This is a job for the Freedom Commissioner

The Minerals Council of Australia has just published a report it commissioned from Sinclair Davidson of the Institute of Public Affairs, responding to campaigns to encourage divestment from coal. What’s most interesting is the suggestion that Corporations Act and the anti-boycott provisions of the Trade Practices Act could be employed to silence critics of the coal industry. The relevant section, from the conclusion

Finally, the campaign may contravene the letter or the spirit of the Corporations Act. While activists argue that wealth portfolios without fossil fuel stocks perform just as well as those with fossil fuel stocks, the reality is that failing to hold a well-diversified portfolio has substantial economic costs in the form of higher risk and lower returns. So if investors make valuation errors based on the divestment campaign and relinquish high-performing stocks, a breach of the Corporations Act may have occurred.

There is a potential role for the Australian Securities and Investment Commission to examine whether the stigmatisation of the fossil fuel sector via the divestment campaign is a breach of the [Corporations Act].

The divestment campaign would amount to an unlawful secondary boycott if environmental activists were covered by those [anti-boycott] laws. They are seeking to restrict coal mining in Australia by targeting a critical supplier to the sector.

There are quite a few points of interest here. The most obvious is the threat to freedom of speech, something that ought to be of interest to Freedom Commissioner Tim Wilson, formerly of the IPA. In this context, it’s worth noting that campaigners against wind farms (notably including the IPA) would be potentially subject to the same kinds of penalties.

More generally, there’s the question of the anti-boycott provisions and the Trade Practices ACT in general. These provisions involve fairly substantial infringements on freedom, primarily for the benefit of business. The law originally focused mainly on protecting small businesses against a variety of anti-competitive practices of big firms. That sounds good, but there’s an equally good case to be made that the market should be left to sort itself out in such matters, or replaced by public provision when it can’t. The extension of Trade Practices Law to cover unions (under the Fraser government’s Section 45D) and public services (under National Competition Policy) makes the Trade Practices Act one of the central legal instruments for the imposition of market liberalism.

Note: Again, no personal attacks, please. There’s more than enough to criticise in the substance of this piece.

35 thoughts on “This is a job for the Freedom Commissioner

  1. On this matter Minister Billson noted

    you can of course run a direct information scheme, but not a campaign that threatens a business with loss or harm, so it depends on the conduct itself

  2. @J-D

    Well done. It is a very important service that you do to point out that this is most rational explanation of the motivation that leads to this self-serving cognitive style. These weaselly tactics could be quite opaque to the person who is presenting them – they could be – so lets not be too cruel to those less able than ourselves.

    I was wondering, just last night, if this strange behaviour – strange that is, if it was emanating from a rational and intelligent person – is evidence for the idea that these people have descended into cultism, and then this morning I saw this:

    “There have been some notable cults in Papua New Guinea and now one has emerged much further south.

    It’s called the Carbon Tax Repeal Cargo Cult and it has the natives of Parliament House not just restless, but shouting and whooping.

    There were signs the cult was emerging last week as Tony Abbott started talking about all the good things that would come if Labor’s toxic carbon tax was axed.

    The cult gained momentum on Monday when legislation to repeal the tax was introduced, for the second time.

    On Tuesday morning the government cultists had some preliminary skirmishes with their Labor and Green enemies over how the first stage of the ritual should be conducted.”

    There is a bit more at “The New Daily” from Don Woolford.

  3. Also, it’s worth considering how the divestment campaign can constitute a breach of the CCA

    The object of this Act is to enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection

    Choice argue that section 45D on secondary boycotts limits rights to free speech and therefore does not protect consumers rights to freely express their opinion. They reference the Chris Berg doc “Freedom of speech means freedom to boycott”.

  4. @J-D

    “Statements of the form ‘X would be unlawful if it were covered by a law against it’ are always true, by definition”


    “This is so obvious that anybody who goes to the trouble of making such a statement must have an ulterior motive. In this case the ulterior motive is obviously to insinuate that there should be a law against it while trying to evade any appearance of incurring the onus of explaining why there should be a law against it.”

    It is one possibility. See my comment @ 11 above: “It may be S.D.’s attempt to give his paymasters an idea as to what changes in law would be required because he writes conditionally…” Another possibility is that S.D. wishes to draw attention to the current Act. (referenced @11). Another possibility is that he does not know or does not wish to use theoretical knowledge about ‘competitive private ownership economies’.

    Prof Q. went straight for the jugular regarding changing the law (conflict with Mrs Newman’s anti-wind turbine campaign – very awkward regarding advisers!)

    It is really the last possibility I mentioned above which irks me. According to his own report to the Mineral Council, Sinclair Davidson is “Professor of Economics, Finance and Marketing”. It is the reputation of economists I am interested in rather than his knowledge of law.

  5. @Ernestine Gross

    You are justified in suggesting that I should not have been so categorical about the motive, although the other possibilities you suggest do not exclude the one I indicated (or each other): there may be more than one motive.

    The insinuation that there is something wrong with the position of environmental activists without accepting the onus of making a case for that conclusion may not have been the only motive; it may not have been a motive at all. But it is an effect, whether it was intended or not.

    Once the effect has been noticed, it’s possible to go on and say ‘Maybe it’s true that environmental activists are seeking to restrict coal-mining in Australia; the assertion is made as if there would be something wrong in their doing that; but is there? would there be anything wrong in environmental activists seeking to restrict coal-mining in Australia?’ The way the section quoted from the report is written, it tends to lead away from direct confrontation with this question; but if the subject is going to be raised, then that question should be directly confronted.

  6. The idea of a cargo cult was mentioned above. Modern orthodox (neoclassical) economics is very much a cargo cult. It effectively posits that goods and services can be produced without any consideration of material and energetic input requirements and without any consideration of wastes and environmental degradation. It posits that wealth comes from an economic system which is free-standing from dependence on any other system. In other words, it holds that the economic system is independent of the biosphere and independent of the laws of thermodynamics.

    It achieves this by false accounting at the most basic level. The destruction of natural capital like forests, soils, wild fisheries, the climate system and all the bio-services and waste absorption services provided by the environment are not counted thus their destruction is not accounted for. Drawing down on natural capital faster that it can self-repair and re-accumulate is really exactly the same as drawing down on a bank account faster than earnings replenish it.

    If the account started out very large (as indeed our natural capital was before the industrial revolution), it can take a long time to draw down the capital. However, if outgoings are growing exponentially, the process rapidly esacalates and “hits the wall”. For example, if world economic growth is 5% that is a doubling of the economy every 14 years. If the economy reached 50% of the biocapacity of the earth to sustain it in 2000, then in 2014 it reaches 100% of the sustaining biocapacity. Various estimates actually place our economy currently at about 150% of the earth’s capacity to sustain it. This means we are in overshoot mode and rapidly drawing down on (destroying) our natural capital. Overshoot presages collapse.

    There’s an old saw: “Processes that can’t continue indefinitely, don’t.”

    There are any number of unsustainable processes going on now in the money economy and these reflect the pressure from unsustainable processes in the interaction of the real economy with real (& declining) resources. One example is the decline of real wages relative to prices. Of course, this cannot go on indefinitely at the financial level or the average wage(s) will not sustain the average household. The great pressure to institute such unsustainable trends comes from the neocon push to increase inequity (more money going to profits and less to wages) but it also comes now from real world resource depletion pressure.

    Costs of raw materials are escalating. The more or less permanent change from oil at $25 or $30 a barrel to over $100 a barrel is an example of this. Mineral prices will follow as highly concentrated ore bodies are mined out and miners resort to much lower quality ore bodies. Indeed, with regard to the procurement of energy and minerals, a point will be reached where the cost of energy input to obtain output becomes prohibitive in both energetic and financial terms, at least in our current conventional economy.

    The above will remain the case unless we can switch to a ubiquitous resource economy. Ubiquitous resources are those everywhere in the biosphere in free state or useable state. Examples of some ubiquitous resources (counting both energy and materials) are sunlight, wind, tide, water*, silicon, carbon (organic or not), sodium chloride, calcium carbonate, rocks (in general) and maybe iron.

    An economy running on ubiquitous resources would use solar power, wind power, tidal power, carbon fibre construction and epoxies. Iron might be abundent enough for continued steel use. We probably will have to develop carbon nano-enineered replacements for rare earths and conductive metals, if this is possible, to run an electrical economy (which form of power is our only hope).

    * Note: Fresh water is unevenly distributed and is running out. “Fossil water”, that is water in aquifers, is running out rapidly and our rivers and lakes are drying up from over-use. A country like Australia could implement, if necessary, solar and wind powered desalinators at many sites on the coast where hinterland water fails or is needed in the hinterland itself.

  7. @J-D

    I wasn’t trying to suggest you should have phrased your argument differently nor am I not aware of the potential media management strategy (long hand for spin). I’d like to challenge Sinclair Davidson on his notion of ‘free markets’ and Economics. Unfortunately, he hasn’t entered the discussion on JQ’s blog.

    Note, in his executive summary he talks about the “sophisticated argument” presented by the alleged campaigners. This is where I suspect he falls down.

    I’ve learned over time there are many aspects to any ‘campaign’ from any direction. I just try to contribute from the perspective of my area. If Sinclair Davidson writes a report as a private individual with specific beliefs, then I’ll shut up – its free speech only.

  8. Ikonoclast, we’ve had a protracted argument about ‘neoclassical economics’. This term means different things to different people and, more importantly, there is an overlap between some ‘stuff’ in neoclassical economics and models which take the finiteness of natural resource very seriously (axiom). There is also some ‘stuff’ in neoclassical economics which is useful in real life (eg various elasticity measures). It seems to me the term ‘neocons’ would be quite sufficient to label the dogma you are arguing against, and rightly so, IMHO.

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