IF WE WANT TO HELP FARMERS AND SMALL BUSINESSES, WE MUST GIVE THE COMPETITION WATCHDOG MORE TEETH, Huffington Post, 4 November 2016
‘EXPLAINING THE RISE OF AUSTRALIAN INEQUALITY’
JUST IDEAS TALK #2
PER CAPITA’S REFORM AGENDA SERIES
MONDAY, 5 DECEMBER 2016
***CHECK AGAINST DELIVERY***
There are many forms of inequality, but perhaps the starkest is the difference between those who own no assets and earn their living by selling their labour – and those who earn vast assets, and can live off the proceeds.
Between these two extremes lies home ownership. It’s not a perfect marker, but if you don’t own a home, it’s likely you live by the sweat of your brow. Conversely, if you’re living off your investments, it’s a pretty good bet you own your home.
At the end of World War II, Australia was a nation where just 53 percent of households owned their homes. In the major cities, the figure was just 46 percent. Most city-dwellers rented. And most homes were made of wood or fibro cement.
Then in the post-war years, something remarkable happened. The Australian home ownership rate surged. By 1954, it was up to 63 percent. By 1961, it was 70 percent. In just over a decade, the distribution of Australian housing wealth became significantly more equal.
It wasn’t just homes. Shared prosperity in the post-war decades meant cars became cheaper. By the 1960s, most Australian homes had a vacuum cleaner, a washing machine, a television and a fridge – items that in the pre-war era were only owned by the most affluent. Even access to university was shared. For someone like my grandfather Keith Leigh, attending Melbourne University would have been impossible on a modest clergyman’s wage. Only a post-war veteran’s scholarship made it feasible.
The intellectual seeds for these changes were sown in John Curtin’s white paper on full employment, and his clearly professed view that ‘there will have to be a fairer distribution of wealth’.
But the surprising thing is what happened next.Read more
The Cost Of Inequality Can't Be Priced In Dollar Terms, Huffington Post, Monday, 28 November 2016
Why should we care about inequality? The starting point is to acknowledge what economics lecturers everywhere teach their first years. Economics is about maximising wellbeing, not money. If one person had all the money in Australia, we’d be just as wealthy, but much less happy.
Globally, there are about one billion people who live on less than a dollar a day. Most of it goes on keeping hunger at bay. But then there are about 1800 people who have more than a billion dollars. For them, more money means a faster jet, fancier jewellery or another holiday home. If you believe that moving a person from $1 a day to $2 a day brings more happiness than giving a billionaire another dollar, then you’ve accepted the idea of diminishing marginal utility of money. There is no better argument for caring about inequality.
Putting numbers around this can be tricky, but an analysis by Lateral Economics finds that to get the same increase in life satisfaction, you either have to give someone on $15,000 another $6000, or someone on $100,000 another $100,000. Lateral Economics estimates that the cost of inequality to national wellbeing is the equivalent of $54 billion, making it a bigger problem than mental illness, obesity or long-term unemployment.Read more
Companies that lie must be hit harder, Herald Sun, 28 November 2016
When it comes to household brands, who do you trust? That’s the question Australians were asked earlier this year as part of a Reader’s Digest survey. The top three were vacuum cleaner manufacturer Dyson, and battery makers Energizer and Duracell. But what’s more interesting is who came in at number four: paint manufacturer, Dulux.
Unfortunately, Dulux’s time atop the trust list might be short-lived. Earlier this month, the company was fined $400,000 by the Federal Court for misleading its customers. Dulux claimed that its outdoor paint could reduce the temperature of a house by up to 10 degrees.
If true, Dulux’s outdoor paint would’ve been a cool product indeed. Unfortunately, as soon as the temperature rose on Dulux, their claims began to peel away. When they couldn’t brush off the criticisms any longer, Dulux admitted that they didn’t have the evidence.
Alas, Dulux is not the first coat in Australian false advertising. Every year the Australian Competition and Consumer Commission receives 14,000 complaints of misleading and deceptive conduct. The competition watchdog can only take a small share of these complaints to court. The list of companies that have been reprimanded by the competition watchdog or the Federal Court over the last 12 months reads like the ‘who’s who’ of big companies, including Jetstar, Virgin, Arnott’s, Uncle Tobys, Optus, Harvey Norman franchisees, Kogan, Nurofen, Unilever and Volkswagen.Read more
What would modern Australia look like without China? The Australian Financial Review, 25 November 2016
Over recent years, there’s been no shortage of commentary on China from the glass-half-empty brigade. So it’s sometimes useful to ask the basic question: what would Australia be like today had China not opened its economy in 1978?
Based just on merchandise exports, Australia’s economy would be almost 5 per cent smaller. That’s $8,000 less for every Australian household every year.
Prices would be higher. Since 2007, the price of goods we import from China has fallen 20 per cent while the price of goods we produce at home has increased by 20 per cent.
Our universities would be nearly $6 billion poorer each year. They would educate almost 100,000 fewer students.
Our tourism sector would earn $6 billion less each year with 1.2 million fewer visitors visiting our attractions, eating in our restaurants and buying our souvenirs.Read more
Labor’s reforms to promote inclusive ownership and inclusive growth, Business Insider, 18 November 2016
In history’s page not much is recorded about events in the Scottish village of Fenwick, except in 1769 – when some members of the Fenwick Weavers Society, so their story goes, lugged “victuals” they’d purchased with Society funds to the front room of a small cottage.
From here the items were sold at a discount to fellow Society members while the profits went into the Society’s funds (deposited – literally – in a box).
This small community enterprise appears to be the first consumer cooperative of which there are records, while the fund the Society established to lend money for members to “purchase high cost items” seems very much like a primitive credit union.
However, equally important as these profit-orientated activities was the motivation of the Society’s members and their objectives.Read more
COUNTING THE COST OF INEQUALITY
‘JUST IDEAS’ TALK #1
UNIVERSITY OF SYDNEY
FRIDAY, 18 NOVEMBER 2016
***CHECK AGAINST DELIVERY***
One of the many things I love about Australia is our egalitarian ethos. We’re a nation that doesn’t have private areas on our beaches, and likes using the word mate. We rarely stand up when the Prime Minister enters the room, and prefer to pay a decent wage than have people relying on tips. Since the 1800s, when European migrants alighting from boats said that they felt they had entered a ‘workers paradise’, the spirit of Australian egalitarianism has burned bright.
Unfortunately, when there’s a bright light shining in your eyes, it can be hard to see anything else. Sometimes, I fear that we think that equality is merely about battlers and billionaires sharing the showers at Bondi Beach. An equality of manners is a lovely thing, but as many a homeless person has observed, you can’t eat politeness.
How much equality is there in Australia? One way of answering that question is to imagine that we divided up the population into five groups of about five million people each, and allocated the Australian land mass to them in the same way that wealth is distributed in Australia. For simplicity, let’s start from the bottom, and just draw lines of latitude across the nation that match the current distribution of wealth, as measured by the Australian Bureau of Statistics.Read more
Bend back Ag's U-shaped employment curve, The Land, 15 November 2016
Five years ago, a family in NSW took the plunge and started a company called Rise Above, which specialises drone technology, including precision agriculture, farming and crop management. This technology is an example of where innovation in agriculture has made it in practice, cutting the cost of jobs such as spraying and data collection. Taking innovation through to implementation, including as new businesses, is an area in which Australian agriculture can perform much better.
However, one innovator’s disruption is another person’s job loss. One of the most common questions politicians like us are asked is “where will the jobs of the future come from?” While all of us welcome the prospect of increased crop yields, greater productivity and improved efficiency in our agricultural sector, they create inevitable pressures on farm employment.
As a share of total employment, agricultural work has halved during the past 20 years. Not only is this a worse result than manufacturing, it also bucks the trend that we normally see across the Australian economy. A recent study by economists Roger Wilkins and Mark Wooden looked at employment changes across 43 Australian occupations and found a ‘U-shaped’ outcome: employment has grown in the low-paid and high-professions, but contracted in the middle-paid professions. Not only are farm workers relatively poorly paid – the number of these jobs on offer is shrinking rapidly.Read more
LOCKING SOMEONE UP COSTS AROUND $300 A DAY OR ABOUT $110,000 A YEAR, The Canberra Times, 14 November 2016
You might not know it to watch the news, but on many measures, Australia is becoming safer. In the past two decades, the murder rate has fallen by one-third. The rate of armed robberies has dropped by one-third. Car theft is down by two-thirds.
And yet while crime is falling, our prison population is rising at an alarming rate. In June, 38,685 people were in jail. At the current pace, the prison population will soon pass 40,000. If our jail population were a city, it would be the 36th-largest city in Australia – larger than Albany, Bathurst or Devonport.
As a share of population, I estimate that Australia now jails 207 in every 100,000 adults. That's a higher incarceration rate than in most other nations. To take just a few examples, imprisonment rates in Australia are higher than those in Canada, Japan, France, India, Germany, Indonesia or Britain.
Curious to know how the current lock-up rate compares with Australia's past, I dusted off some old statistical volumes and started comparing the figures. I was shocked to discover that the last time our incarceration rate was this high was 1901.Read more
This week, the Australian Competition and Consumer Commission's found that there's too much bull in the cattle industry. Buyers colluding to keep prices down, saleyards altering cattle weights, agents who act for both buyers and sellers.
The report discusses bid-rigging, physical intimidation and intense social pressure on rural families. The competition watchdog is so concerned that it is now undertaking multiple investigations of cartel conduct in the industry: an offence which carries a potential jail term.
The Australian cattle and beef industry is vital to our economy and our society. It contributes $11 billion a year to the Australian economy. It is the largest contributor to the Australian agricultural sector. Half of our 123,000 farms are engaged in cattle production. In the list of industries you want to make sure are functioning well, Australia's cattle industry is surely near the top.
WHEN BUSINESS DOESN'T PAY ITS BILLS, The Daily Telegraph, 3 November 2016
Yesterday, I rang my supermarket. It was just a courtesy call, letting them know that from now on I would be paying for my groceries 60 days after scanning them at the checkout. I assured them it was nothing personal – simply a matter of improving my cash flow.
Alright, I’m pulling your leg. But you can only imagine a company’s reaction to getting such a call from a regular consumer. Yet this is exactly what many large Australian companies are doing to their suppliers right now.
Earlier this year Rio Tinto told many of its suppliers that, with no compensation, it would now pay its bills after 90 days instead of 45 days (in 2014 it was 30 days). This followed BHP’s decision last year to pay its suppliers after 60 days instead of 30 days. Woolworths is also reportedly increasing its payment terms from 30 days to 60 days. Mars, Kellogg, Procter & Gamble and Heinz are also pushing for more generous payment terms. In April, Murray Goulburn retrospectively cut the price it paid to farmers, then asked them to pay back the difference.Read more