We’ve had quite a few debates here about the Labor leadership. While there are plenty of issues, there is one that, at this point in the cycle, trumps all the others. Of the two serious contenders, who is more likely to save Australia from the disaster of an Abbott-led coalition government? The answer to this question is so clear-cut that I find it impossible to believe anyone would dispute it: Julia Gillard has almost no chance of victory at this point, while Kevin Rudd has a chance. There’s certainly room for debate about how good Rudd’s chances are, but none, I think, as regards Gillard’s. And, whatever the stylistic differences, in substantive terms Gillard’s agenda is the one she inherited from Rudd.

The question now is whether we will have another three years to implement that agenda, or whether we have a Newman-style slash and burn assault on the public sector, the environment, science, women’s rights and, of course, the working class. The only thing likely to stop that is an immediate change of leadership.

As last year drew to a close, it seemed quite possible that the Gillard government could be re-elected. The polls were going the right way, the reality of the carbon price had discredited the apocalyptic scare campaign of the Opposition, and the various real or alleged scandals surrounding the government seemed to be fading. The carbon issue is still going the right way, but everyhing else has turned around severely since then: even before the disasters of the last week, the polls had turned bad, pointing to an uphill struggle.

Last week was bad for the government in all sorts of ways, but the Obeid hearings before ICAC were in a league of their own. I was aware of the scandal, of course, but the evidence of Obeid’s total control over the NSW Right, and therefore of the state government, still surprised me. Even more out of the blue was the involvement of two federal ministers, Conroy and Burke. While taking free accommodation from Eddie Obeid looks a lot worse in retrospect than it would have at the time, his dubious reputation goes back a long way.

It’s hard to see how Gillard can credibly promise to clean up this mess. Her long reliance on Thomson and Slipper, the role of the NSW Right in sustaining her power, and, fairly or otherwise, the old allegations about her own career, all count against her. At this point, as Bernard Keane says (h/t Nancy Wallace)

‘If only Labor had an alternative leader who was fixed in the public mind as someone profoundly at odds with Labor powerbrokers …’

Obviously, he’s talking about Kevin Rudd. While it’s late for a shift, the case has become stronger in many ways. Of the people strongly identified with the personal attacks on Rudd last year, Roxon has gone to the backbench, Conroy and Burke are now liabilities, and Swan’s failed surplus push has greatly weakened him.

A simple change of leader would not be enough. Labor needs to excise the tumour that is the NSW Right. If restored to the leadership, Rudd should immediately push for a full-scale intervention into the NSW Branch removing all the existing officials, and putting someone credible like John Faulkner in charge. The whole faction system needs to be reformed or abolished, starting with the dissolution of the NSW RIght. And those compromised by their association with Obeid, Richardson and similar agents of corruption need to be expelled or permanently removed from any positions of power.

I don’t know if it’s too late to stop the election of an Abbott government. But it’s evident that Gillard is not the right person for the job.

The floodwaters have receded[1] and the miserable task of cleaning up is beginning in Bundaberg, Laidley and other communities. Here in Brisbane we were lucky enough to avoid another flood. The remnants of Cyclone Oswald hit us in the form of a summer storm, bigger than usual, but a pretty regular event here. It wasn’t surprising that hundreds of thousands of people (including me) lost electrical power, or that repairs couldn’t start until the wind had subsided. Even so, the restoration of power was very slow – in many places slower than in 2011. It’s become evident that, like all areas of the Queensland public sector, the electricity distributors (Energex in the Brisbane region and Ergon elsewhere) have been subject to staff cuts that have hampered their ability to respond. The union was issuing warnings about this last year, and they have been proved right. In one startling case, workers were delayed from responding to the emergency in Bundaberg, so they could be briefed on their redundancy options.

Ergon and Energex are government-owned corporations, which are normally supposed to make their own commercial decisions. In this case, however, the shareholding ministers, Energy Minister Mark McArdle and Treasurer Tim Nicholls, have actively intervened to push for job cuts. The obvious explanation is that they are trying to boost profitability (at least in the short term) to prepare the enterprises for privatisation. The regulatory system is supposed to require Energex and Ergon to meet reliability standards, but it seems likely that it is vulnerable to gaming, possibly by excluding extreme (but not uncommon or unpredictable) events like this storm from the criteria (I plan to look into this).

The cuts in the electricity sector have been matched or exceeded across the entire public sector, including the services on which we all rely in an emergency. Meanwhile, Campbell and Nicholls are building themselves a brand new office tower, demolishing the aging but serviceable building in which they currently work. They are paying off their supporters with cuts in payroll tax, grants to racing clubs and so on. But if you want a symbol of this government, you can’t go past Jeff Seeney, who tried to get a government plane, currently used for organ transplants and similar emergencies, allocated for his personal use.

I don’t have a strong view on the hoax announcement that ANZ had withdrawn its support for the Whitehaven coal project. However, I do have some thoughts on the widespread claim that “Mums and Dads” lost significant sums of money as a result of the short-lived fall in share prices that ensued.

First, the claim is undoubtedly true. By the time they have enough money to invest in, or speculate on, the share market, the great majority of Australians have children. Nathan Tinkler, for example, is a father of four. Gina Rinehart is, at least according to her kids, a spectacularly bad mother, but she’s a mother all the same. The unremarkable fact that most owners of shares have children does not entitle them to any particular sympathy.

More importantly, this was a zero sum event. For every Mum, Dad, or childless person who lost money by selling at the bottom, another gained by buying.

Finally, what kinds of Mums and Dads lost money on this event? Anyone who left their investment portfolio unchanged over the course of the day was unaffected. So, the losers fall into two groups
(a) Unsuccessful speculators, who might be better advised to spend more time with their kids and less time playing the market
(b) A few unlucky parents who shifted their long-term investments the right way (that is, out of coal) but at precisely the wrong time

As regards Mums and Dads in group (b), I offer the consolation that, while they didn’t get the timing precisely right, a decision to sell coal stocks will very probably turn out well in the long run. And, as far as investing is concerned, getting out of coal is certainly the best thing they could do for their children.

Jenny Macklin is still dealing with the response to her terse answer “I could” to the question of whether she could live on unemployment benefit. But the policy shift that led her in front of the cameras is the product of a complicated history that might be worth explanation. I’m going to go from memory, and invite commenters to supply links or corrections for my recollecitons.

The story starts in the 1960s, at a time when unemployment was very low, and spells of unemployment very short. Whether in fact or reality, the archetypal single parent was a widow. The vast majority of income support took the form of age pensions, which were means-tested and set at a very low level. Around this time Ronald Henderson estimated a poverty line at 25 per cent of average weekly earnings (AWE), well above the basic pension.

Over the late 1960s and early 1970s, pensions were increased to approximately the Henderson poverty line. In combination with some additional concessions and the introduction of Medicare, these changes virtually eliminated poverty among the old.

The changes to the value of the old age pension, relative to weekly earnings have been sustained.[1] Initially, unemployment benefits and supporting parents benefits (which replaced the former widows pension, IIRC) rose in line with the old age pension. Both were indexed to the CPI, but ad hoc adjustments kept them broadly in line with AWE. But the Howard government replaced CPI adjustment with AWE adjustment for pensions, while retaining indexation to the CPI for unemployment benefits. The result has been that the value of UB (now Newstart or some similarly Orwellian name) has fallen relative to both pensions and incomes generally.

Around 2006, the Howard government turned its attention to supporting parents, introducing a rule that recipients would go on to UB when their youngest child turned 8. At the time, the measure was strongly attacked by Labor. Here’s Penny Wong. Existing recipients were exempted (the term “grandfathered” does not seem apposite here), with the implicit promise that they would remain under the old rules. In the search for a surplus, the Gillard government decided to abandon that promise and push existing recipients with children over 8 onto UB. The question that got Macklin into trouble was about that decision.

There is a defensible case for setting the old age pension higher than UB, particularly if the government pursues active labour market policies to help the long-term unemployed find jobs. The pension needs to be enough to live on for decades, over which time household goods have to be replaced, and other long-term expenses addressed. Most spells of unemployment last only a few months, so various kinds of expenditure can be deferred. But the gap that has emerged over the past 15 years is much larger than can be justified in this way, particularly in the case of supporting parents, who are more likely to spend long periods out of employment. Instead of completing the Howard agenda, the Gillard government ought to be looking at increasing the real value of benefits, allowing the unemployed to share in some of the growth in incomes for the community as a whole.

fn1. In other respect, showever, the generosity of the pension system peaked around 1980. Means tests, which were eliminated in the 1970s, were reintroduced in the 1980s, and the pension age has gradually increased.

She says “I could”, but you watch the video, Jenny Macklin’s answer here is very odd. She ducks the question once, has it put again, and is asked “Could you live on the dole”. She says “I could”, without any elaboration then goes straight back to spin. Her office then tries to delete it from the transcript.

It’s such a spectacular screwup, I think she must have imagined she was saying something different. But, whether or not that’s right, she, and the government, deserve all the pain they get for this piece of nastiness.