Working Papers

The political health of the Medibank Private sale

Despite its name, Medibank Private is owned by the Australian government, which wants to sell it - though there seems to be some confusion within the Cabinet as to whether or not this year is the right time to do so.

One thing we can be sure of, though, is that public opinion won’t support it. In the 1980s, there was some popular support for privatisation, but it went into decline after major privatisations began in the early 1990s. Asked at an abstract level in 2005 (in the Australian Survey of Social Attitudes) whether privatisation brought more benefits than costs, 53% disagreed and 17.5% agreed. On more specific privatisations, some of the ‘don’t know’ respondents say ‘no’, with about two-thirds typically against the two main recent sale proposals, Telstra and Medibank Private. This was seen again in an ACNielsen poll published in this morning’s Fairfax broadsheets, with 63% against selling Medibank Private off and 17% in favour. Newspoll recorded almost the same result back in April.

Politically, I believe that marketisation and privatisation are contrary agendas - though in a policy sense they are synergistic agendas. The pragmatic Australian electorate wants reliable, cheap services, and as I argued last year in Telstra’s case if things are broadly ok people will stick with the safe status quo. Telstra’s service levels have improved significantly since the telecommunications market was opened up, and so removed the ‘do something, anything’ frustrations that were probably driving pro-privatisation opinion. Similarly, Medibank Private operates in a competitive market already so it is hard to see how privatisation will create any significant consumer benefits, and indeed as the Newspoll found most people think premiums would rise if it was privatised (though in reality competitive conditions in the industry will be the main determinant of prices).

The government isn’t likely to win this debate, but far more significant privatisations than Medibank Private have proceeded without obvious political cost, so they may as well take the cash from a sale if and when they can.

posted on 12 September 2006 by Andrew Norton in Politics

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Unfortunate Metaphor of the Week

Kate Legge on John Hewson (Weekend Australian magazine, no link):

[his] absence from politics for more than a decade has not lessened his passion to prune and fertilise our national landscape.

posted on 22 July 2006 by skirchner in Politics

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Costello and the Deakinite Left

Peter Costello is arguing for a ‘smooth’ transition, but this presupposes that there is a case for a leadership change in the first place.  If such a case existed, he would have no difficulty mounting a successful challenge.  As Greg Sheridan notes:

The extraordinary thing about the Costello challenge is that there is absolutely no rationale for it beyond Costello’s petulant self-regard. There is no policy or political imperative for Costello to go forward. This challenge is about Costello, not about the Australian people. As Treasurer, Costello has been a lukewarm reformer at best. For years Costello was the last socialist politician defending Australia’s absurd, incentive-sapping top marginal tax rate. After a decade he managed to reduce it by 2 per cent.

Peter Costello entered parliament amid the purge of the Victorian Liberal Party’s Deakinite left in the late 1980s.  It is not a little ironic that Costello now appeals mainly to the left of the party room, who are the least troubled by his lack of policy substance.

posted on 13 July 2006 by skirchner in Politics

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The Hazards of Victorian Deakinite Liberalism

Andrew Norton, with a timely warning on the dangers of Victorian Deakinite liberalism for the Liberal Party:

Howard’s mix of populist conservatism and big-spending government has been a electoral winner - something free traders lament on both counts, but social liberals on only one. The danger for the Liberals is not the loss of Deakinites, it is the loss of the conservative working class if Costello takes over.

Those who saw the Prime Minister yesterday being mobbed by teenage girls shouting ‘You’re so cool!’ will appreciate why the Treasurer is so reliant on an archaeological dig in Ian McLachlan’s wallet to stake his claim.

posted on 11 July 2006 by skirchner in Politics

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Libertarian Party Member Advisory

Tin foil hats don’t work!  (via TB)

posted on 31 May 2006 by skirchner in Politics

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Peter Costello: The Heir Unapparent

The 10th anniversary of John Howard’s ascent to the Prime Ministership has not surprisingly seen increased scrutiny of his Deputy, Peter Costello.  In part, Costello has drawn this attention to himself, with the announcement of his international tax beauty contest, as well as a recent foray outside his portfolio responsibilities.  The punditocracy was unimpressed with both efforts.  His speech on citizenship has drawn this response from Greg Sheridan (or at least the sub-editor’s paraphrase):

This shallow, lazy, lucky and opportunistic Treasurer does not deserve to run the country.

On tax, Sinclair Davidson notes:

Apart from some tinkering at the margins, he has done nothing…The top marginal tax rate of 47 per cent has remained unchanged since Paul Keating was treasurer…By calling for a review of the basic facts of the tax system, Costello has shown himself to be years out of date and uninformed.  Costello has relied on three arguments to stymie tax reform. First, that Australian tax rates aren’t that high; second, that the tax take is small; and third, that tax reform would only benefit a small number of Australians. Each of these arguments is false.

Alan Wood, by contrast, attempts this rather lame defence of Costello:

this time Australia has avoided the boom’s inflationary consequences, and “there are grounds for optimism it can avoid a subsequent bust”.

If we do, it will be because of the better economic policy framework Costello has played an important role in putting in place.

Peter Costello has cited ‘Reserve Bank independence’ as one of his greatest achievements as Treasurer.  The August 1996 exchange of letters between the Treasurer and RBA Governor was in fact a mere codification of existing practice.  In 1996, the RBA was already doing what the Treasurer now claims credit for.  This fell well short of the comprehensive statutory reform of central banking institutions seen in other countries during the 1990s.  Along with the US Fed, this has left Australia with one of the most antiquated frameworks for monetary policy governance among the major industrialised countries.

posted on 02 March 2006 by skirchner in Politics

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Pricing Clinton, McCain and Rice

US Senators make lousy Presidential candidates, but John Fortier argues that Hillary Clinton and John McCain are the exceptions to the rule:

Senators who look in the mirror think they see the next president of the United States. History, however, has shown that the reflection is that of a losing candidate…

Only two sitting senators have ever won the presidency—John F. Kennedy and Warren Harding—and both had short and relatively undistinguished Senate careers. By contrast, consider the success of governors. Not only have four of our last five presidents been governors but incredibly none had even held a real job in Washington before entering the presidency.

Clinton and McCain are currently the highest priced Intrade contracts for securing their party’s nomination.  Unfortunately, the market is giving a very low probability to the Hillary-Condi contest favoured by Dick Morris:

Rice is the only figure on the national scene who has the credentials, the credibility, and the charisma to lead the GOP in 2008…a race between these two commanding, but very different, women is a very real possibility - and would inevitably prove one of the most fascinating and important races in American history.

posted on 15 December 2005 by skirchner in Politics

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VSU in Our Time

If the Minister is to be believed, then Australian university students are about to save up to $162 million dollars care of the abolition of compulsory student union fees.  This also implies that universities will have to front as much as $162 million for student services, given that most universities have already exhausted the limited discretion they have to raise extra funds from Commonwealth funded students under the current funding regime.  This should have the desirable consequence of forcing universities to assume control of student services and rationalise their operations, eliminating the inefficiencies, politicisation and rorts for which they have long been notorious.  Universities will now have decide how much of this they are willing to tolerate, rather than just passing it on to students in the form of higher amenities and other fees unrelated to tuition.

As Andrew Norton has pointed out, this will exacerbate the problems that beset the current funding model for higher education, whereby the net operating position of universities deteriorates for every Commonwealth funded student they are unfortunate enough to enroll.  This is an argument for deregulating the market for higher education along the lines Andrew has suggested in his book, The Unchained University.  It is actually a very good argument for universities simply refusing to enroll Commonwealth funded students, de facto privatising higher education.  While not an intended outcome of the legislation, to the extent that it hastens the demise of an unsustainable funding model, it is a welcome development.

posted on 10 December 2005 by skirchner in Politics

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The Dismissal: Get Over It

Today is the 30th anniversary of the dismissal of the Whitlam Labor government by the Queen’s representative in Australia.  Lindsay Tanner has the best advice on this subject: get over it.  Dramatic though it was, it is all too easy to exaggerate the significance of this event.  The counter-factual history is one in which the Whitlam government would have been repudiated at the next election anyway.  The removal of Whitlam in November 1975 did little to arrest the secular expansion in the size of government over the last 30 years.  The current government has built extensively on Whitlam’s legacy in its further centralisation of power in the hands of the Commonwealth.  The scope for fiscal and regulatory competition within Australia’s federal system of government has never been smaller.

November 1975 does leave an important legacy for Australian republicanism.  The 1999 republican referendum arguably failed because republicans did not adequately address the issue of the reserve powers of the head of state.  The republican movement in Australia has always been motivated by anti-establishment nationalism rather than a genuine republican constitutionalism, so it has never taken constitutional issues seriously.  Republicans will be hard pressed to offer an improvement on constitutional monarchy while it retains this narrow nationalist mindset.  As far as heads of state go, one who lives thousands of miles away and minds her own business is about as good as it gets.

posted on 11 November 2005 by skirchner in Politics

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Treasurer Costello’s Problem

Paul Kelly has some hard questions for Peter Costello on Malcolm Turnbull and tax:

What else are backbenchers supposed to do? What conclusion about Costello will other backbenchers draw? And it is backbenchers who make and break leaders…

Is it hard in political and financial terms? Of course. But what, exactly, is Costello’s problem? Does he object to the design or the politics or just the impertinence?

posted on 03 September 2005 by skirchner in Politics

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The Joke is on Costello

Treasurer Costello has ridiculed fellow Liberal MHR Malcolm Turnbull’s discussion paper on tax reform, but the joke is actually on Costello.  Turnbull’s paper has effectively exposed the fact that Costello is a policy-free zone.  Costello is the most conservative senior politician in Australia, in the non-political sense of the term.  He is uninterested in reform, because he sees it as potentially disrupting his path to the leadership.  What Costello brings to the leadership is nothing more than a well developed sense of entitlement.  Even as a political strategy, this is deeply flawed, as Paul Kelly argues:

Peter Costello’s reform was far too cautious. By changing the thresholds and keeping the rates, he doomed his package to eclipse before a more reformist push. Costello was too cautious - and caution is not the quality needed to replace Howard in the Lodge…

On the ABC’s 7.30 Report on Monday, Costello was the opposite of a can-do leader. He was, instead, Mr If. The Treasurer believes in lower tax but only “if” it is possible in political terms; his distaste for cutting the top rate was obvious. The Coalition, of course, has just won the Senate.

This is a bizarre and risky situation. Shadow finance minister Lindsay Tanner sees a lower top rate as part of tax reform with equity. So does trade union leader Bill Shorten, en route to the ALP caucus. They share much of the terrain sketched out by Liberal MP Malcolm Turnbull…

Politics is driving Costello’s position and he admits this. He told the 7:30 Report that he wanted to focus on the 97 per cent of taxpayers not the 3 per cent. So Costello is the champion of the mainstream against a more ambitious tax reform agenda. He debunked Turnbull’s base broadening, pointing out that it meant increasing some taxes.

The problem for Costello, however, is that this debate will only intensify. It doesn’t matter that his May reforms aren’t completed until next year. Nor does his populist 97 per cent-3 per cent paradigm to debunk Turnbull have much traction.

Costello’s worst mistake would be to fall into defensive mode and champion the status quo, a blunder Howard will never make…

The irony is that Tanner is more aggressive about tax reform than Costello. Tanner sees cutting the top rate as slotting into a bigger reform, and he’s right. There is a beautiful political position opening up for Labor with the Coalition assuming that Labor lacks either the brains or the guts to seize it.

posted on 31 August 2005 by skirchner in Economics, Politics

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Some Hope for the Tories

At least one of the Tory leadership contenders has a promising intellectual pedigree:

The Observer can reveal the influence on Tory frontrunner David Davis of the political philosophy of Randy E Barnett, a 53-year-old right-wing academic from Boston University, whose book The Structure of Liberty has been hailed as a classic of conservative thought.

Barnett argues that political and legal decision-making should be devolved as locally as possible, with central government cut to the bone. He mounts a passionate argument for the right of self-defence for the property owner and the right of retribution for victims of crime.

More controversially, Barnett last year represented the Oakland Cannabis Buyers’ Co-operative in a Supreme Court action to defend their right to provide free cannabis to sufferers of conditions such as MS and glaucoma. The action failed, but Barnett was hailed by cannabis campaigners as an advocate of the rights of the citizen in the face of state power…

The men were introduced by John Blundell, head of a right-wing think-tank, the Institute of Economic Affairs…

Blundell said Davis’s intellectual hinterland is underestimated. He said that the young Davis was a keen reader of right-wing philosopher Karl Popper and free-market economist Milton Friedman, who provided the theoretical backbone to Thatcherism. ‘He is one of the brightest people I’ve ever met. It’s easy to typify him as a bruiser because of the broken nose and his SAS background, but he is a voracious reader and serious thinker.’

Davis is also the front-runner on the Intrade contract for next Tory leader.

posted on 30 August 2005 by skirchner in Politics

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GetUp!: ‘We Know Where You Live’

Glenn Milne notes some interesting parallels between the corporate governance practices of the latte left and the nativist right:

There is an eerie similarity between GetUp!‘s company structure and One Nation - a structure that could have allowed Pauline Hanson and her fellow company directors to walk away with millions in donations from supporters. And there are questions about the level of personal detail required by GetUp! from new members - detail that involves financial information and profiling tailor-made to establish a database for use in direct-mail campaigns during elections. Or for commercial purposes…

Much of the site is devoted to how to make a donation, starting with $10 and with no upper limit. Money is also an issue if you choose to become a member of GetUp! But while the up-front pitch is all about political enthusiasm, the company’s actual constitution is much tougher when it comes to the question of money and membership.

It says: “By applying for membership the member agrees to pay the dues, fees, levies and other assessments imposed by the board and be charged interest at 10 per cent on any late payment, plus any expense incurred by the company because of failure to pay or late payment.” Its constitution also states: “The directors are entitled to the aggregate amount of remuneration that the general meeting determines from time to time.”

When you make a donation to the group you’re asked to provide not only your name and address, but your email address and your credit card number. When you become a member you’re also asked for an email picture of yourself plus a brief explanation of why you joined.

In political terms, this sort of information is an election campaign goldmine. While GetUp! states that it won’t “sell, trade or exchange your information without your permission”, it adds, “your information may be used to identify your location (electorate, state) and provide targeted and relevant opportunities for you to be part of our activities”.

...and a free set of steak knives.  In any other context, the left would be deeply suspicious.

posted on 15 August 2005 by skirchner in Politics

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Libertarian Party HQ Discovered

It’s the tinfoil hat house.

(via Tim Blair)

posted on 24 May 2005 by skirchner in Politics

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So I’m a Tory After All

Not that I put much store in tests like this, but here is my score:

Conservative +51
Labour -6
Lib-Dem -66
UKIP +24
Green +3

What I thought interesting about these results is they suggest I should be close to neutral on Labour and the Greens.  My anti-EU responses are no doubt responsible for the high Conservative and UKIP scores, since these parties would not have benefited from my responses to most of the other questions.  One election I am glad I don’t get to vote in!

posted on 16 April 2005 by skirchner in Politics

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