Right Pulse

In response to Cardinal Pell’s call for an increase in the Australian fertility rate, ‘your’ ABC recently reported:

…prominent economist Jeffrey Sachs says the global population is rising too dramatically.

“The planet, everyone can feel, is just right at the limits right now in terms of food, in terms of energy supply, in terms of land use,” he said.

Professor Sachs says population projections, which also take falling fertility rates into account, are already too high at around an extra 2.5 billion people by 2050.

“I do think that the world would be very wise on its own welfare and for saving the physical earth to be trying to stabilise through voluntary means the world’s population at around 8 billion, not the over 9 billion which is our current trajectory right now,” he said. “It’s a serious problem.”

Economic doom and gloom forecasts, how original. Thomas Malthus would be proud. People are always the problem for the left, never part of the solution. Can you feeeeel it? And you sure will if the fertility rate does not increase, with an increased tax burden to care for the elderly falling on a smaller group of workers. And speaking of Malthusian policies, study this article and then decide your feelings on the matter:

There is a little-known battle for survival going in some parts of the world. Those at risk are baby girls, and the casualties are in the millions each year. The weapons being used against them are prenatal sex selection, abortion and female infanticide — the systematic killing of girls soon after they are born.

According to a recent United Nations Population Fund (UNFPA) State of the World Population Report, these practices, combined with neglect, have resulted in at least 60 million “missing” girls in Asia, creating gender imbalances and other serious problems that experts say will have far reaching consequences for years to come.

Mosher, the first American social scientist allowed into China, puts much of the blame on Beijing’s one-child policy, which took effect in 1979.

The policy encourages late marrying and late childbearing, and it limits the majority of urban couples to having one child and most of those living in rural areas to two. Female infanticide was the result, he said.

“Historically infanticide was something that was practiced in poor places in China,” Mosher said. “But when the one-child policy came into effect we began to see in the wealthy areas of China, what had never been done before in history — the killing of little girls.”

Have you felt it yet? The article goes on to deal with selective abortion and other gender selection practices.

However, China has pledged to keep its one-child policy in place until the year 2050, a policy which it admits is “related” to the large sex imbalances in the country.

“The implications are potentially disastrous,” Mosher said. “The answer is economic development, not restricting the number of people.”

Read the rest of this entry »

From the BBC about the potential merger between BHP and Rio Tinto:

A tie-up between BHP and Rio would create a firm with a third of the world’s iron-ore market, raising fears that it would be too powerful.

The EU listed its concerns but said BHP would be able respond, adding the findings had not been pre-judged.

Ah ha though, where there’s a will there’s a way to stop the free market:

US regulators have approved the deal but, like the EU, Australia’s regulators are also sceptical.

Why on earth Australian regulators would be opposed to such a move is a mystery. It would make BHP one of the top 5 corporations in the world by market value - think of the tax revenue from the strengthend market position such a merger would result in. Anyway, this rather interesting note from Forbes magazine:

The commission said its preliminary investigation showed that the proposed takeover raises serious doubts as to its compatibility with the single market. The EU executive has particular concerns over the markets for iron ore, coal, uranium and aluminium and mineral sands, because the proposed takeover could result in higher prices and reduced choice for these companies’ customers.

Seems like the EU has already made up its mind, but they have a get out clause:

The commission said, however, that its decision to open an in-depth inquiry does not prejudge the final result of the investigation.

Some how I find that slightly unbelievable.

Peter Saunders, from the Centre for Independent Studies, argues on ABC’s Counterpoint against the Australian welfare state and taxation system. A system that takes money from individuals and families and then gives it back to them through welfare benefits:

…it’s saying that people who feel that they would be better off with their own money, buying the things that they need, organising their own budgets, looking after their own families and dependants should be able to say that, they should be able to declare independence from the government:

I don’t want your Medicare, I don’t want your social insurance, I don’t want your schools, I don’t want any of that stuff. I’m willing to pay tax in so far as it’s necessary for the redistributive component of the welfare state, to help people who genuinely can’t help themselves, but I’m fed up with paying tax so you can give it back to me again. And in return will you please leave me alone with this increasing amount of paternalistic regulation that you’re bringing in. Stop running my life for me.

A case of the Government stealing from the middle class and then giving the money back - as if it was a privilege to receive from the Government what was already yours.

Churning’ is that you’re paying for your own benefits. Your listeners can look it up; the Australian Bureau of Statistics produced a report last year which proudly stated that the average family with dependent children was paying in all tax (not just income tax but GST and so on) was paying I think it was something like $516 dollars a week in all taxes and was being given in the value of all benefits and services $503 a week. So there was this massive bureaucracy to take the money off you, including taking more than you should have done in order to give it back at the end of the tax year, and then there’s another massive bureaucracy to hand it all back again.

No club for victim hood here. Our friends seeking ‘healing funds’ could learn a few things. It is another reason why an Aboriginal state would never work - Aboriginal elites want independence from the Australian Government but can’t survive without Australian Government money and support as it is.

Rip rip rip away I say:

EDUCATION Minister John Della Bosca and Planning Minister Frank Sartor are being targeted for removal by ALP powerbrokers in a campaign that could rip the Iemma administration apart.

At the heart of the ructions are Treasurer Michael Costa, Ports Minister Joe Tripodi and powerful backbencher Eddie Obeid, who are being blamed for a smear campaign against Mr Della Bosca over his role in the power privatisation debate.

The Premier’s chief of staff, Josh Murray, was caught up in the tensions when he was fingered by senior ALP staffers as the author of an embarrassing mock video clip featuring Mr Della Bosca as Hitler, which appeared on YouTube last week. He denied any involvement.

The video is below.

Continuing:

Yesterday a rival video using the same footage, but this time portraying Hitler as Mr Iemma railing against Mr Costa and referring to Mr Murray, was also posted on YouTube.

The tit-for-tat video battle comes as Labor MPs plan a revolt on the floor of parliament over the privatisation legislation.

The counter video is linked here. Warning, there is a bit a foul language in the video, after all it is the ALP. Back to the story. Apparently there are multiple ALP MPs threatening to cross the floor and vote with independents opposed to the privatisation. I suppose they know they can’t block privatisation of the electricity network, due to conservative support, so the ALP left are looking for a scalp from the front bench - a bit of political bullying to keep any other dissidents in check.

If the conservative opposition wanted to be completely opportunistic, they could continue to give in principle support to privatisation but vote against it in Parliament due to a lack of community support, or something to that effect. Anything to get the independents and the ALP left to vote for a motion of no confidence against Iemma and hopefully spark an early election. With the opposition ahead in the polls, that would give them the best chance of getting back into power sooner rather than later.

There is a distinct possibility the gov’t may have over estimated the budget surplus by $3bn, by accounting for the indirect effects that might arrive in additional tax revenue from an increase in immigration:

The Federal Opposition has questioned why the Government is expecting almost $3 billion in revenue from a boost to immigration announced in this year’s Budget.

Opposition Leader in the Senate Nick Minchin has used a Senate Estimates hearing to question public servants about the impact of the immigration increase.

He says he is staggered the Government has listed the expected revenue in the forward estimates.

“All central agencies have always taken the view that particularly with respect to expenditure decisions, that it is highly dangerous to start counting secondary or indirect revenue consequences of expenditure decisions,” Senator Minchin said.

If this turns out to be the case, there may be other areas affected by the same error. It would be the biggest budget stuff up in history and would force the gov’t to issue a mini-budget to correct the error. Maximus Embarrasmus.

Former Reserve Bank governor Bernie Fraser has come out against further interest rate rises, citing exogenous shocks as the main source of inflation instead of the demand driven thesis normally given by the main stream media (msm):

The target band may need to be reviewed if the climb in food and fuel costs reflected structural changes in the global economy rather than the regular ebb and flow of prices.

“We’re not there yet but the question is going to arise, are some of these increases not seasonal, not episodic, but structural and secular?” Mr Fraser has told The Australian Financial Review.

“If we’re going to be faced with secular oil prices, that’s going to directly and indirectly push up inflation.

“But it would be wrong, in my view, for the Reserve Bank to respond to that sort of increase in inflation by pushing up interest rates.”

In other words, supply side shocks are affecting inflation and these factors are not best addressed by monetary policy, although as I have written before, the current money supply policy is making inflation worse. By contrast, demand in the economy has slackened off considerably:

Consumer confidence is close to a 15-year low and growth in retail spending ground to a halt in the first three months of the year…Business, too, is hurting from rising borrowing and fuel costs, forcing them to cut back on their hiring intentions and rein back on upgrading their facilities and infrastructure investment as sentiment dropped to the lowest level since 2001.

So if the current rate of inflation is not driven by demand, what is one to make of the msm coverage given to a tax cut - inflation link? Basically that the view is shallow, fed by the hard left in the media that are opposed to any reduction in Government revenue for fear of Government becoming irrelevant and in some way hurting the club for victim hood. The CIS has a less cynical take on the issue than my view:

Reductions in taxes can be useful in inducing increased labour supply. But the benefits of tax cuts extend well beyond their positive implications for labour supply, to issues relating to the distortions, compliance and collections costs that flow from the operation of the tax system.

Tax cuts have the capacity to increase supply more broadly, not just in the labour market, easing capacity constraints and reducing inflation pressures.

The appropriate focus for fiscal policy is precisely these microeconomic and supply-side issues, not demand management.

I also have another proposition. Tax cuts provided in the past were merely keeping up with inflation by reducing the rate of the ‘inflation tax’ or bracket creep. In order to help remediate the current rate of inflation, caused by supply-side constraints, larger tax cuts are need above and beyond the inflation tax. This will stimulate the supply side signals needed for the market to reduce the current rate of inflation through investment in productive capacity, continued expansion of the labour market and encouraging savings.

Andrew Bolt has a good summation of the latest FuelWatch goings on. I’d only add that the data provider for the ACCC study has come out against the policy:

Informed Sources managing director Alan Cadd said its figures actually found fuel prices were consistently higher in Perth compared with eastern states until the introduction of supermarket fuel outlets in 2003-04.

“It was increased competition that saw the prices drop, not FuelWatch,” Mr Cadd said.

And there has been an initial watering down of the policy:

Australia’s consumer watchdog the ACCC has come out strongly in favour of FuelWatch, but has warned it might lead to higher prices in bush areas with limited competition among petrol stations.

So its competition that drives prices down not government regulation of prices. So what’s the point of FuelWatch?

Documents leaked to the media indicate that four government departments, including Finance and Prime Minister and Cabinet (PMC), believe the ALP’s policy to implement a socialist style fuel price fixing system, FuelWatch, is a dud idea:

The Cabinet document, leaked to the Nine Network, contained a caution from Prime Minister Kevin Rudd’s own department that FuelWatch could lead to “a small overall price increase” in the pump price.

The finance department, the industry department and the department of resources and energy also argued against the scheme, under which service stations will be required to fix their prices each day.

PMC also reference Treasury estimates that further indicate the problems with the FuelWatch policy:

“The proposed scheme will also result in an increase in the compliance burden in the economy, with Treasury estimates indicating that the proposed scheme will result in ongoing increased operating costs of around $4000 per annum to affected small businesses.”

So that’s now the Government’s three senior departments, PMC, Finance and Treasury saying FuelWatch is a bad idea. And what about the ACCC and there supposed support for the scheme? PMC say:

“Econometric modeling undertaken by the Australian Competition and Consumer Commission (ACCC) is somewhat inconclusive with respect to the overall pump price, but indicates that a small overall price increase cannot be ruled out.

Well if FuelWatch was such a good idea then the proof would be clear, but it isn’t. All of the departments in question recommend against the scheme, especially the idea of forcing retailers to lock down prices for 24 hours. Government forms of price control don’t work and never have - they merely constrain supply which increases prices and shortages for everyone. As Turnbull said in the HOR:

You have to go back to the Soviet Union, you have to go back to Gosplan and Brezhnev’s era, to think of governments which would actually want to set prices and say that price movements are wrong. What have these guys learned? Nothing.

Rudd ignored FuelWatch warnings

Last night in the House of Reps Appropriation Bill (No.1) was debated. I know know you’re all thinking excitement plus how did I miss such an occasion. Well I’ll give you what the main stream media won’t. The opposition assistant Treasurer Dutton noted the following regarding the ALP’s infrastructure fund which was part of the recent Budget:

Labor has announced that it will place $41 billion into these slush funds and then spend $41 billion of the slush funds, as well as the interest, on infrastructure projects. This was announced in the budget and there is precious little detail available on how these slush funds will be set up and how the slush will be administered….what rate of return will the government seek; will the government be seeking public-private partnerships; how will this be legislated; will the legislation…include a target rate of return for the investment? Not that that would be too important in the long term, of course, because Labor is intent on spending not just the return but also the capital….

Presumably, the people who assess the projects will then put recommendations up for cabinet consideration, where it will then go behind closed doors for no-one to see. This is where the political interference certainly will come in…and the Australian public will have no idea about the decision-making process and which projects get missed and why…Cabinet documents will not be released and the government cannot commit to not announcing projects during election campaigns. Thus I think we are seeing the birth of the biggest election war chest in Australian political history. Read the rest of this entry »

The ALP is now divided on what to do with fuel taxes. Resources/energy Minister Mr Ferguson wrote the following about the ALP’s plan for a ‘Fuel Watch’ system:

“Your assertion that Fuel Watch will be pro-competitive is unsubstantiated and ignored the very substantial evidence that it is anti-competitive,” Mr Ferguson wrote. “I remain more concerned about the substantive elements of Fuel Watch, which I believe will seriously damage the Government’s economic and regulatory reform credentials.”

And state government’s are basically telling Rudd to go take a hike if he thinks he is going to take the GST off fuel:

New South Wales Treasurer Michael Costa says it would cost his state up to $400 million and he warns there is not likely to be a deal unless his state receives the full amount.

“We’d expect that the $400 million would be compensated in full,” Mr Costa said.

As one reader commented, ’so much for the end of the blame game’. It is only beginning. I’d like nothing better than to see the ALP tear itself apart over fuel. Given that Rudd has announced he has already done all he can to reduce the cost of living - including fuel - the Government is looking for ideas from the public:

IF ANYONE out there has any ideas about how the Government could cut out waste and make savings, now is your moment.

Finance Minister Lindsay Tanner is inviting ideas from the public, saying yesterday that the Government’s “razor gang” had started looking for a second round of cuts, targeting the processes and programs of government. He said there were always pressures for new spending, and “we would welcome any suggestions or savings proposals from anybody in the general community”.

So much for Rudd having a vision.