A rose by any other name …

Most of the discussion of the Abbott government’s recently announced revenue raising measure has focused on semantics: is there a meaningful difference between a levy and a tax, has the government broken its promises and so on. All of this is boringly predictable. The last government to treat its election promises as binding obligations was Whitlam’s. Perhaps Rudd would have kept his promises if it weren’t for the GFC (I don’t think he broke many before that), but with that exception we’ve got used to the various theatrical devices associated with ditching promises: Black Holes, debt crises, Commissions of Audit and so on. The reaction of Bill Shorten and the Labor Opposition is equally predictable. The job of the Opposition is to oppose, and in particular to excoriate the government for breaking any promise, no matter how ill advised.

On the other hand, I’m disappointed that the Greens have taken the same line. Their job, in my view, is to use their leverage to promote sustainable social democratic policies, and to oppose regressive market liberal and environmentally destructive policies, regardless of source. So, for example, they were sensible to wave through Hockey’s abolition of the debt ceiling, even though it involved breaking a silly promise. They can’t stop the government breaking lots of promises on the expenditure side, so they should try and achieve balance by supporting sensible proposals to raise additional revenue.

The case in favor of an increase in taxes for higher income earners[1] is obvious. The big cuts promised by Howard in the leadup to the 2007 election, and largely matched by Rudd were unaffordable at the time and became even more so when the GFC led to slower growth in real and nominal incomes and therefore to less of the bracket creep that normally pays for such cuts. Along with Costello’s massive handouts to “self-funded” (but publicly subsidised) retirees the previous year, these cuts are the main reason it has been so hard to achieve a return to surplus after the GFC stimulus was wound back under the Labor government.

So, it makes sense to increase the rate, and to keep it high until bracket creep finally works its magic and restores the revenue raising capacity of the income tax to something like its pre-2007 level. I haven’t done the numbers but it seems as if four more years ought to do it. So, a temporary increase that can be called a levy makes sense. And, if everything else is held constant, an increase in revenue translates one-for-one into a reduction in debt.

Summing up, if Abbott wants to increase income tax on high earners, I’ll support him. And, if he wants to call this policy a “debt reduction levy”, I don’t have a problem with that.

fn1. Doubtless, we’ll get objections that taxpayers on $80 000 a year aren’t really high income earners, although the median wage for full time workers is around $60 000. But the extra tax payable by someone on $80 000 is precisely zero: the levy is only payable on income in excess of that level. Even at $180k, the levy is only $2000/year or about $40/week – a small fraction of the discretionary spending of most people earning this kind of income.


I’ve never been a fan of the idea of leadership[1][2]. This hagiographic portrait of Campbell Newman by Griffith University political scientist Paul Williams illustrates the problem. He describes Newman’s approach to policy execution as following the army’s ” “Task, Group, Individual” paradigm” and is fulsome (in all senses of the word) in his praise, concluding

Whether you support or oppose Newman’s policy choices, the evidence is the Premier is not engaging in random reactionary politics but, rather, adhering to a considered leadership plan. In the end, that’s all anyone can ask.

Well, no.

* We would reasonably ask that Newman should adhere to his election commitments which promised public servants their jobs would be safe.
* We could reasonably ask that basic rights like freedom of association should be preserved
* We could reasonably ask that our government should not spend millions of dollars of our money pushing claims about asset sales that no economist (not even strong advocates of privatisation) accepts.

If “leadership” meant persuading the public of the merits of particular policies, there would be a lot to be said for it. But, invariably, “leadership” means ramming through policies that voters don’t want, and hoping they will forget by the next election. In these circumstances, I’d prefer random reaction to a considered plan to do the opposite of what you promised.

fn1. One of its sadder outings was Labor’s doomed 1996 election campaign, which for some reason added a full stop to the word for its slogan. The sight of a “Leadership.” banner sagging to the floor on election night said it all.
fn2. I’ve long had the idea of writing a book on “followership”, on the general model of The Good Soldier Schweik. The key idea would be that a good follower makes sure that the leader is between them and whoever is shooting at them.

Stratification in tertiary education

When people call for a university system more like that of the US, they commonly have in mind the idea that Australia should have institutions like Harvard and Princeton, and a belief that more competition in tertiary education would bring this about. There are a couple of obvious problems with this.

First, high-status universities like this provide undergraduate education only a tiny proportion of young Americans. Around 1 per cent of the college age cohort attends high-status private institutions like the Ivy League unis, Chicago and Stanford, and this proportion has been declining steadily over time. Most of the Ivies enrol no more undergrads than they did in the 1950s. Adjusting for population, an Australian Ivy League would consist of a single institution enrolling perhaps a thousand students a year.

Second, the US experience shows that the idea of competition between universities is a nonsense. Harvard, Princeton and the rest were the leading universities in North America before the US even existed, and they are still the leaders today. The newest of the really high status universities is probably Stanford, founded in 1885. Competition between universities is pretty much the same as the competition between the Harlem Globetrotters and the Washington General.s

The reality of US education is a highly stratified system. Below the high-status private universities are the “flagship” state universities, which educate around 10 per cent of the college age cohort (again, a proportion that is declining, or at best stable).

After that, there are lower-tier state universities, two-year community colleges and, worst of all, for-profit degree mills like the University of Phoenix which exist largely to lure low-income students into debt and extract Federal grant money, with only a minority ever completing their courses.

Australia has always had a stratified system, but to a much lesser extent. (More on the history when I get a chance). The big question facing policy is whether to increase stratification, by widening the gap between the “Group of 8” and the rest, or to treat tertiary education like other public services, available to all who can benefit from it, at the best quality we can provide for everyone.

University education systems mirror and recreate the society to which they belong. A highly stratified system, like that in the US and UK, reflects and reinforces a class-bound society in which the best thing you can do in life is to choose the right parents. We should be aiming at less stratification, not more.

Update Just by chance, one of the lead articles in the NY Times advises that, thanks to increased international intakes, the number of places for domestic undergraduates at the Ivies has fallen sharply

Joining a sinking ship

According to news reports, Education Minister Christopher Pyne is going to reprise his successful Gonski exercise of last year with an attempt to remodel the Australian university system along US lines, as recommended by former Howard education minister David Kemp and his adviser Andrew Norton. In particular, he hopes to expand the role of the private sector.

Apparently none of these people have read the stream of reports coming out of the US making the points that

* Whereas the US was once the world leader in the proportion of young people getting university education it now trails much of the OECD (including, if I got the numbers right, Australia)
* US university education, even in the state system, is ruinously unaffordable
* The top tiers of the US system are increasingly closed to students from all but the top 5 per cent (or less) of the income distribution
* The US has the most inequality and some of the lowest social mobility in the developed world
* For-profit education in the US is a scam, based on exactly the mechanism promoted by Kemp and Norton, namely access to public funding/

The US tertiary education system is now like the US health system: world-beating for the 1 per cent, high-quality but incredibly expensive for the top 20, unaffordable or non-existent for the middle class and the poor. And this is the model the LNP wants to emulate

Anzac Day, 99 years on

Another Anzac Day. A solemn occasion to remember the heroism and sacrifice of those who died and to recall with horror the waste of young lives in a war of rival empires. Australians had no quarrel with Turks, nor they with us. And, in the Middle East, as elsewhere, the war achieved nothing and resolved nothing, but rather generated and inflamed conflicts that continue to this day.

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Another one (or more) bites the dust …

Coming back yet again to nuclear power, I’ve been arguing for a while that nuclear power can only work (if at all) on the basis of a single standardised design, and that the only plausible candidate for this is the Westinghouse AP1000. One response from nuclear enthusiasts has been to point to possible future advances beyond the Gen III+ approach embodied by the AP1000 (and less promising competitors like EPR). The two most popular have been Small Modular Reactors and Generation IV (fast) reactors. Recent news suggests that both of these options are now dead.

The news on the Small Modular Reactor is that Babcock and Wilcox, the first firm to be selected by the US Department of Energy to develop a prototype, has effectively mothballed the project, sacking the CEO of its SMR subsidiary and drastically scaling back staff. Westinghouse already abandoned its efforts. There is still one firm left pursuing the idea, and trying (so far unsuccessfully) to attract investors, but there’s no reason to expect success any time soon.

As regards Generation IV, the technology road map issued by the Gen IV International Forum in 2002 has just been updated. All the timelines have been pushed out, mostly by 10 years or more. That is, Gen IV is no closer now than it was when the GenIV initiative started. In particular, there’s no chance of work starting on even a prototype before about 2020, which puts commercial availability well past 2035. Allowing for construction time, there’s no prospect of electricity generation on a significant scale before 2050, by which time we will need to have completely decarbonized the economy.