to be looking at it. AFAICT, none of the major national news organizations even mentioned it. There seem to be a couple of possible reasons for this. One is that some people don’t like Morgan as a pollster (I don’t follow the polls closely enough to have a view on this).

The second is the idea that a result so far out of line with other polls (52.5-47.5 for Labor) must be a “rogue” or “outlier”. This reasoning reflects the fact that political journos still don’t understand stats. It would be sensible to ignore a poll finding if it was the result of a breakdown in sampling procedures, or a biased question. But this is the same poll Morgan has been running for many years, presumably with the same procedures. What is more likely is that, by chance, this particular sample population was more pro-Labor than the population as a whole. Every sampling procedure is subject to this kind of error. But the correct response is not to discard the data, but to collect more, or combine it with existing evidence.

Given four or five of recent polls with results around 53-47 for the coalition, simple averaging suggests that the best estimate would now be around 52-48. A better procedure would be to use a Bayesian model. This guy has done it, and Hey Presto, concludes that the best estimate is 51.9-48.1.

Coming back to the statistical illiteracy of journos, the problem may be put as follows. On the one hand, they know that it would be silly to run a “Labor ahead” story. On the other hand, they don’t have the technical chops to explain Bayesian updating, or even weighted averaging, and to do so would make it impossible to write future stories suggesting that small variations in poll numbers have any meaning.

Even so, I think Tony Abbott has had a lucky break here (as has, in a secondary way, Julia Gillard). The only thing keeping him in his job is the perception that, while he may be unpopular, the LNP are sure to win. Even a single poll challenging that could pave the way for a spill. And if the result were to return Malcolm Turnbull, the outlook for the Gillard government would suddenly get a lot worse.

Time to ban guns

John Quiggin145 Comments

The horrific shootings in the US may or may not produce some restrictions on the gun culture there, but they provide a renewed warning of the dangers here. Australia has experienced a substantial reduction in gun deaths since John Howard bravely introduced severe restrictions in the wake of the Port Arthur massacre. But the gun nuts, aided and abetted by people like Campbell Newman, have been chipping away at those restrictions ever since.

It’s time to take a clear stand on this. There’s no reason why anyone should be allowed to own a handgun. Their sole purpose is to kill people. Those who need handguns for their work (like police officers[1] and armored car guards) should have them checked out at the beginning of each shift, checked back in at the end, and kept securely locked away when not in use. Farmers and professional shooters need rifles and shotguns, but anyone else who wants to use deadly weapons like these should seek psychiatric treatment. Anyone outside these categories found with a weapon designed to kill people should be assumed to have that end in mind and locked away from the rest of us until they can show that it is safe to let them out. And, obviously, military weapons should be confined to the military.

Undoubtedly, criminals will ignore the law – that’s why they’re criminals. But in a situation where only outlaws (and police) have guns, the possession of a gun will permit an easy conviction in cases where crims might otherwise get off.

fn1. As UK experience shows, there’s no reason for the majority of police to carry guns. That should be limited to trained specialists.

Time to proscribe the NSW Right

John Quiggin10 Comments

The latest news showing that former NSW Treasurer Michael Costa is up to his neck in the Obeid scandal comes as no surprise. Australian politics has produced few characters more unattractive than Costa, and it is unsurprising that he should have enriched himself mightily on the proceeds (to the tune of $3.5 million according to the SMH, he says “only” $500 000).

At this point, it’s evident that this isn’t a problem of individual malfeasance but one of structural corruption. The core of the corruption is the NSW Right faction aka “Sussex Street”. [1]. While corruption has been an ever-present problem on both sides of NSW politics[2], the wholesale corruption of the NSW right can be traced back to the election of Graham Richardson as General Secretary in the 1970s. From the bashing of Peter Baldwin to the rise of Obeid, Richardson oversaw the conversion of the rightwing machine into a wholly corrupt organization. At this point, there is no-one in the faction who doesn’t owe their position, directly or otherwise, to Richardson or the crooks he promoted and protected.

If Labor is to have any chance of avoiding catastrophe in NSW at the next federal election, the National Executive needs to intervened now to shut down the NSW Right once and for all. The faction should be proscribed so that no ALP member is allowed to belong to it. The current officers of the NSW Branch should be sacked, and direct national control maintained until the party can be cleaned up. In this respect, Faulkner’s “one strike” policy should be applied with immediate effect, and including past offences.

It may well be that the only way to get rid of the NSW Right is to ban factions altogether. While the factional system has both advantages and disadvantages, none of the advantages are remotely comparable to the cancerous damage wrought by Sussex Street.

fn1. Ludicrously, they now propose to fix their problems by changing address, perhaps to somewhere in the much-touted Western Suburbs

fn2. Back in the 60s and 70s, Premier Robin Askin and Lord Mayor Leo Port were notoriously corrupt and Howard’s right-hand man Arthur Sinodinos is caught up in the same mess as Costa.