Home > Boneheaded stupidity, Economic policy, Oz Politics > The IPA: Less scruples than Billy Hughes

The IPA: Less scruples than Billy Hughes

February 28th, 2013

A prominent figure in Australian politics in the first half of last century, Billy Hughes, ‘the Little Digger’, was famous for his flexibility, having successively led the Labor Party, National Labor, the Nationalists and then the United Australia Party, before serving in Labor’s Advisory War Council and then joining the Liberal Party. According to legend, he was once asked why he had never joined the Country Party (now the National Party) and replied ‘You have to draw the line somewhere’.

Starting about the time Hughes retired, the Institute of Public Affairs has been similarly flexible, serving first as a Liberal Party slush fund, and then combining a high-minded line in free-market ideology with hackish advocacy on the part of all kinds of vested interests. But, unlike Hughes, the IPA has decided not to draw a line anywhere.

The IPA has been a consistent servant of the tobacco lobby, from denying the science on passive smoking (a dress rehearsal for its role in the climate change debate) to promotion of absurd claims about intellectual property in relation to plain packaging laws. As well as promoting absurd science denial on climate change, the IPA engaged in some pretty stunning hypocrisy, supporting front groups that have engaged in the worst kind of NIMBYism regarding wind farms.

But, as with Hughes, the IPA maintained one bright line: it consistently condemned infrastructure boondoggles like the pseudo-private Alice Springs to Darwin railway (a rare point on which I’ve agreed with them). That’s why I was a little shocked to read Mark Latham in today’s Fin, pointing out that the IPA is promoting Gina Rinehart’s Northern Australia and then some. Worse, it’s calling for special tax concessions for dams in Northern Australia.

If there is one type of project that epitomises infrastructure boondoggles in Australia it is irrigation dams, and if there is one region where the boondoggle aspect is worse than anywhere else, it is Northern Australia. The disastrous Ord River project spelled the end of dam mania for a generation or more, but now the IPA, along with the Murdoch press, is helping to revive it.

Given our friendly relations, I can’t refrain from pointing out the close relationship between the IPA and Australia’s leading centre-right blog. I’ll be fascinated to read their defence of this exercise in rent-seeking or, more likely, amused by their embarrassed silence.

  1. Sam
    February 28th, 2013 at 19:52 | #1

    Horrible. Anyone who has spent time walking in Northern Australia knows how special it really is. So much true wilderness; it’s one of the last places left on Earth where humans are not in control. To think that it’s all about to be brought under cultivation and tamed is just too dreadful.

  2. Martin Spalding
    February 28th, 2013 at 19:55 | #2

    Yes, the last scrap of intellectual consistency is gone. But the IPA has long been mainly about serving conservative interests & aligning with the right wing of the Liberal Party.

    What worries me more is the ridiculous number of times the ABC puts them on their shows, giving them a legitimacy & mainstreamness that is completely unwarranted. How many hundred associations, groups & think tanks are out there doing wonderful things but getting a fraction of the airtime the IPA gets?

    Can one person tell me what the IPA has done to deserve this inflated media profile?

  3. Matt
    February 28th, 2013 at 20:54 | #3

    @Martin Spalding
    The IPA have stacks of cash and they seem to do a very good job at training up their people to work with the media.

    Unfortunately it seems with the ABC, (and Sky for that matter) the demands of servicing a 24hr news cycle and the constant hectoring to be “fair and balanced” for more than 10 years have meant that they are very open to put media savvy points of view from one side of politics to air.

  4. TerjeP
    February 28th, 2013 at 21:29 | #4

    All the think tanks are a bit wacky. But I quite like the IPA and much of their work. I agree they are at times a bit soft on the Liberals but when they do attack the Liberals on a point of policy the media doesn’t report it anyway. I threw some money their way for one of their campaigns on free speech. And I’ve met Tim Wilson briefly in passing during drinks in an evil libertarian lair. In terms of their media engagement they are a breath of fresh air compared to the usual idiots. QandA is heaps better when one of the figures from the IPA is there. All up they are generally tops. Oh and I hope Gina gives them a mountain of money. That would be superb.

  5. Jim
    February 28th, 2013 at 21:30 | #5

    Good point, this guy Bert Kelly http://economics.org.au/2011/06/bert-kelly-feels-a-dam-coming-on-at-each-election/ is an old anti protectionist and hero of the HR Nichols society CIS and others…… in this column he completely bags the ‘put more dams in Northern Australia’ argument in this column. This is I suppose what real free marketers think about that stuff, and mentions the Ord and Northern Territory etc. But then again, I don’t think anyone really believes in free markets in a genuine sense…including…it appears….the IPA

  6. Will
    February 28th, 2013 at 21:31 | #6


    The authoritarian apple never falls far from the authoritarian tree.

  7. TerjeP
    February 28th, 2013 at 21:39 | #7

    Will :
    The authoritarian apple never falls far from the authoritarian tree.

    Yes I’ve noticed that too. Bit why are you telling me?

  8. John Quiggin
    February 28th, 2013 at 21:46 | #8

    @TerjeP Glad to see you sticking to the tribe, Terje

  9. rog
    February 28th, 2013 at 21:46 | #9

    Gina and Singo share a common political wackiness and Singos growing influence in the media is disturbing.

  10. Mel
    February 28th, 2013 at 21:54 | #10

    ” … the close relationship between the IPA and Australia’s leading centre-right blog.”

    The quality of Catallaxy has certainly declined since Jason Soon handed over the reigns to the South Africa’s least impressive export, Sinclair Davidson. Jason Soon may have had an ego the size of a small planet but at least he was, on the whole, intellectually honest and intelligent; Davidson on the other hand has reduced Catallaxy to a clownish imitation of Andrew Bolt’s blog.

    As to the IPA stooges and Catallaxy wallflowers, Alan Moron, Judith Sloan Ranger, Julie Novacaine and Chris Iceberg-Lettuce, the less said the better.

  11. Sancho
    February 28th, 2013 at 21:59 | #11

    I posted some dissenting opinion on Australia’s leading centre-right blog and found that the contribution was respected and recognised, in the finest tradition of western intellectual debate.

    Kidding LOL. The admins banned me when they realised “shut up, statist” isn’t an effective rebuttal to anything.

  12. Sancho
    February 28th, 2013 at 22:08 | #12

    We’re over the euphemisms, then.

    Okay. Here’s the summary of my experiment:

    And here’s where I easily eviscerate one of Judith Sloan’s arguments:

    I don’t make claims to evisceration lightly. I’m well aware of when an opinion is merely an opinion, but Sloan’s statements in that post are so far removed from reality that they could only be pitched to an audience guaranteed not do any fact-checking.

  13. Peter
    February 28th, 2013 at 22:24 | #13

    How similar is the northern concession to the Brisbane Line of WWII. Instead of ceding the northern land to invasion we dig up the land and ship it to them.

  14. Mel
    February 28th, 2013 at 22:35 | #14

    Sancho, did you forgot to read Joe Cambria’s Book of Sensible Netiquette for the Modern Man? I believe it was published by the IPA last year.

  15. Fran Barlow
    February 28th, 2013 at 22:35 | #15

    Pedant that I am, I’d prefer that the title were: Fewer scruples {…) It jars each time I read it.

    ‘Scruples’ are countable, though admittedly, perhaps not in the IPA’s case, ;-)

  16. Sam
    February 28th, 2013 at 22:44 | #16

    Actually you’re wrong on this one, Fran. “Less” has always been acceptable for countable objects. You can see literary examples of this going back continuously to King Alfred a thousand years ago. Some silly Oxford Dons in the 18th century made up an arbitrary rule condemning it, but this injunction was gaily ignored by the vast majority of English speakers and writers. See Steven Pinker “The Language Instinct” for more.

  17. Sancho
    February 28th, 2013 at 22:51 | #17

    Joe Cambria.

    He spams links to his blog at /pol/. High standards.

  18. Mel
    February 28th, 2013 at 23:03 | #18

    Thanks for that, Sam.

    The less/fewer bugaboo is where the pedant becomes indistinguishable from the pissant.

  19. Sancho
    February 28th, 2013 at 23:15 | #19

    In arguments over grammar it’s hard to tell the language realists from the fumblers covering for their ignorance.

    I’m with Fran on this one. Using “less” or “fewer” correctly gives a writer a certain zing that indicates they care about quality of communication, even though it’s not a crucial distinction.

    In my experience the people who complain about grammar fascism usually go on to substitute “your” for “you’re”, “loose” for “lose”, “than” for “then”, and so on and so forth.

    I stand to be corrected, but my impression is that critics of grammar critics usually don’t know how to write well.

  20. Mel
    March 1st, 2013 at 00:59 | #20

    Stephen Fry rips the pedants to shreds here: http://www.stephenfry.com/2008/11/04/dont-mind-your-language%E2%80%A6/

    But we are way off topic here, so let me just say one more time that the IPA are a miserable bunch of shills who deserve a metaphorical slap about the ears with a frozen snapper.

  21. Sancho
    March 1st, 2013 at 01:10 | #21

    Hurrah! Frozen snapper all round!

  22. Sam
    March 1st, 2013 at 01:27 | #22

    I’m not making an anti grammar- fascist point here. I’m saying the particular meme Fran is hostage to here happens to be based on an error. Surely as someone who cares about grammar, you should be on the side of those who are actually right, rather than self-proclaimed “pedants”?

    If it’s all just team loyalty, and the facts don’t matter to you, there might be a spot opening up on “The Drum” panel tomorrow next to Mr Wilson…

  23. Sancho
    March 1st, 2013 at 01:44 | #23

    Given the content of the OP, I don’t want to bog down in an argument about grammar, even though I started it and should have known that my comment wouldn’t pass without notice.

    By all means pin me down about this stuff in an open thread, but for now let’s take the opportunity to point out the differences between centre-right and fascism that the IPA seems curiously blind to.

  24. Jarrah
    March 1st, 2013 at 03:36 | #24

    If ‘less’ and ‘fewer’ are interchangeable, why have both? What am I saying, this is the English language we’re talking about!

    “Davidson on the other hand has reduced Catallaxy to a clownish imitation of Andrew Bolt’s blog.”

    It’s not his fault, mainly. What’s happened is that a large number of Blairites have migrated after Tim was forced to accept moderation.

    My biggest problem with the post-Soon era is that the laissez-faire attitude has gone (despite appearances). Soon never censored or banned, except for one crazy person. Davidson, in contrast, is trigger happy. Worse, his decisions are inconsistent and opaque.

  25. kevin1
    March 1st, 2013 at 04:34 | #25

    Just on their history, I had the idea that IPA was started up around 1946 by Charles Kemp, father of the two Howard ministers, with funding from the banks and with the original purpose to oppose talk by Chifley of bank nationalisation. Does anyone know if that’s correct? Don’t really know what they did during the Menzies/Playford/Bolte nation-building period of the 50s/60s when big govt was the theme of their side of politics.

  26. John Quiggin
    March 1st, 2013 at 05:23 | #26


    That’s about right. To complicate matters, there were two separate bodies, one in Sydney (now defunct, I think) and the Melbourne one, run by Kemp. The IPA was part of the discussions that led to the formation of the Liberal Party out of the ruins of the UAP. As I mentioned in the OP, it’s main (or at least reputed) role in the 50s and 60s was as a conduit for business donations to the Libs.

  27. John Quiggin
    March 1st, 2013 at 05:29 | #27

    On less/fewer, I’ll happily defend myself in a sandpit, to which future comments on that point should be directed.

    Also, while I’m happy enough to bag Catallaxy, the IPA is a bigger problem. As several commenters have noted, they seem to have an inside line to the ABC.

  28. Will
    March 1st, 2013 at 06:17 | #28

    Reading the synopsis for Rinehart’s book (the best I can do as I will not pad her pockets) the thesis seems to be (and it always is!) to remove government so that she can institute her own little fiefdom. The line about earning money and others being jealous of success is an extraordinary howler given her privileged upbringing and inheritance of the world’s largest iron ore resource. Rinehart has made her position very clear with support of domestic think tanks and the purchase of stakes in various mass media – Australia will once again follow the US and overtly have large amounts of conservative money thrown into elections to smear the opposition and muddy the waters.

  29. March 1st, 2013 at 07:28 | #29

    I would assume the IPA support for her “plan” indicates the Gina has already become a donor. I think they do publish figures indicating income, so if the next set contains a substantial increase, I would take that as a fair indication.

  30. TerjeP
    March 1st, 2013 at 07:50 | #30

    John Quiggin :
    @TerjeP Glad to see you sticking to the tribe, Terje

    It’s a bit rich of you to bag me for tribalism. Given you lead a cheer squad for the left.

    As I said the IPA ain’t perfect but when one of it’s members shows up in the media it is usually a breath of fresh air. Rather than spew leftist crap all over the airways at least they offer something different. Perhaps you don’t like them because they are generally well informed, insightful and they give leftist ideology a solid kicking.

  31. Katz
    March 1st, 2013 at 08:00 | #31

    Has Abbott named one of the hundreds of catchments that would allegedly benefit from one his hundreds of dams?

  32. TerjeP
    March 1st, 2013 at 08:04 | #32

    My biggest criticism of Catallaxy is that it is so damn popular that you can’t have a peaceful little intellectual conversation with others. The comment threads are a million miles long.

    My secondary criticism is JC who dwells in the comments thread. He is a sad little man who is determined to hunt down anybody that deviates from his world view and spray them with vitriol and abuse. I was briefly a joint author with him at ALS because our world views actually overlap quite a bit. But in the end I gave an ultimatum that one of us must leave. I can’t work with JC.

    Steve Kate’s is generally brilliant on the economics but far too partisan for my liking. I’ve followed his writing since the 1990′s when nobody else in Australia was defending Says law.

    Sinclair Davidson writes well and has a terrific intellect. In person he is an absolute gem with a brilliant wit.

  33. Robert (not from UK)
    March 1st, 2013 at 08:11 | #33

    The IPA did indeed have a separate Sydney office during the 1990s, but it was closed down afterwards on the dubious grounds that it was costing too much money.

    C. D. Kemp seemed to me a decent soul, in other words, he genuinely believed in what he said and had intellectual standards. I shudder to think of what he would say if he were to come back to life and to see what the IPA has become now.

  34. Troy Prideaux
    March 1st, 2013 at 08:19 | #34

    There has been 2 online petitions recently regarding the ABC’s enthusiasm for inviting IPA input into opinionated discussions which I’ve equally enthusiastically participated in, although they’re still there, alas.

  35. March 1st, 2013 at 08:24 | #35

    I did not put Mel or Jarrah up to say what they said!


    Kates is mad.He thinks Europe’s problems are due to Keynesianism when he simply cannot admit the utter failure of classical economics.

    Yes I agree on the IPA. I think Ron Brunton was the only decent persosn they ever had.

    and yes this is on Around the Traps!!

  36. March 1st, 2013 at 08:28 | #36

    which is here. It is a beauty

  37. Steve of Ferny Hills
    March 1st, 2013 at 08:43 | #37

    Too right! There’s nothing like a short walk to provide all the insight anyone needs.

  38. Will
    March 1st, 2013 at 08:54 | #38

    Steve Kate’s is generally brilliant on the economics but far too partisan for my liking. I’ve followed his writing since the 1990′s when nobody else in Australia was defending Says law.
    Sinclair Davidson writes well and has a terrific intellect. In person he is an absolute gem with a brilliant wit.

    Kates is an Austrian, hence he is wrong. For the past few years it has been amusing to see Krugman run rings around the Austrian school with a simple IS-LM model while the Austrians double down on their foolishness and grow louder in their baying for the imminent financial armageddon.

  39. John Smith
    March 1st, 2013 at 09:05 | #39

    ‘Dams will facilitate northern development’. Yes, but where? Where exactly? Where are the proposed dam sites?

    CSIRO: “Capturing and keeping streamflow in northern Australia is difficult. Most of the rainfall occurs near the coast where it is mostly too flat to build dams.

    Capturing water in valleys doesn’t overcome the problem of evaporation unless the dams are very deep – very few sites are suitable or near locations where there is likely to be significant demand for water. Consequently, large scale dams (like Lake Argyle) that can provide year-round water are not likely to be feasible for most of the north.”


  40. Julie Thomas
    March 1st, 2013 at 09:06 | #40


    Have you checked your dopamine levels lately?


    You seem to suffer from this superiority illusion/delusion and believe that your personal responses to, and evaluations of a person’s character and abilities is useful for understanding the ‘reality’.

    That JC person is a doozy eh? But he called it correctly, a while ago saying that ‘the collectivists have won’. I don’t often go to Catalaxy but I was lucky enough to come across this comment and ever since I have been quite positive about the future; Pollyannaish in fact about the fact that the tide is turning and the IPA can only react, and try to save face. They have nothing to offer anyone interested in ideas.

    What about CL though? He is an awesome example of the quality of Catalaxy contributors.

  41. Katz
    March 1st, 2013 at 09:29 | #41

    So all we need for Abbott’s policy to make sense are some crustal folding and/or the appearance of some rift valleys.

  42. Steve of Ferny Hills
    March 1st, 2013 at 09:37 | #42

    @John Smith
    Cubbie Statiion is flat.

  43. Katz
    March 1st, 2013 at 09:42 | #43

    Is Cubbie Station a workable model for water storage anywhere in Northern Australia?

  44. Steve of Ferny Hills
    March 1st, 2013 at 10:13 | #44

    Since you’re the one bagging Abbott, show that it isn’t.

  45. Katz
    March 1st, 2013 at 10:27 | #45

    It doesn’t work that way, Old Sport. It’s up to him to give it his best shot.

    Abbott has made the proposal. Presumably he has some specific locations in mind among the hundreds that are flapping about his belfry.

    Unless, of course, Abbott is philosophising about Platonic dams…

  46. Steve of Ferny Hills
    March 1st, 2013 at 10:43 | #46

    You asked the question. If the answer was genuinely important to you, you would take the time to find out yourself.

    As Abbott is not a member of the Ian Macdonald school of development, I doubt he has specific locations in mind.

  47. TerjeP
    March 1st, 2013 at 11:02 | #47

    The austerity in Europe in so far as it entails increases in taxation, and cuts to spending is neither Keynsian nor classical.

    A classical solution would be to cuts taxes and remove red tape. That may or may not require government spending cuts but probably would given the debt problem. The Keynesian solution would be to cut taxes and / or increase government spending. Given the debt situation the Keynesian solution can’t really fly.

    Either solution would be more possible if the countries in question simply defaulted on their debts. Whether such a default is a good idea is a somewhat separate issue. However even if it did make both the classical and Keynesian option more possible it does mean that the two solutions are equal in effectiveness.

    My view is that the core of the problems in Europe were cause by the Keynesian mentality and won’t be solved by it.

    I agree far more with Kate’s than Krugman.

  48. TerjeP
    March 1st, 2013 at 11:05 | #48

    I meant to say “does NOT mean the two solutions are equal …”

  49. rog
    March 1st, 2013 at 11:40 | #49

    The problem in EU is one of transfers and sovereignty – something that cant be peacefully solved overnight.

  50. March 1st, 2013 at 11:54 | #50


    you are being fed mad pills.

    classical economics has governments always having a balanced budget. this causes a dramatic shift in business confidence and produced economic growth.

    That is what austerity was all about.
    It failed utterly.
    Europe went backwards as any half educated economist would have told you.
    the IMF has now recanted on this. the EU hasn’t.

    Keynes only recommended austerity in boom times as it is then and only then when it assists the economy.

    As for Keynesian policy being responsible no less an author than Master Quiggin (and Henry Farrell) has shown that to be utterly false.

  51. March 1st, 2013 at 12:01 | #51

    Steve of Ferny Hills, Cubby Station isn’t actually a particularly good place to store water.

    If, on the other hand, your aim was to stop it flowing south and make sure most of it evaporated, it’d be perfect.

  52. Uncle Milton
    March 1st, 2013 at 12:10 | #52

    As fun as it is to pile on the IPA and Catallaxy, the bigger issue from Latham’s article, not given justice in JQ’s post, is how enthusiastic Abbott and his shadow ministers are about the Northern Australia boondoggle. (Presumably Hockey is against, but his position is too weak for him to speak out).

    The coming Abbott Government will be anything but economic rationalist. It will be BA Santamaria and the DLP on steroids. The very worst kinds of state intervention in economic life; the most wasteful and profligate spending imaginable, will become the norm. Australia will become a rent seekers’ wet dream.

  53. Steve of Ferny Hills
    March 1st, 2013 at 12:28 | #53

    @David Irving (no relation)

    Cubbie as a concept doesn’t appear too shabby. From Wikipedia (yes, I know):

    “The water is used to supply 130 square kilometres (50 sq mi) of irrigated cotton and other crops including wheat, which generates a net profit in the range of A$50 million to A$80 million a year.”

    And the water flows into the channel country are not as regular as the monsoonal rains in
    the Far North. Most water in the Far North flows in every direction other than south.

  54. Steve of Ferny Hills
    March 1st, 2013 at 12:33 | #54

    Sorry, not channel country but Culgoa River (Upper Murray Darling Basin). Statement about water flows still holds.

  55. may
    March 1st, 2013 at 12:38 | #55

    Sancho :@Mel Hurrah! Frozen snapper all round!

    no no .
    that means the recipient is conscious enough to get the message.
    and the worst you have to worry about is an all in fishfight.

    where does the consparty get the monies for spreading the kind of tosh i recently had aimed at me about how the people smigglers are winning?(yes smigglers.otherwise there is too much smug.hur.)
    what was interesting about it was how the number of boats stayed about the same over the sample shown.
    is this to make the profits of the outsourced privately owned centres of detention in a bracket enough to keep tax down?
    or do they call their profits “royalties”and pay next to nothing anyway.
    aint it marvellous how a country like this with a public purse providing conditions that are attractive in so many ways, has stateless corporate entities willing to take every advantage and yet grab at any applicably legal opportunity to get more than they give and then whinge that they are paying too much.

    i’ve had it with being nagged at by a bunch of “trust-me-i’m-conservative”s.
    all take,no give.

  56. Fran Barlow
    March 1st, 2013 at 13:12 | #56


    On less/fewer, I’ll happily defend myself in a sandpit, to which future comments on that point should be directed.

    Fair enough, but FTR, I was merely expressing my preference. I long ago gave up ‘going to the mattresses’ on matters of grammar and usage. I like the distinction, but as always YMMV.

  57. March 1st, 2013 at 13:19 | #57

    I’m not sure what your point is, Steve of Ferny Hills.

    Are you suggesting Cubby is a good model for storing the otherwise “wasted” monsoonal rain? I still don’t see how relevant the actual water flow is here.

  58. Steve of Ferny Hills
    March 1st, 2013 at 13:32 | #58

    It may well be. It shouldn’t be dismissed out of hand. The point about water flows is that Cubbie makes $50-80m a year and yet its water storages are not filled every year. Unlike a ‘Cubbie’ on the Norman River for example.

  59. Sam
    March 1st, 2013 at 13:33 | #59

    Maybe there is a way to make money out of irrigating the North, and maybe dam storages could work economically. I hope not. It would be a tragedy if we brought all the wild places under total human control.

  60. Jim
    March 1st, 2013 at 15:57 | #60


    The IPA doesn’t even bother trying to be clever about disguising their allegiances and whom they are doing their bidding for.


    The IPA, in conjunction with Australians for Northern Development and Economic Vision (ANDEV), have been calling for the establishment of a Northern Special Economic Zone with lower taxes and a reduced regulatory burden. See http://www.andev-project.org IPA staff are often direct contributors to ANDEV activities.

    The Coalition’s recently leaked draft policy for the north is almost a cut and paste from the work of ANDEV.

    Who is the chair of Chair of ANDEV? Gina Rinehart.

    Draw your own conclusions about who is calling the shots for the IPA and the Coalition.

  61. John Quiggin
    March 2nd, 2013 at 05:07 | #61

    TerjeP :

    John Quiggin :
    @TerjeP Glad to see you sticking to the tribe, Terje

    It’s a bit rich of you to bag me for tribalism. Given you lead a cheer squad for the left.

    It’s notable that Terje doesn’t deny his own tribalism, but comes back with a tu quoque. This is characteristic of the political right these days. No one can claim with a straight face that rightwingers support evidence-based policies, reject conspiracy-theoretic worldviews and so on. So, when the point is raised, people like Terje come back and say that the left is just as bad.

    I’m planning a bigger post on this soon. But, Terje gets a free shot right now. This post has shown that the IPA is willing to sell its principles in return for backing from Gina Rinehart. The commenters have pointed out, at length, that Catallaxy is barking mad. Terje’s response has been to stick with his mates, without denying any of the specifics. He now says I do the same. So, Terje, how about spelling this out?

    1. For which sections of the left do I (or this blog) act as a “cheer squad”?
    2. Can you point to posts where I’ve excused them for behavior I’m obviously unable to defend?

  62. TerjeP
    March 2nd, 2013 at 08:17 | #62

    John – the IPA link you refer to in your main article calls for special economic zones with lower taxes. This is an initiative I would fully support. I hardly see how it is tribalism to support a position you agree with. However if this is your definition of tribalism it will be quite trivial for me to find examples of you being tribal.

  63. March 2nd, 2013 at 08:23 | #63


    I know Terje and he is a great guy to know and share lunch or dinner with.

    There are plenty of ideas I shares with him as well as plenty I do not.

    I do not think he is a tribalist per se’ as they display all the characteristics of a cult. That he sympathizes with them is a bit more accurate.
    He rarely if ever uses intemperate language which is virtually a self identification label these days with such cults (think the big C folks).

    If you or others could remember the ‘good old days’ when say you and Jason Soon agreed on a lot of things but disagreed on stuff as well then that is the proper categorisation.

  64. John Quiggin
    March 2nd, 2013 at 10:28 | #64

    “the IPA link you refer to in your main article calls for special economic zones with lower taxes. This is an initiative I would fully support”

    My apologies. Since you didn’t say anything about this obviously distortionary policy, I assumed you disagreed with it, but wanted to defend your allies

    That said, I’m stunned that you could support such a policy. Can I ask whether you have any particular reason for favoring Northern Australia in this way? Why not a special economic zone for Western Sydney? Or, for that, matter, St Lucia where I live. How about a patchwork of tax rates, depending on which locality is most politically influential/

    If your answer is that you support any kind of piecemeal tax cut, is this support purely for geographically specific cuts, or does it extend to all kinds of tax expenditures. How about exempting Macs from the GST for example?

  65. TerjeP
    March 2nd, 2013 at 11:12 | #65

    Make Northern Territory a state and let it set it’s own tax rates. You then have a different tax zone.

    However I don’t think that is quite what the IPA are suggesting. I think they had something in mind more like Norfolk Island where residents are exempt from federal taxes. I’d be fine with that also. Although if federal spending via grants was still the same I’d protest about the spending policy.

    If you want to make McDonalds exempt from GST it is a bit hard to selectively cut federal spending to match. So it’s not really a reasonable comparison. I’d oppose it as an administrative complication and just plain silly.

  66. John Quiggin
    March 2nd, 2013 at 11:17 | #66

    But as you note
    (a) Northern Australia isn’t a state
    (b) states don’t collect income tax
    More importantly, there is no proposal to selectively cut spending on Northern Australia to finance the tax concessions. If anything, the opposite is implied.

    This is a specific tax subsidy to benefit very specific people, just as in your example of exempting McDonalds from GST. It just depends on whether you think Ronald McDonald is more or less deserving of a susidy than Gina Rinehart.

  67. TerjeP
    March 2nd, 2013 at 11:24 | #67

    Notrampis – not sure how I know you. Are you HP?

  68. TerjeP
    March 2nd, 2013 at 11:49 | #68

    John – I’m not sure the opposite is implied. I don’t know much about Andev so perhaps you can persuade me otherwise but a quick review of their website indicates they want lots of infrastructure up north paid for by the private sector. That’s fine by me.


  69. Chris Warren
    March 2nd, 2013 at 11:52 | #69

    Actually setting St Lucia up as a special economic zone could work. If St Lucia reduced wages to Third World levels and lengthened working hours and banking secrecy was provided for, foreign investment would rush in and all the economists would cheer – “St Lucia – Asian Tiger – miracle economy”. The Australian sharemarket would soar.

    And all the economists right across Australia would chant – free trade! free trade! supposedly so the rest of Australia can enjoy high real wages from cheap imports from St Lucia. You cannot have tariffs to protect your jobs because your productivity is uncompetitive.

    I’ll let Keynesians work out what is wrong with this proposal.

  70. March 2nd, 2013 at 11:54 | #70

    Terje, well who else would it be?

    The blog tells you that!

  71. TerjeP
    March 2nd, 2013 at 12:21 | #71

    HP – I didn’t notice the link.

  72. March 2nd, 2013 at 12:26 | #72

    you owe me a coffee then!!

  73. TerjeP
    March 2nd, 2013 at 13:02 | #73

    Fair enough. :-)

  74. Ikonoclast
    March 2nd, 2013 at 13:19 | #74

    @John Quiggin

    JQ, can you link me to comments or articles by you criticising negative gearing, FHOG, and fossil fuel subsidies? As you oppose distortionary subsidies I am sure you have written extensively against these massive distortionary subsidies. I just haven’t seen you criticise these elephants in the economic room recently.

  75. March 2nd, 2013 at 13:56 | #75

    negative gearing isn’t the problem. Afterall all it means is that you are paying more in interest than you are recieving in rent.

    The problem as the RBA showed is depreciation.

  76. John Quiggin
    March 2nd, 2013 at 14:29 | #76


    @Ikonoklast : you can use Google as well as I can. Why don’t you find the links and post them for me. But to respond very quickly

    Given that I’ve been banging on endlessly about carbon pricing, my views on fossil fuel subsidies don’t need regular restatement, I would think

    As regards FHOG, of course I’m opposed, but it seems pointless to keep going on about it

    On negative gearing the real problem is concessional treatment of capital gains. Without that, negative gearing would be legit.

  77. Chris Warren
    March 2nd, 2013 at 14:50 | #77


    Are you assuming that all interest is taxed elsewhere?

    This may not apply in the case of small credit unions. from ATO website;

    Interest derived by small credit unions is exempt from tax if all of the following apply:

    – the credit union is an approved credit union
    – the interest is paid to the credit union by its non-company members in respect of loans it made to those members.

    Also if rent is taxed at landlords marginal rate, it may be better for the community than if the same funds were taxed at the company rate?

    Is there a better system?

  78. March 2nd, 2013 at 15:14 | #78


    Negative gearing is thus,
    You are paying $300 in interest but getting only $200 in rent.
    It exists for buying property or shares however it is only , naturally, in property where extremely generous depreciation provisions come in.

    You can claim that but ask any company who invest in a project where the yield is less than the interest on the loan. how many do they do?


  79. Chris Warren
    March 2nd, 2013 at 19:28 | #79


    It is more complicated.

    Obviously where the yield is less than loan interest, an investment is marginal. However companies do this when they are engaging in loss-leading.

    But negative gearing is not just this. Negative gearing is deducting interest from rent revenues also when you pay $200 in interest but get $300 in rent.

    Then if you have a deficit, you can deduct this from unrelated income – eg salaries. Thus wealthy middle class professionals, ie graduates, can move their taxable income from (eg) 47cents in the dollar marginal rate down to, possibly, 35cents in the dollar, while building up an asset using their tenants purchasing power.

    Presumably also, the interest on loans may also be unrelated to the rented property or shares. For example, you can mortgage your house, buy shares, and deduct mortgage interest from share dividends received.

    This damages public revenue if this myriad splitting reduces overall tax payable by shifting multiple income levels below different thresholds. The burden is then increased on lower wage earners who do not have surplus for investing in shares and rental properties etc. and therefore access to splitting. This social strata then pays higher PAYE (and all of the GST and all rates if purchasing their home).

    IN effect, the rich get richer and the poor get poorer.

    Would it not be better if interest payments received by banks were taxed at the marginal rate they would have been taxed before neg. gearing, eg at 47cents in the dollar (or top marginal personal rate).

    Depreciation is another lurk for middle class elements. Then there are more complicated schemes – trusts, etc. This is another issue.

    This common policy kow-towing to the middle class was demonstrated in the GST debates 20 years ago. Today, the rich and poor pay the same tax per item where GST applies, and the better off consequently end up with more to play with than under alternative arrangements.

    Sales tax, supposedly inefficient, distinguished between luxuries and common commodities, and between imports and domestic products etc. This system supported greater social efficiency.

    We now have domestic factories closing, and masses of working poor. A blunt “economically efficient” taxing regime but massive social inefficiency.

    Negative gearing shifts tax responsibility to where tax is minimised or, in the case of some credit unions, obliterated completely.

    If the middle-class can receive their shares “franked” – then why cannot banks receive their revenues with a tax-debt stapled in the same way? They then remove the tax debt by a payment to tax office from their superprofits.

    So if a bank lends to high income earners it now pays different taxes on interest revenues than when it lends to average income borrowers. It already has the necessary information in its computers.

    Would this fix the problem with negative gearing?

  80. rog
    March 2nd, 2013 at 21:40 | #80

    @Chris Warren The rort is where interest is deducted as a cost, the rent netts a loss lowering owners income and therefore income tax liability while profit on sale is largely untaxed due to depreciation and reduced CGT rates. This then encourages over speculation, a distortion or bubble.

  81. Jim Rose
    March 2nd, 2013 at 22:49 | #81

    There is another name for special economic zones: that is federalism. Different jurisdictions decide their own tax and other policies.

    In the USA, federal, state and local authorities compete on many margins for residents and mobile resources including income and sales taxes, and state corporate taxes.

    Special economics zones were central to China’s economic transition.

  82. rog
    March 3rd, 2013 at 06:17 | #82

    Are you suggesting that we emulate Chinas economy?

  83. Ikonoclast
    March 4th, 2013 at 08:54 | #83

    @John Quiggin

    Fair enough on all points EXCEPT negative gearing. IMO, Chris Warren raises a number of very valid points in his post above; points which illustrate that the equity, revenue and distortionary problems with negative gearing go far deeper than simply the treatment of capital gains.

    The same general reasoning IMO goes for salary packaging which is a another distortionary rort.

    This country has not even scratched the surface of removing distortionary subsidies, deductions and other inequitable facets of tax policy. Clearly, there is no political will to do so and unfortunately little popular pressure to do so. This is an economic tragedy because it causes great distortion, inefficiency and unfairness in the economy.

    Apart from the capitalist oligarchs, the big problem as Chris Warren points out is the middle class of this country and its political consciousness or lack thereof. There is a great deal of selfishness and social atomisation in the approach of the modern middle class to social and political life. – I speak from experience as a member of the middle class. – Selfishness and social atomisation account for policies which appear to serve the self-interest (from an atomistic point of view) but which actually reduce the summed, enlightened self-interest of the entire class and of the entire society.

    This atomisation is engendered by the capitalist system and its mode of reducing everything to money and money realtions; to the cash nexus. The middle class generally have little or no sense of social solidarity beyond their own nuclear family.

    Earlier, I alluded to the lack of political will to tackle these problems. We could take pre-emptive action if we were conscious enough of what was going on. But apparently these problems will not be tackled until much of the Western middle class begins to slip (as it inevitably will under these current policies) into mass poverty. This is already beginning to happen in the US where the lower middle class is descending into poverty. This collapse of the middle class into poverty and their consequent joining to the working class and underclass will radicalise them.

    I would wish us to have the political consciousness to forestall violent ruptures by using enlightened, equitable, sustainable and forward thinking policies to prevent the descent into a situation where radical ruptures occur. It doesn’t appear we have the necessary collective wisdom so it looks like we are going to have to learn the hard way.

  84. Bring back Birdy at Catallaxy
    March 5th, 2013 at 09:21 | #84

    This is a fitting thread for this post.

    Catallaxy, Australia’s self-described “leading libertarian and centre-right blog”, currently features a post by Julie Novak of the Institute for Public Affairs criticising the Fabian Society. The post features a graphic purporting to be the “wolf in sheep’s clothing” logo of the Fabian Society.


    Having looked into the matter I have found that:

    (a) this is not the logo of the Fabian Society in either the UK or Australia;

    (b) if one googles “Fabian Society” and “Fabian Society” images, one finds that this bogus Fabian logo is prominently displayed on a range of crank conspiracy theory websites and in a video titled “Fabian Society exposed”, alongside climate change denialism, conspiracy theories about Jewish financiers, and the like.

    Catallaxy, Julie Novak and the IPA owe us an explanation of why they have chosen to place themselves in such company.

  85. March 5th, 2013 at 12:02 | #85

    no it is Cultallaxy!!

  86. Chris Warren
    March 5th, 2013 at 12:09 | #86

    nottrampis :
    no it is Cultallaxy!!

    “catallaxy” {political catalepsey and moral apoplexy}

  87. Fran Barlow
    March 5th, 2013 at 12:29 | #87

    @Bring back Birdy at Catallaxy

    I’ve often seen this claim put about oat crank sites too, but as most who have been around the left will know, the symbol of the fabian Society is the tortoise:



  88. John Quiggin
    March 5th, 2013 at 12:45 | #88

    @Bring back Birdy at Catallaxy
    Amazing. I’ve tweeted this now

  89. John Quiggin
    March 5th, 2013 at 13:03 | #89

    Google reveals that this is a pre-Internet instance of the impossibility of irony. The story apparently traces back to an elaborate joke by GB Shaw, who commissioned a medieval-style stained glass window, featuring prominent Fabians dressed up in medieval gear, and the logo in question as a heraldic device. The window was lost for a century (except for a brief reappearance in 1978) and finally resurfaced in 2005, just in time to become the focus of wingnut conspiracy theories


  90. David Irving (no relation)
    March 5th, 2013 at 13:31 | #90

    What I need to know, Fran, is if it’s tortoises all the way down.

  91. Will
    March 5th, 2013 at 13:32 | #91

    One more time, this nonsense with the paranoia and witchhunts, in which the pure ideology is being subverted by infiltrators and said ones with the wrong type of ideology must be uprooted by any means necessary…….

    It is well for all of us that this mob of closet authoritarians have so little power.

  92. John Quiggin
    March 5th, 2013 at 13:35 | #92

    @David Irving (no relation)

    Actually, my quick search reveals that, as in the original story, there’s a capitalist elephant on top of the worker tortoise – the drawing is apparently due to Walter Crane, the leading children’s illustrator of the late C19.

  93. March 5th, 2013 at 13:54 | #93


    They are a cult.

    despite all evidence against their theories they are more fervent in their beliefs.

  94. David Irving (no relation)
    March 5th, 2013 at 14:03 | #94

    @John Quiggin
    That’s priceless!

  95. Katz
    March 5th, 2013 at 15:02 | #95

    How embarrassment!

    The Keyboard Kommando of Mum’s Basement are tangled in the tentacles of their own falsifications.

    Memo to the KKMB: you should get out more. Try to meet some people with real jobs.

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