I seem to have lost trackback capacity – people are linking but they are not showing up as trackbacks. If any readers can automagically divine the source of my problem, I’d be very grateful. My host recently rearranged my directories, putting the WordPress blog at root level to fix the RSS feed, so perhaps I’ve gained on the roundabouts and lost on the swings.
Month: February 2005
What I’m reading
Blood Matters by Matthew Klugman is a fascinating history of the Red Cross Blood Transfusion Service in Victoria. As well as being of great interest in itself, it yields lots of insights into the role of volunteers and social social solidarity, particularly in relation to the “gift of blood”.
The story ends in the 1990s, when organisations that had served Australia well for decades were swept away in a tide of managerialist and market-oriented reform. The Victorian service was merged into a national body, while Commonwealth Serum Laboratories, the government organisation that had processed blood was privatised on terms that were grossly unfavorable to the public. It’s arguable that this is all for the best. Certainly the quality of Australian blood supplies remains high, and the ethic of blood donation is still strong. But I can’t help feeling that in this, and many other respects, we are living off social capital accumulated in the past.
Shameless
This Sun-Herald front page “exclusive” by Matthew Benns is one of the most despicable pieces of journalism I’ve seen in a while. Taking the eminently forgettable occasion of Prince Charles’ visit to Australia, Benns decides to chase down the disturbed young man who shot blanks at the Prince with a starters pistol during his last visit 11 years ago. The man has turned his life around and recently qualified as a barrister. As the story makes clear, all he wants to to is forget about the whole business.
Certainly 11 years ago was a traumatic experience and is something I don’t want to bring back those memories again … To think about it even now unsettles me a little bit … what happened back then was extremely traumatic and the effect it had on my family was deeply upsetting.”
The other people quoted in the story, including then premier John Fahey and his wife seem equally unhappy about revisiting it.
Faced with this kind of response to a story idea, a responsible journalist and editor would have quietly killed it. But not Benns or the Sun-Herald edito. Their idea of letting the guy move on is to splash his picture all over the front page. I am seriously considering cancelling my subscription as a result of this.
The Great Canal
It looks as if the WA election may turn on a PPP scheme: Liberal leader Colin Barnett’s proposal for a canal bringing water from the Kimberleys to Perth. This seems to me like complete lunacy. The estimated construction cost is $2 billion, but given a 10-year staged construction process, accumulated capital costs will be closer to $3 billion by the time the first water flows. The private owner will want a nominal return of at least 10 per cent, and depreciation of 4 per cent[1]. That’s more than $400 million a year in capital costs alone, or something like $800 a household. I think a saw an estimated water flow of 200 GL, which suggests $2/kl in capital costs.
But that’s just the start of it. Water is heavy. Every kilolitre of water is a tonne of matter that has to be transported nearly 3000km with no assistance from gravity. I have no idea how much this would cost, but I’d be amazed if it could be done for $1/kl. And all of this is before treatment and reticulation, and without even thinking about evaporation and seepage, environmental issues, native title, compensation for non-indigenous freeholders and so on. Desalination is considered expensive at $1-2/kl but it looks like a marvellous bargaing compared to this.
The proposed contract is take or pay, so if demand falls short (this scheme will supply around 400kl/household, more than total consumption for many) the loss will be borne by existing public water suppliers.
Barnett has apparently committed himself to the scheme without any sort of feasibility studies, and, according to the Fin, scored a big win with the TV audience in his debate with Geoff Gallop by doing so. But, on the evidence of this scheme, he’s unfit to be trusted with a footy club raffle, let alone running a state government.
One interesting feature of this kind of scheme is that I’m in agreement with the Institute of Public Affairs. We have very different views on infrastructure policy in general, but we can both recognise a boondoggle when we see one.
Update 5/04 The Fin quotes a Treasury report that estimates the cost at $6.50/kl which includes higher construction costs. That sounds about right to me, and confirms my conclusions about Barnett. The story says the $2 billion promise was based on a proposal from Tenix (the planned private partner) that was exceptionally sketchy – apparently they didn’t even know the route of a major gas pipeline in the area.
Further update Rob Corr is all over this story. For what it’s worth, I’d judge that Barnett has a few days left to back off the idea and claim he’s been misunderstood. Any longer than that and he’s better off brazening it out all the way to the election. But three weeks is a long time in politics.
fn1. It’s supposed to be a BOOT apparently, so the capital will have to be amortised over 25 years or so, making 4 per cent a lower bound.
Weekend reflections
This regular feature is back. The idea is that, over the weekend, you should post your thoughts in a more leisurely fashion than in ordinary comments or the Monday Message Board.
Please post your thoughts on any topic, at whatever length seems appropriate to you. Civilised discussion and no coarse language, please.
Will you go bankrupt before Social Security?
In his push for Social Security privatization choicepersonal accounts abolition, George Bush is raising the prospect that, some time around 2050, Social Security will go bankrupt. This claim has been refuted quite a few times, so let me raise a different answer.
If you’re a young working-age American, don’t routinely pay your credit card balance(s) down to zero each month, and don’t have top-flight health insurance, it’s odds-on, based on recent experience[1] that you’ll go bankrupt at some point.
Read More »
A general request for civil discussion
There’s lots of interesting issues under discussion at present, but, inevitably, vigorous discussion is sliding into flamewar. No individual comment has been offensive enough for me to intervene, but there’s a lot of shouting going on. That tends to reduce comments threads pretty rapidly to repetitive exchanges between two or three people – entertaining for a little while, but a turn-off after that. Could I ask everyone involved to take a deep breath and avoid any personal criticism for a while. There’s plenty of meat left in these issues, I think.
The OECD on user pays
I normally ignore OECD reports on the Australian economy, since they are in essence, a Paris republication of the Australian Treasury policy line of the day. The OECD is largely staffed by officials from national treasury departments on temporary postings, and its primary source in consultations is the Treasury. If there has been an instance of substantive disagreement between the OECD and the Australian Treasury in the past 30 years, I’m not aware of it (corrections welcome on this!). Of course, if you think Treasury is always right, this isn’t a problem.
The latest calling for a renewed push on reform and so on, fits the pattern perfectly. But there was one para that caught my eye, and so I’ll try to dig out the report.
The health system, it said, needed more market incentives and a strong user-pays approach.
Private health insurers should be able to cover risks outside hospitals, while there should also be less reliance on paying doctors on a fee-for-service basis, which encouraged them to over-service their patients.
This seems entirely self-contradictory, but consistent with my general view of the OECD. Fee for service is the only real “user pays” system, since a privately insured person faces exactly the same incentives as someone consuming free public health services. On the other hand, concern about medical over-servicing and support for central planning as a method to control it has been a characteristic feature of the Treasury/Finance view for many years. But, I’ll have to read the whole thing.
Update Treasury is pretty well-informed about the Australian economy, and likes to play its cards close to its chest, so the OECD reports are a useful guide to the way Treasury is thinking. But when Treasury gets it wrong, don’t expect the OECD to correct them. In early 1990, for example, when anyone in the private business sector could have told them a catastrophic crash was under way, the OECD Report said “A severe recession is unlikely … the task for policy is to ensure that the necessary weakening of domestic demand continues”.
This report is also interesting reading for those who now deny that the current account was the policy target driving the credit squeeze that gave us ‘the recession we had to have’.
Banned in Brisbane
We in Brisvegas finally got to see Outfoxed on the ABC last night. It didn’t get a cinematic run because the Murdoch papers (a monopoly here) refused to run more than minimal advertising for it.
It was interesting. I haven’t seen enough of Fox to know whether it was a fair and balanced picture, but the traits depicted were exactly those of the RWDB bloggers who follow the same line as Fox on most issues[1]. Blatant partisanship is combined with a hypocritical pretence of devotion to the unvarnished truth. For “we report you decide”, insert “fact-checking their asses”.
There’s nothing wrong with partisanship, and I’m not shy about announcing my own position. But even partisans have an obligation to be truthful, while acknowledging that they are more likely to focus on facts that are consistent with their own world-view. From what I’ve seen, Fox fails this minimal test, while denying that what it presents is propaganda rather than news.
fn1. This isn’t true of all rightwing bloggers. Some engage in honest debate, and others make no pretence of objectivity. But Instapundit sets the pattern, and many others follow.
Looking for unicorns
Greg Barns raises the prospect that liberal Liberals might cross the floor to block illiberal government legislation in the Senate. This will take one government senator if the rest of the Senate is opposed, or two if the government can line up an additional vote, say from Family First. As Barns observed, this happened a couple of times under Fraser
And during the 1980s, when the Liberal Party was in opposition, it was liberals such as Ian Macphee, Peter Baume and Fred Chaney who curtailed the impact of the Liberal Party’s social conservatives on matters such as immigration and women’s rights.
Of course Macphee lost preselection and Baume and Chaney were marginalised. But, as Dave Ricardo pointed out in recent comments, if you want to look at what’s happened to the 1980s liberal wing of the Liberal party, you need only look at its remaining representative in Parliament – Philip Ruddock.
John Quiggin 