Water again

While I’m on the topic, my Fin column last week was about the National Water Initiative, which is in danger of becoming collateral damage in the fights between the Federal government and the states. It’s over the page.
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Rice and water

A couple of people have suggested that I should comment on some stories in the Australian about water and the rice industry. Since I’m busy, along with the RSMG team, working on models of this very topic (for all irrigated industries, not just rice), I’m happy to oblige.

The first, by Amanda Hodge and Matthew Denholm, presents a fairly negative view of the rice industry as a profligate user of water, and the second, by Laurie Arthur, is a response from the industry. A lot of interest focuses on the amount of water used to produce a kilogram of rice. In the original article, this was erroneously reported as 21 000 litres: the correct figure is about 2000 litres/kg, or 2Ml/tonne which is still a lot of water[1].
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How long can this go on ?

Another huge current account deficit, coming in at around 7.2 per cent of GDP. And that’s with high commodity prices and low world interest rates, thanks to the ‘global savings glut’. Put commodity prices back to normal, and interest rates up by a couple of percentage points, and we could easily be running a deficit in excess of 10 per cent of GDP. At that rate, net overseas obligations would be in excess of 100 per cent of GDP within five years.

Australia has been called a miracle economy on the strength of an impressively long, but by no means unique, economic expansion. But if we manage sustain this kind of imbalance for another five years it really will be a miracle. As far as I know, no economy has ever managed anything like it.

Effective average tax rates

An anonymous reader has sent me some interesting charts on average tax rates. The first shows the average income tax rate for a single person, taking into account the Medicare levy and the low income tax offset. The average tax rate rises with income as you’d expect but much more slowly than the marginal tax rates

The second takes into account the withdrawal of social security benefits, to compute an effective average tax rate, where the denominator is private income+maximum transfer payments and the numerator is tax paid+benefits withdrawn. The third does the same for a couple with one child. These average tax rates peak at a fortnightly income of about $500 for a single person and $1000 for a couple, and are otherwise fairly flat.

The pics are attached over the fold

Update Sorry, all that there are some problems with these pics. I’ll try and fix them ASAP.

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Why bother reading the papers?

Jack Strocchi points me to this piece by Tony Parkinson in the Age, which tries to score some points on the number of deaths caused by the Iraq war. Not only does Parkinson get nearly every point in the debate wrong (he misdescribes confidence intervals, fails to note that the UN study he’s touting covered only the first year of the war, ignores the difference between direct war casualties and “excess deaths” and so on) but he’s presenting as news an issue that was covered exhaustively in blogs weeks ago (you can start here and work back. As usual Tim Lambert does the heavy lifting. For a review of the earlier debate, see Daniel Davies at CT. For a more defensible version of the case Parkinson is trying to make, go here.)

I think we can add this to the list of issues where you’re better off getting your information from blogs than from the “quality” press.

Monday message board

As usual on Monday, you are invited to post your thoughts on any topic. Civilised discussion and no coarse language, please. I’m planning something on industrial relations reform before long, and I’d be interested in your views.

Weekend reflections

This regular feature is back again. 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.

Schapelle Corby, the Bali 9 and the war on drugs

Like lots of others, I’m not too happy about the Corby case. But I think most of the complaints from Australia have been misdirected. The problem is not with the trial which, while not as procedurally tight as the Australian equivalent, seemed basically fair[1] to me. The real problem is with Corby’s twenty year sentence. The likely imposition of the death penalty on the Bali heroin smugglers is even worse.

The reason that attention hasn’t been focused on this issue is that, as a society, we’re fairly hypocritical about the war on drugs. At one level, we recognise that it’s essentially pointless and unwinnable, like a lot of wars. So we’ve gradually backed away from lengthy prison sentences for bit players, and even abandoned the idea that the capture of a few “Mr Big Enoughs” would make any real difference. But it’s still convenient for us that our neighbours should have draconian laws, the burden of which falls mainly on their own citizens. It’s only when a sympathetic figure like Corby gets 20 years for an offence that might have drawn a good behavior bond in Australia, or when some stupid young people end up facing a firing squad that the contradictions are exposed.

fn1. That is, as fair as other drugs trials. The nature of the war on drugs is that normal legal principles have to be suspended if the law is going to be made to work at all. The routine use of procedures bordering on entrapment, and the effective reversal of the onus of proof, once possession is established, are examples of this, in Australia just as much as in Indonesia.