Inside This Issue Volume 53 • Number 2 • June 2001

ARTICLES & REGULAR FEATURES

2 Editorial 19 Workers’ Compensation: Time to Rethink the Stuart Littlemore shows what is wrong with the ABC. Options Slouching from freedom and reason. Mike Nahan Our present workers’ compensation system is a bad mix 3 Prospering from Freedom’s Riches of insurance and welfare. Time for some radical changes that will make it fairer, cheaper and easier to administer. The latest economic freedom of the world report Nick Renton explores the correlations between freedom and growth, corruption and quality of life. Mike Nahan 21 Cultural Wars 5 Global Poverty and Inequality The pursuit and promulgation of truth are supposed to be among the virtues of intellectuals. Not so, apparently, Everyone knows that globalization means that the rich for some of our ‘public’ intellectuals. Ron Brunton are getting richer and the poor are getting poorer. Right? Wrong! Jim Hoggett 23 Family and Work 6 Economic Nationalism: It’s Back to the Future Attempts to grant legal equality to forms of cohabitation other than marriage overlook that which is unique to The prospect of greater government intervention in the marriage itself. Andrew McIntyre economy, dressed up as various forms of economic nationalism, is far more dangerous than we might think. 24 Free_Enterprise.com To m S w itzer Just how did things which we now take for granted— 8 The Pendulum Swings: Robbing the Rich Pays such as e-mail and the World Wide Web—come to be? Plus a look at some Australian free-market and libertar- Electoral Dividends ian think-tanks. Stephen Dawson Why parties of the Left, here and overseas, are doing well electorally—despite their past economic blunders 26 Education Agenda and increased scrutiny from global financial markets. Recent research shows that the traditional two-parent Alan Moran family is still the best way to ensure childhood devel- opment and educational success. Kevin Donnelly 10 Promise Deferred A former Head of ABC Radio explores his misgivings 27 The Role of Judges in the 1998 Waterfront Dispute about balance, impartiality and inclusiveness in ABC The Patrick/MUA dispute revealed some interesting programming. Keith Mackriell correlations between some judges’ decisions and the manner of their appointment—and it would be naïve 14 Letter from London for us to expect otherwise. Murray Cranston The 7 June UK election is too depressing to write about. One issue that should receive more attention, 30 Letter on America but doesn’t, is the administrative competence of the President Bush told some plain truths about Kyoto— public service—or the lack thereof. John Nurick and was pilloried for his efforts. Nigel Ashford 15 What’s A Job? When opposing paradigms about the nature of work clash, the future trends in employment are likely to BOOK REVIEW remain hidden from the major players. Ken Phillips 31 And Freedom for All… 16 Confessions of a Privatizer What would Adam Smith have made of a spirited and Some critics describe CSL’s privatization as the worst in articulate essay in support of free enterprise (without a Australia. Yet it was anything but that, according to one of hint of special pleading) published by an association of the key players in the process. Gary Johns ‘people of the same trade’? John Hyde

R E V I E W

Editor: Mike Nahan. Publisher & Executive Director: Mike Nahan. Production: Chris Ulyatt Consulting Services Pty Ltd. Designed by: Colin Norris, Kingdom Artroom. Printed by: Print Hotline, 47 Milligan Street, Perth, WA 6000. Published by: The Institute of Public Affairs Ltd (Incorporated in the ACT) ACN 008 627 727. Level 2, 410 Collins Street, Melbourne, Victoria 3000. Phone: (03) 9600 4744. Fax: (03) 9602 4989. E-mail: [email protected] Website: www.ipa.org.au

Front cover photo: Bureau of Meteorology, using imagery from the Japan Meteorological Agency geostationary satellite Inside cartoons by Peter Foster [(03) 9813 3160] Unsolicited manuscripts welcomed. However, potential contributors are advised to discuss proposals for articles with the Editor. Views expressed in this publication are those of the authors and do not necessarily reflect the views of the IPA. Reproduction: The IPA welcomes reproduction of written material from the Review, but for copyright reasons the Editor’s permission must first be sought. From the Editor MIKE NAHAN

R Stuart Littlemore has On a more positive note, the ABC put beyond doubt the has announced that it will shortly question of bias, staff introduce a ‘right of reply’ programme on M capture and poor standards which the IPA will have an opportunity to within the ABC. appear. It is also worth noting that Gail His entire programme of Monday 9 Jarvis, Director of Television, who was April 2001 on ABC-TV was devoted to responsible for commissioning the an attack on the IPA and its recent Littlemore programme, and who conference, Their ABC or Our ABC? defended it against our complaints, has Littlemore’s report stands as a classic resigned, in part, over this incident. example of jackboot journalism Now to another depressing topic— designed to silence critics. the slouch from freedom and reason. The Conference brought together In the early 1980s, Australia began people from a wide range of political and to adopt a new national vision, one professional perspectives, including the Littlemore programme together with based on the belief that the best path to people with a great deal of knowledge of, our detailed critique are available at prosperity lay with a free and open and commitment to, the ABC. It took a www.ipa.org.au] economy. constructive approach, providing detailed What was the ABC’s response? It Of course, Australia was not alone. evidence of the lack of balance in the stuck by its man. The IPA made a formal Indeed, most countries have at least ABC and what might sensibly be done complaint to Jonathan Shier, the flirted with economic freedom and many about it. Managing Director of the ABC. The have embraced it. One of the speakers was Keith ABC replied that it is ‘…satisfied that As I outline in ‘Prospering from Mackriell, whose talk at the conference the program presented appropriate Freedom’s Riches’ (page 3–4), the pursuit is reproduced on pages 10–12 of this comment within the context of its of economic freedom has not only issue. Keith is a strong supporter of the brief’. resulted in higher incomes and faster ABC, having spent most of his working Littlemore’s approach to us is not growth, but also in less corruption and a life with the organization—including ten unique, indeed it is his standard fare. The higher quality of life. The benefits of a years as Head of ABC Radio. Indeed, six week after he did a number on us, free economy are also discussed by John of the ten speakers were, or are, because we dared question ‘his’ ABC, he Hyde in his review of a new booklet currently employed by, or contracted to, did a number on the Australian Demo- from the Chamber of Commerce of the ABC and have collectively clocked up crats’ new leader Senator Stott-Despoja. Western Australia entitled In Support of over 90 years with the organization. Yet, His actions were again aggressive, Free Enterprise. And as a recent study by Littlemore dismissed them as the ‘usual abusive, and self-serving. His apparent the Commonwealth Treasury shows (see coterie of harmless duffers’. motivation was that he did not like the Jim Hoggett’s ‘Global Poverty and Not surprisingly, the Conference leadership transition in the party from Inequality’, on page 5) the benefits have received extensive press coverage—with left-wing baby-boomers (like him) to the not come at the cost of higher poverty the exception of the ABC—as the issues generation-X (like her). or greater disparity of incomes. raised and the calibre of the speakers The fact that the ABC even allows The political pendulum is now clearly were clearly newsworthy. Littlemore and Co. on the air with a moving away from freedom both here What was Littlemore’s response? programme of this format brings into and abroad (see Tom Switzer ‘Economic Lies, distortion, libel and character question its ethical and journalistic Nationalism: It’s Back to the Future’, assassination designed to inflict maxi- standards. That ABC management gives pages 6–7; and Alan Moran ‘The Pen- mum damage to the IPA’s credibility, them unquestioned support—even when dulum Swings’, pages 8–9). The swing is reputation and funding. confronted with clear evidence of gross being driven by a number of forces, He lied about our support base; he misconduct—proves that the organiz- including a strong yearning for the ‘good lied about our purpose and approach; ation is seriously flawed. old days’, the fragmentation of politics, and he lied about our position on key We have made a complaint to the and a return of old foes in new battle- issues. He accused us of being money- ABC’s Independent Complaints Review dress and with new strategies. eyed, right-wing propagandists. He Panel. We wait to see whether it related us to Hitler. [The transcript of warrants its name. I P A

R E V I E W 2 JUNE 2001 Prospering From Freedom’s Riches MIKE NAHAN

VER the last two decades, countries. The indices are based on 21 Chart 1: Economic Freedom and Income Australia slowly but stead- data sets covering seven areas: size of O ily adopted a new national government, economic structure and 25,000 ‘vision’. One based on eco- use of markets; price stability; exchange $19,846 nomic freedom—open markets, freer of currency; legal structure and prop- 20,000 trade, less regulation, limited govern- erty rights; trade in goods and services; ment and sound money. and financial and capital markets. 15,000 We were not alone; indeed many Among other things, the data pro- $9,607 nations of the world have, to varying vide an overall economic freedom in- 10,000 degrees, adopted this ‘vision’. dex by country over time which in turn $7,286 The rationale was simple: eco- provides a statistical base for examin- 5,000 $3,984 nomic freedom is seen as the key to ing relationships between economic $2,210 prosperity. When people have free- freedom and other factors such as GDP per capita, PPP (1998 international $) dom––to go into business and occupa- growth, income, human development, Bottom4th 3rd 2nd Top tions of their own choosing, to reap poverty, and corruption. EFI Quintiles profit and suffer losses from their ac- economic turnaround is one of the big, tivities, to save and invest, to enjoy the THE FINDINGS overlooked stories of the last decade. use of their property, and to join in vol- First, the report confirms that Australia Second, the report finds strong and untary exchange with each other–– has significantly freed up its economy positive relationships between eco- they produce more. With time, these over the last 25 years and, as a result, nomic freedom on the one hand and more productive societies will become has become one of the most open wealth and economic growth on the prosperous. economies in the world. In 1975, Aus- other. As argued elsewhere (Switzer, page tralia had an economic freedom rat- As shown in Chart 1, countries in 5; Moran pages 6–7), this vision is now ing of 6.5 out of a maximum of 10, the top quintile (20 per cent) of the under sustained attack in Australia and which ranked it 17th out of 123 ‘most economically free’ countries around the world. Many dispute its nations. By 1999, Australia’s economic have an average per capita GDP of central premise—that freedom leads to rating had improved significantly to $US19,846—over twice the income prosperity. Others agree that it has led 8.5, pushing up its overall ranking to level of the next quintile of coun- to growth in developed countries such sixth. tries—while countries in the bottom as Australia, but believe that these Although Australia ranks below 20 per cent of countries had an aver- gains have not been widely shared Hong Kong, Singapore, New Zealand, within and across countries. the UK and the US, the gap is getting Chart 2: Economic Freedom and Growth What is the evidence? smaller and in many areas is small-to- Thanks to a project—the Eco- negligible. Indeed, Australia lags the 3 nomic Freedom Project1—initiated top nations significantly in only three 2.27% more than a decade ago by the Fraser areas: labour markets, tax, and welfare 2 1.48% Institute of Vancouver, Canada, we transfers. 1.06% 0.88% have the data to begin to answer some Australia is not alone in its recent 1 of these questions. pursuit of economic freedom. During And the findings are very posi- the same period, New Zealand went 0 tive—at least from the perspective of from a ranking of 35th to third, the UK economic freedom. went from 18th to fourth, and Ireland -1 The Fraser Institute, together with went from a ranking of 27th to sixth—

Real GDP growth per capita (1990s) -1.45% 53 think-tanks (including the IPA), or equal with Australia. In fact, Ire- -2 have developed a composite set of in- land’s adoption of economic freedom Bottom4th 3rd 2nd Top

▲ dices using published data covering 123 and its contribution to its incredible EFI Quintiles

R E V I E W JUNE 2001 3 Chart 3: Economic Freedom and Unemployment Chart 5: Economic Freedom and Human Chart 6: Economic Freedom and Corruption (20 OECD Countries, 1993-96) Development 12 8 0.10 7.41 0.88 7 10 0.76 0.73 6 8 4.96 0.62 5 6 0.52 3.88 0.05 4 3.43 2.55

Corruption Index 3

Unemployment Rate 4

Human Development Index (Percentage of Labour Force) 2

2 (higher ratings denotes less corruption) 1 0 152 3 4 0.00 0 1995 Economic Freedom Index Quintiles Bottom4th 3rd 2nd Top Bottom4th 3rd 2nd Top (from ‘Most Free’ to ‘Least Free’) EFI Quintiles EFI Quintiles age per capita GDP of just $US2,210. rate. One cannot share in freedom and freedom correlates with less corrup- Economically-free countries also wealth over the long term without ac- tion. This is no surprise, as economic tend to grow faster. As shown in Chart cess to work. As shown in Chart 3 (us- freedom—free trade, open markets, 2, over the 1990s, the higher the level ing data only for the OECD countries limited government, etc.—act directly of economic freedom, the higher the during the 1993–96 period), except for against the base of corruption—that is, average rate of growth, with the most- countries in the third quintile, greater the ability of government officials to free nations recording an average economic freedom is associated with restrict access to markets and resources. growth rate in real GDP per capita of lower unemployment rates.2 2.27 per cent and the least-free nations Another indicator of inclusiveness SUMMARY experiencing an average growth rate is the rate of poverty. Poor people can The evidence shows that economic of -1.45 per cent. face huge barriers not only to gaining freedom has lived up to expectations. This result is not quarantined to jobs but also to education and health It has tended to lead to prosperity, in wealthy countries. Although wealthy services. As shown in Chart 4, using wealthy as well as in poor nations. It countries, of course, dominate the data from the UN’s Human Poverty has also tended to enhance the ability ranks of the most free, the largest gains Index, there is a negative relationship of people and nations to share in in terms of wealth and economic between economic freedom and pov- wealth and opportunity. growth have been made by those for- erty. That is, the proportion of the Some nations have not fared well merly poor countries—such as Singa- population afflicted by poverty is gen- in relative and absolute terms over the pore and Hong Kong—which most erally greater the less free is the last two decades and their decline has, strongly adopted economic freedom. economy. in part, been caused by the worldwide Third, economic freedom tends The message is also positive using trend to free economies, or rather to towards a more inclusive society. a broader measure of well-being, such their failure to join this trend. The na- The most important indicator of as the UN’s Human Development In- tions which have fared worse have inclusiveness is the unemployment dex which ‘measures a country’s been those with the lowest levels of achievements in three aspects of hu- economic freedom. The nations that Chart 4: Economic Freedom and Poverty man development: longevity, knowl- have gained the most are those poor edge and a decent standard of living’. ones that changed their policies to 12 As shown in Chart 5, the higher the adopt more free and open markets. 10 level of economic freedom, the greater the level of human development in- NOTES 8 dex—that is, the higher the level of 1. The latest annual report, Economic economic freedom, the higher the Freedom of the World Report 2001, is 6 available at www.freetheworld.com. quality of life. 2. Charts 3 and 4 from Grubel, Herbert Another fundamental indicator of G. (1998), ‘Economic Freedom and 4 Human Poverty Index inclusiveness is the level of corruption. Human Welfare: Some Empirical Findings’, Cato Journal, 18 (2), 2 Corruption limits access to opportuni- ties and services. It, more than any- (Fall): 287–304. The data set for (Percentage of Population Living in Poverty) Chart 4 included only 55 countries. 0 thing else, is the cause of policy failure 152 3 4 1995 Economic Freedom Index Quintiles and poverty within nations. As shown (from ‘Most Free’ to ‘Least Free’) in Chart 6, higher levels of economic I P A

R E V I E W 4 JUNE 2001 Global Poverty and Inequality

JIM HOGGETT

IOLENT street demonstra- On the UN Human Development Again, even while poorer countries tions against ‘globalism’ Index, an even broader measure of grow faster than the rich, the absolute have made world headlines. well-being, Australia led the world in gap will continue to widen for a while V The protesters are diverse 1870. Its index number then would because rich countries also grow, and but, in short, they blame the existing now rank 127th. they grow from a higher income base. world trading and financial system for Finally, there continue to be very creating and perpetuating global in- AND THE RELATIVE GAP IS poor countries, mainly in Africa, that equalities. NARROWING are making little progress and a sub- Also, from the late 1960’s, the relative stantial number of people, therefore, WHERE IS THE TRUTH? gap between the rich and poor seems remain in extreme poverty. It is difficult for the general public to to have been narrowing. comprehend what is at stake here. The Global inequality appears to have WHY DO COUNTRIES DO subject is complex and there are many peaked about the year 1968. Between BETTER OR WORSE? conflicting and emotional statements. 1968 and 1998, the ratio of the income Many developed countries are better- Sound statistics would help. But of the richest to the poorest group of off because they had a 150-year start what we have been getting are esti- countries decreased from 15:1 to 13:1. on the industrial growth path. mates that have propaganda rather The income of the poorest more than But more important now is the fact than analytical value. doubled while that of the richest grew that the countries that are wealthy or In its latest Economic Roundup, the by three-quarters. that are catching up quickly share a Federal Treasury cuts through the de- Moreover, 25 years ago, almost half few simple characteristics. They have bate. It examines the available statis- of the world’s population were in the stable, honest institutions and govern- tics to find out: poorest 20 countries. The poorest 20 ments. They have open economies and • what the figures actually tell us; and now contain only 7.3 per cent of the clear property rights. They are not cen- • what makes the difference between world’s population. trally planned. And they have peace. those countries that stay poor and It is a sad fact that most of the seri- those that progress and get rich. LIES, DAMN LIES AND STATIS- ously poor nations are at war within TICS their own borders. NEARLY EVERYONE IS BETTER Why the assertions of growing inequal- OFF ity which fuel the protests? THE WRONG SUSPECT IS ON The last century has seen per capita Treasury notes that one reason is TRIAL income growth in all four quartiles of that consistent statistics are not used. The Treasury paper tries to remove countries graded by income (see Simplistic exchange-rate comparisons some of the major statistical miscon- Chart). are made, and these significantly un- ceptions which are held even by such Even the poorest quartile at the end derestimate true purchasing power in exalted bodies as the UN and the of the century was significantly better developing countries. World Bank. In this, it makes a first off than the second step, at least, to see history as it hap- richest at the start. Income levels by quartile, 1900 and 2000 pened and the future challenge as it Broader meas- Per capita GDP, 1990 PPP$ Per capita GDP, 1990 PPP$ is. 20000 ures confirm the 20000 Blaming globalism for inequality trend. In 1870, 16000 16000 is a tragic mistake and could have

Australian life ex- 12000 12000 tragic consequences. There is serious pectancy was 48 poverty in many nations but there is years—the second 8000 8000 also great progress. Dismantling the

highest in the 4000 1234567 4000 multilateral trading system will dam- 1234567

1234567

1234567 world. By the mid- 123456 1234567 age all countries—but most of all the 0 123456 1234567 0 1990s the average 1900 2000 poorest. life expectancy in Lowest Population Quartile Middle High Population Quartile 123 Jim Hoggett is Director, Economic Policy, at the IPA. 123 developing coun- 123Middle Low Population Quartile Highest Population Quartile tries was 65 years. Source: The Treasury, Economic Roundup, Centenary edition, 2001, page 8. I P A

R E V I E W JUNE 2001 5 Economic Nationalism: It’s Back to the Future

TOM SWITZER

HERE’S a simple explana- Protectionist sentiments have run deep Nor are these conservatives alone. tion for the rebirth of in Australian political and economic A disparate coalition of centre-left, T Pauline Hanson’s One life for most of the twentieth century. far-left and far right-wing opponents Nation Party, the recent And they have resurfaced with a of capitalism have recently crawled stunning electoral defeats of conserva- vengeance in recent months. out of the woodwork to support in- tives, the less than reform-minded cast The devastating electoral setbacks creasing levels of protection and gov- of politicians in both Labor and Coa- for conservatives in Western Australia ernment intervention in the economy. lition ranks, the bipartisan campaign and Queensland have sparked imme- The growing strength of this group lies to portray big business as a villain in diate recriminations against Mr in their extraordinary diversity. Not public life, the sliding $A against the Howard’s Coalition Government. since the early 1980s, before economic greenback, and the rising backlash Both State and Federal legislators have reforms were implemented, have so against globalization, culminating in blamed the Prime Minister’s free-mar- many groups of different ideological the Howard Government’s decision in ket policies for the carnage, despite the stripes—from the Greens and Demo- April to reject Shell’s takeover of crats on the Left to One Nation on Woodside Petroleum. the Right—been galvanized at any The explanation? Australians are one time. Opposition to deregulation, ditching their 15-year-old honeymoon The danger exists competition, privatization, free trade, with a free-market reform agenda. No, and foreign investment and ownership they have not lurched dramatically to that One Nation’s is the source of their unity. the Left, but the political mood has Indeed, such words are so dirty in grown perceptibly more nationalist agenda overlaps Australia today that anyone who and interventionist in economic mat- dares preach them risks being demon- ters. The spectre of big government too neatly with ized as an ‘extremist’ and ‘elitist’ who’s has once again returned to haunt Aus- supposedly out of touch with the tralia. that of the Aussie mainstream. As Brian Costar, Of course, one could argue that a professor of political science at Shell merely got the answer it deserved protectionist Left Monash University, wrote in The Age when Treasurer Peter Costello blocked in February: ‘Economic rationalism is its $10 billion bid for Woodside. After as popular in parts of regional Aus- all, the Dutch-owned multinational fact that the defeats had more to do tralia as communism was in the should have recognized that its cam- with voters bridling at a series of bu- 1950s’. paign to take over Australia’s twelfth reaucratic gaffes. The rebirth of One Nation—much biggest company in an election year Still, maverick National Party MP like its birth in 1996—is due not so would strike a political raw nerve. Still, Bob Katter reflected deepening con- much to Ms Hanson’s racist attitudes whatever misfortune Shell brought on servative anxiety over the electoral or conspiracy theories about the itself, Australia deserved better than routs when he complained: ‘If they United Nations planning to take over Canberra’s decision to reject. [the Howard Government] want to Australia. Her party’s popularity has No matter how the Howard Gov- continue with these policies, like the more to do with the widespread per- ernment attempted to justify its deci- sale of Telstra, deregulation of the milk ception that free markets wreak havoc. sion—Mr Costello cited ‘national in- industry and GST [goods and services As Mr Howard has consistently argued terest,’ signalling concerns over the tax] then they’ll be as popular as a for the past five years, Ms Hanson may implications of a Shell takeover for the brown snake in a sleeping bag’. And be merely riding waves of protest in future development of the North-West as one senior Liberal Party official said, the rural heartland, a traditional hot- Shelf project—the truth is that it buck- ‘Economic rationalism is dead, dead, bed of anti-competitive, agrarian so- led under growing populist pressures. dead’. cialist principles.

R E V I E W 6 JUNE 2001 If anything, One Nation can the unwinding of the deadening hand to say that Mr Beazley’s Labor has rightly be seen as a reactionary, isola- of the ‘Nanny State’ has delivered sig- turned backwards to seek to win back tionist backlash against Australia’s nificant and enduring benefits. These its traditional blue-collar constituency inevitable integration with the Asia- include a less inflation-prone eco- by resorting to pre-rationalist eco- Pacific region and the global eco- nomy, lower interest rates and a wider nomics. nomy. Comparable movements have choice of goods and services at lower The Liberals paint Kim Beazley’s developed in Europe and North (real) prices. Labor as a ‘policy-free zone’. In fact, America, and there is nothing really As a result, the Australian eco- the policy framework for a Beazley surprising about its emergence in Aus- nomy is much better equipped to gen- Government is already in place. For tralia. erate wealth and to weather external example, the Beazley model is a step Nevertheless, the danger exists shocks than before the mid-1980s cur- back to Australia’s old IR Club, with that One Nation’s agenda overlaps too rency crisis. Indeed, it’s no fluke that its legal protections of union monopo- neatly with that of the protectionist Australia weathered the economic lies, prescription of pay and working Left—including the Greens, the Aus- turbulence out of Asia in 1997–98. conditions by awards, and interfer- tralian Democrats and the left of the Just think how the old Australia—the ence by quasi-judicial tribunals. It is Labor Party. If these parties shared the over-regulated, over-protected, fis- a false political promise to deliver ‘in- balance of power in the Senate—and cally weak and inflation-prone Aus- come security’ to an electorate that this is not inconceivable—they could tralia—would have coped with the inevitably feels uneasy about the una- find common cause on certain eco- Asian financial crisis. voidable realities of the global mar- nomic policies. True, there has been painful ad- ketplace. Of course, there has long been a justment for some rural residents, and Rather than embrace the oppor- statist culture in Australia. Since Fed- traditional forms of regional employ- tunities of a globalized, information- eration in 1901, big government has ment have declined. But many of the age economy, the Beazley agenda sim- manifested itself in various ways—in problems in the bush are hardly the ply sets out to satisfy the ideological a White Australia Policy to keep out fault of private enterprise and globali- preferences of Labor comrades and to competition from cheap Asian labour, zation. They are often simply a result pick up alienated Howard voters by import protection to guarantee do- of technological and structural pretending that there is a free lunch mestic profits, and an arbitration sys- changes such as the decline in world on offer. Such a platform only adds tem to stand between capital and la- commodity prices and technological uncertainty to already wary financial bour by guaranteeing a share of the advances in farming. markets. protected pie for workers. Not surpris- It would be misleading, however, To be sure, Mr Howard and the ingly, these stifled Australia’s devel- to argue that the opponents of eco- Coalition are hardly true believers in opment throughout most of the twen- nomic reform and globalization are the economic reform agenda these tieth century. limited to the extreme political Right days. In pandering to the forces of eco- Fortunately, these also had a lim- and Left. Kim Beazley’s Labor Party, nomic nationalism, for example, the ited shelf-life; the White Australia for example, is significantly watering government’s decision to reject Shell’s Policy was dismantled in the 1960s, as down proposals to reform the eco- takeover bid could be the harbinger was import protection in the mid- nomy. of more policy reversals in an election 1980s. Between 1983 and 1996, the Indeed, with a few honourable ex- year. Hawke-Keating Labor Governments ceptions, the Labor Opposition has Our political leaders should recog- floated the dollar, reduced tariffs and thrown away its 1980s’ claim to be nize that while change and adjust- deregulated the financial system and leading the charge for policies that ment are not easy, it’s a dangerous fan- government-controlled industries such confront the reality of today’s glo- tasy to suggest that Australia can in- as aviation and telecommunications. balized economy. Mr Beazley and his sulate itself from global market forces. Since 1996, the Howard Govern- deputy, Mr Simon Crean, are leading If Canberra thumbs its nose at free ment has, in fits and starts and with Labor backwards into the 1950s and markets and resuscitates Big Govern- some reversals, merely continued in ’60s rather than into the twenty-first ment, then the world would rightly this direction. It corrected Labor’s century. figure that Australians have lost the budget, finished off the job of slaying While Mr Howard sought to get plot. inflation, pursued labour-market flex- rid of our national shame and mod- ibility, improved waterfront produc- ernize our waterfront in April–May Tom Switzer is assistant editorial and opinion-page tivity, privatized government busi- 1998, Mr Beazley supported the MUA editor of the Sydney-based Australian Financial Review. A shorter version of this article appeared in nesses and implemented income and dinosaur and spoke class-warfare lan- The Asian Wall Street Journal on 25 April. business tax reforms. guage more suited to the classic la- Still, economic nationalism bour–capital conflicts at the turn of haunts Australia, despite the fact that the twentieth century. Indeed, it’s fair I P A

R E V I E W JUNE 2001 7 The Pendulum Swings Robbing the Rich Pays Electoral Dividends

ALAN MORAN

N article in The Age (16 voter potential of opposition to the land Beattie Government won a April 2001) by Kenneth way things are. That opposition is sweeping victory despite the over- A Davidson was titled ‘How founded on a feeling by many peo- whelming stench of branch-stacking big business captured Pre- ple that they are battling against the fraud. And let’s not forget, Western mier Bracks’. The article contended odds and that they merit some form Australian voters returned Peter that the Bracks Government has of government support. Dowding although his predecessor, adopted many of the policy ap- Philosophically, Labor succours Brian Burke, was clearly guilty of proaches of its Liberal predecessor. that support more readily than the scandalous fiscal mismanagement. Davidson sought a reversal. He ar- Liberals. Although the Liberals For many Labor politicians, ma- gued that the Bracks Government might spend and regulate excessively, nipulating markets, redistributing should distribute the $200 million the average Liberal politician started income and regulating behaviour windfall from the GST to teachers her or his career by objecting to the provide their political definitions. and nurses rather than use it to at- size of government and its intrusive- But this is also the glass jaw that must tract business activity and private- ness. Some of this sticks—even af- be exposed sparingly if a knock-out sector jobs. ter a life of deal-making and com- is to be avoided. The article’s conventional Age promise. Although Labor can comfortably anti-business line is an important The evidence of the electoral ad- appeal to the electorate’s masses by pointer to wider phenomena. The vantage which the Labor parties diverting income from the better-off, Bracks Government, like that of have can be seen in recent elections such diversions can all too readily Carr in NSW and Beattie in Queens- in Australia. WA’s steadily perform- result in disincentives to work and land, sees the road to longevity in ing Court Government was recently to invest that backfire into economic promoting the form rather than the kicked out, and over the next year underperformance. Labor has, in substance of policies that push more the Howard and the South Austral- fact, only lost office when its actions funds to social services. People have ian Olson Governments may be were clearly shifting the economy to be paid off for providing support— heading for the same fate. Even be- backwards. In the case of the Keating and, notwithstanding Davidson’s ing an outstanding performer, as was Government, it was in having no views, nurses and teachers have been the case with the Kennett Govern- backbone in the Finance Ministry so generously rewarded. But securing a ment, has not stopped the electoral that a spendthrift administration re- new dynasty means making changes demise of Liberal Governments once sulted in budget problems. Other at the edges rather than radical re- their Labor Opposition has provided ALP Governments in Western Aus- structuring. And although, in Vic- evidence that they will be more ‘car- tralia, South Australia, and Victoria toria’s case, many would like to dis- ing’ and will implement interven- lost office because they tried highly mantle the Kennett privatizations, tionary measures without this call- creative means of obtaining the fi- the Labor Administration knows ing on the voters’ pockets. nances for the sort of developments that this is both impossible and un- In contrast to their Liberal coun- they wished to see, in some cases desirable, except in marginal cases terparts, incumbent Labor govern- causing bankruptcy of State finan- such as the ambulance service. ments have fared well. The ALP in cial institutions. If the Victorian Labor Govern- Canberra had 13 years, winning its Australia is not alone in this posi- ment can maintain this approach, it last election despite solid evidence tion of moderate leftish parties being will avoid the excesses of its pred- of poor management, and only nar- voted into Government and remain- ecessors which have, in the past, in- rowly failing to regain office in 1998, ing there as long as their policies are variably swept ALP governments in spite of facing an apparently suc- not disruptive. Blair looks secure in from power. cessful government. The steady-as- Britain, initially winning office Achieving and maintaining gov- you-go Carr Government was re- against a well-performing govern- ernment requires tapping the huge turned effortlessly, while the Queens- ment. The Tories’ highly publicized

R E V I E W 8 JUNE 2001 sex scandals in the John Major years for this. Globalization puts all gov- that countries will play fair with the have been matched by those of the ernments’ policies under the micro- citizens of their own and other coun- Labour Party in government, but they scope of world finance markets. As tries. In this respect it is little differ- have left Labour unscathed. In the New York Times journalist Thomas ent from Merchant Law, a voluntary US, Clinton’s notorious philandering Friedman illustrates in his book The acceptance of fair treatment for all, made no dent in his popularity. Lexus and the Olive Tree, the actions which was the crucible of West Eu- Schroeder beat Helmut Kohl, of individual governments are now ropean trade and development. who had united the two Germanies more circumscribed by financial All this said, M1 and Seattle ac- and was steward over a sound if lack- markets than ever before. Whenever tivity gives vent to political senti- lustre economy, although he had a government undertakes policy ments around the world that seem to been involved in election-funding changes, Standard & Poor and other be set against ‘economic rationalism’. scandals. In France, a left-wing gov- ratings houses scrutinize these. It People are willing to grant the same ernment has been voted into office they downgrade the country’s debt high credibility they normally reserve against a solid, if unspectacular, con- rating, considerable cost-penalties for The X-Files to scare stories about servative administration; that present will accompany this—hence, politi- global warming, genetically modified government is sailing close to the cal action is constrained. food, species extinction and defor- wind, implementing policies which And this is a process that owes estation. will shorten the working week and nothing to a global conspiracy. The Leftish parties can better play to make it difficult for businesses to lay discipline on governments results this gallery. In Australia, Labor is off employees. mightily assisted by the preferential All of this comes back to the voting system where votes for the head-start in public image that The actions of Greens and the Democrats are canal- leftish governments enjoy. Although ized to the ALP. One Nation repre- the militants at Seattle, and under sents a kindred brand of knee-jerk the S11 and M1 banners, represent individual govern- voter, albeit one that would naturally a minority, there is an audible echo gravitate to the conservative parties. of their voices from a huge mass of ments are now The Liberals have, however, been the population. The truth is that persuaded by some of their voters voters prefer a party that will offer more circumscribed (aided and abetted by the ALP) to them government support. Politics reject One Nation’s preferences. This has shifted away from the objective by financial markets is a pity for them. They already face of having the government in power a major, perhaps insuperable, task in ‘hold the ring’ while people transact than ever before retaining power where they are pres- their business and conduct their daily ently in office and an almost impos- lives without disturbance. sible task of displacing reasonably- Most political leaders understand from ordinary people using ratings performing ALP Governments. that an economy not linked into that agencies they have never heard of. Do the liberal parties have an an- of the rest of the world is one doomed They use these agencies through tidote? The preceding paragraph sug- to the Burmese option of stagnation. their ‘agents’, that is, savings and gests that, in Australia at least, woo- Many voters are, however, under the pensions funds. This takes place be- ing rebel conservatives is a tactical impression that they can move much cause people want the best returns for change that could pay off. But this further in that direction and sacri- their money and pick super funds and carries its own risk—it may shift the fice nothing in terms of prosperity. other savings vehicles with this in liberals from liberalism and free mar- This public predilection for the mind. kets. In Italy, Berlusconi cobbled to- Left may have increased in recent The General Agreement in Trade gether a coalition based on law and years. However, as The Spectator (28 in Services will augment this imper- order, tax reductions and major April 2001) pointed out, even the sonal process. It will place a panel of project spending. Even then, he won outstandingly successful Thatcher experts, in principle the equivalent by only a hair’s breadth. It seems that government was only made possible of an impartial legal judge, as the ul- traditional liberalism remains as re- by a hopeless Labour leadership timate determiner of whether a coun- mote from electoral attraction as does (Michael Foot, Neil Kinnock) and a try has laws in place that are ‘more socialistic intervention from a sound divided non-Labour opposition burdensome than necessary’. Now economy. (David Owen, David Steel). those people hostile to capitalism will If the Left parties are now more see this as another nail in the coffin Dr Alan Moran is Director, Deregulation Unit, at electable and more endurable, then of local control or even of democracy. the Institute of Public Affairs. ironically, globalization is one reason But all it comprises is an agreement I P A

R E V I E W JUNE 2001 9 Promise Deferred

KEITH MACKRIELL

N 1941, after the fall of Second: The precept of ‘due im- What does it mean to argue that France, the Francophile partiality’ should be defined, be ‘due impartiality’ should be at the British writer Charles definitive, be in the Code of Prac- heart of program-makers’ decisions? I Morgan gave a lecture in tice and be put into practice. There are three key points: London about Anglo–French rela- Third: All program-making deci- First —that public service broad- tions. The Brits, he said, should get sions should be based on ‘integ- casters aren’t being properly pro- rid of the almost universal belief that rity of intent’ by each of the peo- fessional if only one view is re- ‘you can never trust a Froggy’. He ple making and taking those de- flected in their programs. They urged the French to abandon ‘Perfide cisions. This means that they must include the widest reason- Albion’—their translation of the should be based on the profes- able range of views. Plurality British belief. Making his case, sional assessment of program val- should be the guide. Morgan used an image that has reso- ues and standards, with personal Second—due impartiality should nated across the years—‘France,’ he preferences, prejudices and pre- mean that, while program mak- said, ‘is an idea necessary to civilisation’. dilections pushed into the back- ers take account of a range of ABC Radio is the same. For all ground. views on an issue, they should my remembered life it has been The ABC’s latest Annual Report re- also consider the number and there—as informer, entertainer and fers to a Performance Study claim- weight of opinion holding minor- comforter, mentor and stimulator. ing that, among those who used the ity views. Bringer of news, good and bad. Of ABC (television, radio or online) as Third—while it is entirely proper insights never before imagined. And a source of news and current affairs that accepted orthodoxies should the sublime sounds of Mozart, Callas be challenged, it is entirely im- and the FA Cup. proper not to do justice to the es- Where else, in a six-day period, Broadcasting tablished view, fully and clearly, is there an informed half-hour of talk and also not to discuss the down- about contemporary issues in Health, side implications of the alternatives the Law, Religion, the Media, Sport paid for by all to those orthodoxies. and—however belatedly—Business? Now for ‘integrity of intent’—that And all before nine in the morning. taxpayers should other element that seems so impor- Where else are life matters—the tant for public service broadcast- whole gamut—given a run before 10? deal impartially ers. And it’s only on ABC Radio Na- The following story, told from real tional that you can spend an hour a and fairly with life, by an ABC radio supervisor, day listening to talk about the arts. illustrates what integrity of intent is That’s the good news. There is, us all not. sadly, some not so good news—that A program-maker in the Reli- overshadows much that is admirable gious Department made a program. about ABC Radio and serves to on most days, 90 per cent of respond- Asked to comment, the supervisor weaken the foundations of tax- ents thought that the ABC was ‘do- said—‘That’s good stuff you have funded broadcasting. ing a good job of being balanced and there—interesting clerics, views even-handed when reporting news about social matters, and political THREE PRINCIPLES— and current affairs’. matters as well. I’m happy with all IN THEORY … The difficulty with that figure is that. But, they are all speakers from Before examining the bad news, not just that it seems counter-intui- left-of-centre, aren’t they? We need there are three elements that should tive, but that readers are not told to include some from the right, or be clear: who asked what, of whom—when, conservative, or whatever you like to First: Broadcasting paid for by all where, and in what context—nor call them.’ taxpayers should deal impartially who carried out the study, or who To which the program-maker and fairly with us all. paid for it. said—‘there aren’t any’.

R E V I E W 10 JUNE 2001 ‘Um’, said the supervisor, ‘but I’m impartiality and integrity are ac- But at least his support for Dr quite sure there are.’ cepted and applied, independence, Henderson and Mr McGuinness ‘I mean,’ said the program-maker, both financial and editorial, should points to his recognition that the in a kindly way, ‘none worth listen- be guaranteed. public’s right to know extends be- ing to!’ yond their right to know only what What this shows is that the pro- …AND IN PRACTICE Phillip Adams wants them to know. gram-maker’s opposition to people And there the story might end. He went on to say that, had his with views for which he had no time It doesn’t, because due impartial- critics asked him, he ‘could have was used as a reason for denying his ity is not always reflected in Radio identified any number of ABC pre- audience access to alternative views. National broadcasts. And because senters whose political, social or cul- The listening public has the right there seems a lack of integrity of in- tural views are not merely conserva- to know—and professional, publicly- tent in some of the network’s out- tive but energetically reactionary’. funded broadcasters have the respon- put. Disappointingly, he doesn’t name sibility to present—not just the views those people, contenting himself that match those of the program with the assertion that, in Mel- makers, but those that don’t. Oliver bourne, there’s a broadcaster whose Wendell Holmes talked about the The listening public views on many issues would accord principle of free thought—not free with Alan Jones’, while in Newcas- thought for those who agree with us, has the right to tle there’s a presenter who treated but freedom for the thought we hate. Pauline Hanson with ‘a mixture of There is a special need for news know … not just giggles, gush and grovelling’. and current affairs people to apply Phillip Adams went on to claim integrity to their intent because they the views that that, ‘of the four hours of wireless I act as ‘gatekeepers’. They have the present each week for Radio Na- power to select and present the ma- match those of the tional, only 15 minutes is devoted to terial that comes to them from mul- Federal politics—the “Canberra tiple sources. Their values and as- Babylon” spot being traditionally sumptions define the nature of news program makers, presented by a distinguished mem- itself. They make choices, based on ber of the press gallery. Currently this their assessments of news values. but those that don’t task falls to Margo Kingston—who These values are not clear-cut—ex- is,’ he says, ‘as likely to excoriate the cept at times such as the Princess of Labs as she is the Libs’. Wales’ death and other news events What’s the evidence? Three points should be made of over-arching significance. On days Well, regrettably, it’s got to start here: like that, news may well be fully dic- with Phillip Adams. First—it is not the case that tated by the event. Regrettably, because the problem Phillip Adams is heard for just But who can doubt that, on most lies as much with those who are four hours a week. In fact, he is days, journalists and current affairs nominally in charge, and who seem currently allocated eight hours of people do make choices about which to accept the lack of due impartial- Radio National air time a week, stories are to be covered, who will be ity, as with Phillip Adams himself. not four. He has the 4.00pm to asked to comment—and how the The Weekend Australian of 10-11 5.00pm slot on Tuesday, Wednes- events will be presented? March 2001 published Phillip day, Thursday and Friday and the In the process of deciding, they Adams’ own defence of his position 10.00pm to 11.00pm slot Mon- will, of course, be influenced by their in relation to Radio National, mak- day, Tuesday, Wednesday and own viewpoints, by their professional ing it possible to examine the per- Thursday. The afternoon ses- experience and by the assumptions spective of a high-profile contribu- sions—to be sure—are recorded of their profession. Perhaps, most of tor to the network. versions of the previous night’s all, they’ll be influenced by the ‘cul- The first and fair thing to note is program, but he has this double ture’ of their organization. that he claims to have urged Radio whammy, giving him a total time Within that culture, people often National’s management ‘over the not matched by any other ABC have to work hard to retain their in- years, to offer the likes of Gerard public affairs commentator. tegrity of intention. It’s not easy. But Henderson or Paddy McGuinness Next—it is more than just a lit- the public is entitled to expect that their own programs’—though he’s tle disingenuous to say, as he does, it should be applied, as part of the not so keen about Imre Salusinszky, that only 15 minutes each four integrity/independence couplet—a who would, he says, ‘over-balance hours is devoted to Federal poli- linkage which means that, where me’. tics. Anyone listening regularly is ▲

R E V I E W JUNE 2001 11 soon aware that it isn’t just in seg- programs, on different networks, Of course, concerns about Radio ments about Federal politics that there isn’t an ABC Culture—it’s an National’s commitment to due im- his political position comes argument that flies in the face of evi- partiality and integrity of intent through. Tone, taste, inference, dence from literally hundreds of or- don’t begin and end with Phillip implication—they’re all there to ganizations, of all kinds. Adams, nor are they a recent devel- pump up the left and flatten the opment. others, in a range of items. PROMISE DEFERRED As long ago as December 1996, As to the assertion that in In one sense, Phillip Adams has ac- Eva Cox, who has had regular ac- Margo Kingston’s ‘Canberra knowledged the wide concern that cess to the network, said, ‘There’s a Babylon’ slot she is as likely to his eight hours of air time, broadly perception that left-wing people like excoriate the Labs as the Libs—if devoted to left-wing perspectives, me get too much airtime. I can tell that’s so, she doesn’t seem to do it skews the network. you they don’t. The place is full of very often. And not even her de- As he first wrote in The Austral- what I’d call right-wing commenta- tractors would accuse Margo ian and then told Mick O’Regan on tors. And we have got 50 million Kingston of setting out to disguise Radio National’s Media Report on right-wing commentators every- her general antipathy towards the the first day of March 2001, ‘On this where else in the media’. present Federal Government. very day I’ve applied for membership Notice that she uses the same Phillip Adams goes on to say of the Young Libs, Old Libs, the approach as Phillip Adams—claim- that ‘we’ve a regular in Bea Nats, One Nation, the Shooters ing that there are right-wing com- Campbell, who spends much of Party and, the most extreme of all, mentators on the ABC, but then her allotted time expressing con- the right-wing faction of the New avoids naming them. And they both tempt for Tony Blair and his New South Wales ALP. I am,’ he said, ‘a justify a left-wing stance, by assert- Labour henchmen’. So, some- new person, and everyone can now ing, to use Phillip Adams’ elegant times, she may. But don’t run relax, now that the extremist Adams phrase, that ‘it’s a fart in a windstorm away with the idea that she fills is like the thylacine—extinct, and compared to the overwhelming in the rest of her time boosting bombast and bigotry that’s pouring the Conservatives. Not even her out of commercial radio’. The im- nearest enemies would say that plication that ‘our’ ABC exists as a Bea Campbell has a thing going Concerns about left-wing bastion against commercial for William Hague. Tony may get bombast and bigotry is not easy to the sharp edge of her tongue oc- Radio National’s find in the Corporation’s Charter, casionally, but it’s the full rolling- Mission Statement, Code of Practice pin job for poor William. commitment to due or any other guideline document. Phillip Adams admits that Some commentators argue that ‘we’ve given air time to Noam impartiality and listing examples of the absence of Chomsky’ but says that this is bal- impartiality is an unnecessary waste anced by ‘respectful hearings to integrity of intent of time. Frank Devine, in The Aus- the likes of Henry Kissinger’. And, tralian of 12 August 1996, said that says Phillip, Noam ‘gets very don’t begin and end ‘unfairness is endemic—why bother shirty if you call him left-wing’. making lists of instances, when bias Well, if Chomsky hadn’t writ- permeates the national broadcaster, ten Deterring Democracy, Chroni- with Phillip Adams and the evidence is there for every- cles of Dissent and a number of body to see and hear every day?’ other books reflecting politically Perhaps he’s right. But if the per- radical positions, over many the ABC has clearly established its ception of a lack of impartiality is years, he could have avoided the ecological equilibrium’. allowed to continue, then the an- ‘left-wing’ tag that Mr Adams You might have thought, having tipathy this causes between the says causes him to become shirty. been told this, that everything was ABC, the present Government and Finally—in his defence of his going to be all right. But then, a few sections of the audience, will fester. place on Radio National, Phillip days afterwards, Phillip was talking Adams examines the ‘so-called to John Pilger on Late Night Live. OBSTACLES TO REFORM ABC culture’. It is, he says, ‘a fan- And it was soon clear that all his ap- This conflict does little good to any- tasy’. ‘A furphy.’ plications for membership must have one—and it is surely against the pub- Curious point, this. He seems to be been blackballed. All that bright lic interest that there should be long- saying that because ABC Radio has promise of change has been deferred. standing antipathy between a na- different staff working on different Nothing much is different. tional broadcaster and any govern-

R E V I E W 12 JUNE 2001 ment, Federal or State, Coalition or tive power to block certain decisions What we got were two people Labor. and policies and people. taking essentially the same position. Which prompts consideration of Last year, when there were ru- There is not the slightest objection what stands in the way of improve- mours that Phillip Adams’ contract to presenting views in opposition to ment from the ABC side. was not to be renewed, provides a those taken by any government. But There seem to be two principal case study. listeners have the right to know— possibilities: Aided by media mates and the and the ABC has the responsibility The first is that the ABC’s Board, strident Friends of the ABC, Phillip to provide—information and com- management and senior Radio Adams became a symbol of staff in- ment from people who represent the executives simply don’t see the fluence. There was a significant pub- principal differing views—on the problem. If this is so, and they are lic furore, and denials from Radio Kyoto decision or any other compa- not to be shifted from that view, management. rable issue. then redress will be a long time The program segment provided coming. no reason or background for the The second possibility is that the A core of influential Bush decision. Radio National ap- Board, management, and senior parently thought it was right, with Radio executives decide that staff, while not time in the slot for two opinions, to they can’t take action, despite the have both commentators taking the conviction that action is justi- actually managing same anti-Bush position. fied. It was later claimed by a Radio This possibility is based on the the ABC, has for long National spokeswoman—as re- opinion, articulated by the for- ported in The Australian of Monday mer Senator Graham Richard- had the negative 2 April 2001—that ‘the program’s son, that the ABC news and cur- producer tried to contact pro-Bush rent affairs staffs ‘simply won’t power to block commentators but none was avail- cop’ certain changes they don’t able for the broadcast’. It was also like. certain decisions and said that ‘Breakfast will continue Recent months have illustrated covering that story this week, and how effectively a campaign through policies and people all points of view will be presented’. the media can be mounted against a It is left to readers and listeners Managing Director, who now joins to decide whether the claim that no other chief executive officers, in- The issue, at least in public, was pro-Bush commentators were avail- cluding Geoffrey Whitehead and killed off, with a Sydney Morning able is credible. In making up their David Hill, whose policies have run Herald report quoting Mr Adams as minds, they should note that, in her foul of the prevailing opinions of saying ‘I run a good program. I’m not breakfast show on ABC Radio 702, those staff who see themselves as going to take the execution’. in Sydney, Sally Loane interviewed holding the flame for the ABC. two commentators—one, a US If, indeed, the influence of staff A CLEAR-CUT EXAMPLE Government greenhouse adviser, opinion leads to reluctance to inter- A final point. The Breakfast session who was wholly in agreement with vene, then the views of Russell Bate, on Radio National on Friday 30 Bush’s decision. This was broadcast the last Labor appointee to the cur- March 2001 ran commentary about only minutes after the Radio Na- rent Board, become clearer. the decision by President Bush to tional producer couldn’t find a sin- Earlier this year he spoke about withdraw American support for the gle commentator in the English- staff attitudes and the resistance to Kyoto environmental agreement. speaking world available to put the management directions. Mr Bate’s The broadcast segment had two pro-Bush view. view, after five years on the Board, people commenting on that deci- Did Radio National treat this is that there is an unrealistic expec- sion—a British professor and a major story with due impartiality— tation by many staff of involvement former member of the Clinton ad- and was there integrity of intent? in management. A half-billion dol- ministration. Both took the same lar operation, he said, can’t be run position, opposing the Bush deci- Keith Mackriell was the Federal Head of ABC like a collective farm. sion. Radio from 1974 to 1984. This is an edited version Well, Russell Bate has articulated This failed the many listeners of a paper he delivered to the IPA’s ABC Confer- what many people have long sus- who want to be able to make in- ence in Sydney on 31 March 2001. A full list of Conference speakers and their papers are available pected—that a core of influential formed judgments—either informed on the IPA Website: www.ipa.org.au staff, while not actually managing assent or informed dissent—on a the ABC, has for long had the nega- wide range of current issues. I P A

R E V I E W JUNE 2001 13 Letter from London JOHN NURICK

Is the Public Service first-class minds where it matters. Cer- tainly, changes in society and the too ‘Efficient’? economy mean that a career in the public service attracts fewer of the Last time I wrote, I knew—along with brightest graduates than it used to. everyone else from Prime Minister Second—and paradoxically—the Tony Blair down—that there would be public service has been trying hard, a general election on 3 May. But none and not without success, to become of us had bargained for foot and mouth more efficient: privatization; hiving off disease, and it was postponed until 7 administrative functions such as issu- June. ing passports and driving licences to The election campaign is too de- specialist ‘executive agencies’; cutting pressing to write about. Mr Blair set staff; and so on. Every agency and de- the tone by the way he announced it, partment has performance targets to in front of a captive audience of projects such as the Millennium Dome meet. The result—also seen in lean- schoolgirls, few if any of whom were or the Crossrail project for an east– and-mean private-sector organiza- old enough to vote. That didn’t mat- west link under London. The latest tions—tends to be organizations ter, because he spoke—literally—over example is the new National Stadium where everyone is so busy with day- their heads to the television cameras. at Wembley, where no-one can agree to-day work that there’s not enough The girls, with their pretty faces and on what the stadium should have or elasticity to cope with a sudden change shiny hair and happy hymn-singing, who should pay for it. Meanwhile, in the environment. were just scenery. The worst thing is English soccer finals have to be played Most people assume that flexibil- that I’m sure Mr Blair believes, per- in Wales (which is rather like having ity is something that private-sector fectly sincerely, that he abhors the the National Rugby League finals in organizations need more than the pub- exploitation of children. Tasmania). lic sector. If anything, it’s the reverse. The campaign then settled down This isn’t a complaint against the Private-sector organizations face con- to the usual half-truths about taxation, Labour Government; many of the ex- tinuously-changing conditions, and education, healthcare, immigration, amples began while the Conservatives they either adapt or are replaced by and the ‘European superstate’, enli- were in power. Administrative com- competitors. Public-sector organiza- vened by the occasional scuffle when petence is an issue that should cut tions have to put up with frequent and a voter found a politician. across ideological lines: big govern- often drastic changes in structure or Something that should be an issue, ment or small, what it does should pre- tasks as government policy changes or but isn’t, is administrative compe- sumably be done well. emergencies arise—and there are no tence. In the good old days, people An obvious objection is that competitors to take over if they fail. thought that Britain had a ‘Rolls- there’s nothing special about Britain, Perhaps the Thatcherite reforms Royce’ of a public service: silent, pow- that other countries are just as bad if (continued by Messrs Major and Blair) erful, and dependable. That was always not worse. There’s certainly something have gone too far, and we need a bit myth—but nowadays you really have in this, but I do get the feeling that more slack in the public sector. It may to doubt whether our government and administrative competence here has all be a great conspiracy—give people public service could raffle a chook in declined over the last generation or incompetent government in the hope a pub. so. It’s certainly very hard to imagine it will make them want minimal gov- There are too many examples to the UK matching Australia’s perform- ernment—but somehow I doubt it. present here. The railways; everything ance with the 2000 Olympics. to do with MAFF (BSE, food safety, If there has been a decline, what John Nurick is a management consultant based in the foot and mouth disease, farm policy); are the likely causes? Here are my sus- South of England. From 1985 to 1990, he was editorial director of the Australian Institute for Public the passport agency; the immigration pects: Policy, and later edited newsletters reporting on the service; the prison service; public serv- First, public servants aren’t as good UK Parliament and European Union institutions. ice computerization; and so on. We as they used to be—or rather, the pub- seem to be especially bad at large lic service has a lower proportion of I P A

R E V I E W 14 JUNE 2001 What’s A Job? KEN PHILLIPS

Equality Dreamings ate proximity to contract equality, but important, identifiable force for they don’t change the fundamental change in the Australian workforce. At an April 2001 industrial relations legal inequality of employment. The labour movement cannot be- seminar, the Secretary of the ACTU, Over the last 10 years, however, lieve that this constituency wants to the Victorian Industrial Relations while the media and political focus has escape the environment of employ- Minister, the National Secretary of been on the industrial relations soap- ment inequality. The movement’s only the AMWU and a diverse collection opera, fundamental community policy response is to demonize and seek of leading labour academics facilitated change has occurred that challenges to prevent non-employment work ar- by the respected Professor Ron the industrial relations norm. This has rangements. In pursuing this agenda it McCallum agreed on one key point: taken two forms. has entered the realm of the politically underpinning all industrial relations The first is the dramatic increase macabre. Long proud of its utterances law is the fact that employers and em- in the number of people who work but in defence of equality, the labour ployees are not and cannot be equal are ‘not employed’. They work for movement has turned itself into a most and can never have shared, common themselves and are self-controlled. powerful instrument for the mainte- interests. They stated that the propo- The elements of legal employment do nance of employment inequality. nents of industrial relations ‘deregu- not exist and the IR system is not their On the other side of the debate, the lation’ believed the opposite—that ‘employer’ advocates continue to argue equality does exist and common in- from their same restrictive paradigm of terest is achievable. The Australian industrial accepting the employers’ supremacy, Which view is right? Both, actu- vaguely aware that some sort of change ally! But both are also wrong! The relations debate is has happened but not yet even think- Australian industrial relations debate gridlocked by a classic ing about how to think about it! is gridlocked by a classic case of op- At some point in the evolutionary posing paradigms, neither able to com- case of opposing process, however, there will be a rec- prehend the legitimacy of the other, ognition that we are already living yet with the truth being a combina- paradigms, neither able within a new paradigm that requires a tion of the two. And to a large extent, sensible response. Inevitably this will one side offers a strict legal perspec- to comprehend the mean the acceptance of the fact that tive while the other is economic. people want a free choice when work- The hard truth is that industrial legitimacy of the other… ing, between the option of the inequal- relations is about the regulation of in- ity of employment and option of self- equality, because the very legal essence legal regulator. They exist in a legal controlling engagement. of employment is that one party has paradigm of equality and constitute 20 Ultimately two alternative work- rights to control the other. The IR sys- per cent of the workforce. place regulatory systems will emerge— tem allegedly arbitrates to prevent the The second (and conceivably one geared for the legal inequality of worst excesses of inequality. larger) group are those who could be employment, the other utilizing frame- The alternative economic view classified as independent employees. works for engagements of equality. This holds that real-life behaviours do not They are forced into the legalities of development won’t stop the industrial fit this simple legal paradigm and that employment but have the desires and relations soap-opera or the accompa- the interference of the IR system frus- mental attitudes of independence and nying games of industrial and commer- trates productive economic behav- self-control. cial mafiosi. But clarity in the two le- iours. What the economic analysis Combined, these two groups have gal choices available will focus minds misses is the truth that the IR system no stake in the industrial relations sys- on the comparative economic out- is an exclusively legal construct. To ar- tem, find it all an irrelevant bore, but comes possible under each. gue for deregulation is always to argue have no organized voice, lobby or po- litical representation. Quite oddly, Ken Phillips is a workplace reform practitioner who for transference of legal power to the promotes the principles of ‘markets in the firm’. employer. This legal fact cannot be ig- the industrial relations debate contin- nored. Legal systems of individual em- ues almost as if this constituency does ployment agreements may seek to cre- not exist—yet they are the single most I P A

R E V I E W JUNE 2001 15 Confessions of a Privatizer: The Privatization of CSL Ltd *

GARY JOHNS

HE wholly government- at some point, have been manufac- and Veterinary, could similarly have owned Commonwealth tured by a competitor for a lower had a life of their own, or indeed may Serum Laboratories (CSL) price. The Commonwealth was also have been better placed in another T was sold in 1994 for nearly a purchaser of most of the products. institution such as CSIRO. $300 million. I was responsible for It would have been entitled to seek A whole range of options, from CSL at the time the government took the best price. As both producer and total sale, to partial sale, to dismem- the decision to sell.1 In their book, buyer, the conflict for the Common- berment of the company were all se- Privatisation: Sell Off or Sell Out?, Bob wealth was obvious. riously considered over a number of and Betty Walker gave the ‘Wooden CSL’s largest single manufactur- years. CSL was not a body to be Spoon Award’ for Australia’s worst ing activity was (and is) blood nursed, it was an array of productive privatization to CSL Ltd.2 fractionation. Plasma is sourced from assets to be maximized. Was the Commonwealth wrong blood donors to the Australian Red The decision to sell CSL whole to sell CSL, or was the sale the reali- Cross Blood Transfusion Services may or may not have been the best zation of a public asset and a chance and the Commonwealth had a clear one. Who knows what further op- for an Australian manufacturer to tions would have proved even bet- develop and contribute to the na- ter? What we do know, however, is tional economy as never before? this. CSL paid $4 million income tax Walker and Walker, and Hamil- The question the in 1994; in 2000, it paid $27 million. ton and Quiggin,3 regarded the sale CSL employed just over 1,300 peo- of CSL as consisting of only one form critics … must ple in 1994; in 2000, it employed of risk: the risk that the taxpayer over 1,400 people in Australia, and would receive insufficient return on answer is: would CSL a number overseas. In 1993, sales its investment. They did not con- revenue was around $170 million sider the risks involved in the con- have made such a and assets were $230 million. In tinued ownership of CSL by the 2000, sales revenue was over $500 Commonwealth. Their focus was contribution to million and assets were nearly $1 bil- zero-sum: a gain to the purchaser lion. The question the critics of the must mean a loss to the seller. sale must answer is: would CSL have They did not consider the dy- Australia had it made such a contribution to Aus- namics of the situation. CSL was not tralia had it remained in Common- an institution, it was a company. remained in wealth hands? Among other things, it operated in the highly competitive pharmaceu- Commonwealth hands? DID THE COMMONWEALTH tical industry. It had to invest in re- RECEIVE AN ADEQUATE search and development, it had to RETURN? seek alliances with other companies public health obligation in this part Returning to the critics’ narrow fo- in order to develop sophisticated of the business. While it was unlikely cus, the most difficult part of identi- drugs. It had to be alert to competi- that the Commonwealth would fying the losses and gains of a sale is tion. CSL produced vaccines and source its fractionation elsewhere, or estimating the ‘sale’ or ‘retention’ sera for treating a variety of illnesses, that a competitor was going to arise, value of an asset. This estimate is including diphtheria, tetanus, chol- there may have been advantages in considerably influenced by the view era, plague, pertussis (whooping splitting the company, separating taken on whether there is a differ- cough), smallpox and influenza. Any fractionation from vaccines and sera. ential cost of capital faced by gov- of these products could conceivably, Other divisions, such as Biosciences ernment and the private sector. The

R E V I E W 16 JUNE 2001 4 critics argue that the cost of capital erate higher future profits. The sale between the Commonwealth and is always higher to the private sector of blood-products was controlled by the CSL, an agreement to share any than to government. The argument a contract with the Commonwealth, future gains in productivity over the follows, that the only way a govern- which, before sale, substantially in- lifetime of the agreement, and for the ment can induce a buyer in the pri- creased the price for product, thus first time, the government and the vate sector is to sell the asset at less underwriting future profits. The crit- CSL would have to negotiate a real than it is worth. This is nonsense. ics’ argument is that the Common- price. As Hathaway suggests, ‘the mere fact wealth will be paying out $45 mil- Because there is a single buyer of government (as opposed to pri- lion per year more for the life of the and a single seller in blood fraction- vate) ownership does not alter the ation in Australia, risk can only be value of an asset’.5 The cost-of-capi- assessed through negotiation and re- tal argument is based on the obser- CSL was not an view. That does not mean that risk vation that the government sector is not apparent, or that it should be need not pay company tax, and that set at zero. Fortunately, the PFA in- the government sector can borrow institution, it was corporated adjustments for efficiency at lower rates than the private sec- gains, which were to be split 50:50 tor. These observations are correct, a company. Among between the Commonwealth and but it does not follow that the gov- the CSL, and there was an agree- ernment cost of capital is lower than other things, it ment to review pricing arrangements the private sector cost. Ultimately, during the course of the contract.10 the case for the privatization of gov- operated in the A major impact on the review of ernment enterprises does not turn on pricing was a disagreement about the the cost of capital for government highly competitive depreciation of the Broadmeadows business enterprises. It is based en- facility. The ANAO argued: ‘Some tirely on the efficiency gains it makes pharmaceutical $35 million, which CSL had received possible. in respect of depreciation on its as- The study of the privatization of sets was added back into the total CSL by Hamilton and Quiggin (re- industry asset base value’.11 The Department lied on by the Walkers) made the false of Health countered that ‘projections assumptions of the kind Hathaway ten-year agreement than it would indicate that $219 million will be describes. When the authors applied have, had CSL remained in Com- recovered over the period of the con- 9 their measure to the CSL sale, in the monwealth ownership. Is this accu- tract compared to $221 million [of first instance they concluded that the sation sustained by the facts? the target amount]. This means there 6 12 sale price was right! Indeed, the Aus- The profitability of CSL did and has been no double-counting’. tralian National Audit Office does, to some extent, depend on its The disagreement on the rate of (ANAO) audited the sale of CSL and PFA contract with the Common- depreciation for the Broadmeadows concluded that the Commonwealth’s wealth. Commonwealth payments to plant does not suggest the dogmatic return on the sale of CSL was accept- CSL before the PFA were a non- conclusions of Hamilton and Quig- able given the modest size of the ini- commercial pricing arrangement. gin and the Walkers on the price re- tial after-market share premium and They did not include any allowance ceived by the Commonwealth for that it approached reported share- for capital upgrades to enable con- the sale of CSL. Moreover, the agree- holder funds.7 tinuing manufacture of blood prod- ment to share any variation in the ucts. Presently, the payments are a adjustment to the price of blood THE NEW PLANT AND THE commercial arrangement, and as product considerably reduces the NEW AGREEMENT such represent a real return to CSL. magnitude of any supposed loss, es- To sustain their criticism that the Such a return meant a considerable pecially as the matter is to be rene- Commonwealth sold CSL too increase in the price of the products. gotiated in 2004. cheaply, however, Hamilton and Akin to the differential cost-of- Quiggin relied on two other elements capital argument, Hamilton and HAS THE NATION LOST AN of the sale—the new fractionation Quiggin argued that the real cost of ASSET OR HAS IT GAINED plant at Broadmeadows and the producing blood products could be ONE? 1993–2004 Plasma Fractionation less in the hands of a government- The price of CSL shares has soared 8 Agreement (PFA). The CSL ac- owned CSL. In fact, with the same in the years since the float. The crit- quired a new blood fractionation fa- efficiency of operation, the cost ics argue that any improvement in cility, substantially funded by the would be the same. The things that the share price implies a loss to the Commonwealth, which was to gen- varied were the reassignment of risk taxpayer. They include profits five ▲

R E V I E W JUNE 2001 17 CSL through taxation, employment, 35 CSL Share Prices January and June 1994/2000 capital accumulation, foreign acqui- sitions, exports, and investment in 30 new technology. The future of CSL may be subject to much greater risk 25 as it breaks into new markets and confronts greater competition14— 20 the sort of risk and competition that a government-owned operation $ 15 could not handle, indeed, would not dare handle. 10 NOTES 5 * The full version of this paper is avail- able at the IPA website: www.ipa. 0 org.au J94 J95 J95 J96 J96 J97 J97 J98 J98 J99 J99 J00 J00 1 As Parliamentary Secretary to the June 1994 to June 2000 Minister for Health, Housing and

Source: CSL Annual Reports 1993/1994 to 1999/2000. Community Services. 2Walker B. and B. Walker, 2000. Pri- vatisation: Sell Off or Sell Out? Syd- years after privatization as belonging investments in R&D and in pur- ney: ABC Books, 224. 3 Hamilton, C. and J. Quiggin, 1995. to the Commonwealth, assuming chases, and the new 10-year blood The Privatisation of CSL. The Aus- CSL would have generated those fractionation agreement with the tralia Institute, Discussion Paper profits in government ownership. Commonwealth appear to account Number 5. The only way that could happen was for the confidence that shareholders 4Walker and Walker, 2000, Chs 4, 5 for the government to have captured have in CSL. and Appendix to ch 5. Quiggin, J. 1997. ‘The Equity Premium and the the improvement in value by hav- Government Cost of Capital: A Re- ing purchased CSL shares at its sale! CONCLUSION sponse to Neville Hathaway’. Agenda What specific activities led to the The criticism that CSL was Austral- 4(4): 475–488. extraordinary rise in value of CSL ia’s worst privatization is based on the 5Hathaway, N. 1997. ‘The Equity Pre- shares? Since the float in 1994, other view that government assets should mium and the Government Cost of Capital: A Rejoinder’. Agenda 4(4): than the Managing Director, almost only pass into private hands if the 486. Also, Hathaway, N. 1997. ‘Pri- every single other management role taxpayer receives a return equal to vatisation and the Government Cost in the organization has changed. that which would be received by a of Capital’. Agenda 4(2): 155. CSL’s acquisitions of JRH Bio- private operator, when that operator 6 Hamilton and Quiggin, 1995, 4. sciences USA in 1994 and Biocor had promoted a more efficient use of 7 Australian National Audit Office, 1995. The Sale of CSL. The Auditor Animal Health USA in 1998 have capital. A government which was General. Audit Report No. 14. made some difference, although the unwilling and unable to run CSL as 1995–96. AGPS, Canberra, 5. acquisition of ZLB Switzerland in a private company could not expect 8 Hamilton and Quiggin, 1995, 4. September 2000 was, in the opinion to recoup a present value from assets 9 Hamilton and Quiggin, 1995, 6. of a senior CSL executive,13 seen by that were improved after they were 10 The average minimum price in the the share market as adding consid- sold. Of course, the basis for much PFA was around 65 per cent of world prices for fractionated plasma prod- erable value. of that improvement rested in the ucts. Department of Finance. Further, the market has seen preparation of CSL for sale, in par- ANAO, 1995, 43. CSL’s R&D activities as adding value ticular the new fractionation plant 11 ANAO, 2000. Commonwealth Man- to the company, specifically its col- and the corporatization process. It agement and Regulation of Plasma laboration with Merck on an HPV may also be true that the Common- Fractionation. Audit Report No. 24. 1999–2000 Performance Audit, 59. vaccine (human papilloma virus) as wealth could have struck a better 12 ANAO, 2000, 61. well as its collaboration with Astra- bargain with CSL on the price of 13 Personal correspondence with au- Zeneca (Sweden) on the develop- plasma products and the assignment thor, April 2001. ment of a therapeutic pylori vaccine. of depreciation at the Broadmeadows 14 Macquarie Research Equities, Febru- Another jump in the share price oc- plant. ary 2001. CSL, 8. curred in 1999 when CSL entered Nevertheless, the Common- The Hon. Gary Johns is a Senior Fellow at the IPA into collaboration with the Ameri- wealth was able to realize an asset in and leader of the NGO Project. can Red Cross for the development such a way that the nation has con- of a fibrin bandage. Overall, the new tinued to benefit from the growth of I P A

R E V I E W 18 JUNE 2001 Workers’ Compensation: Time to Rethink the Options

NICK RENTON

HE workers’ compensa- awarded by a court (or agreed in an to cover injuries on the way to and tion schemes in the vari- out-of-court settlement). from work; and the definition of ‘em- T ous States and Territories ployee’ was widened. The line be- differ in their detail, but THE START OF STATUTORY tween such schemes and social secu- they all seem to attract criticism from INTERVENTION rity started to get blurred. both sides of the industrial fence. Many years ago a remedy for this was Employers regard the current arrived at by the authorities, at least THE DEBATE schemes as far too expensive and as in two common situations. This rem- When discussing such issues, the a significant disincentive to job crea- edy was to require compulsory insur- public invariably mixes up two quite tion. Trade unions feel that the level ance for employers, regarding inju- separate aspects: of benefits is often inadequate and ries to their own employees; and for • the overall costs of compensation that this can create hardship for some motor car drivers in regard to vehi- to the community, and severely injured employees. cle accidents on the roads. • the best ways of meeting such In Victoria, common-law claims Other injuries which might be costs. under that State’s scheme were equally harmful to the victims—for The aggregate costs are a function of largely abolished by the former Coa- example, when a brick falls off a the dollars actually flowing to vic- lition Government. They were re- tims, to health professionals, to law- cently restored by the current Labor yers and to various administrative Government—although, to the dis- Any system which personnel. They are not a function appointment of the unions and of of book-keeping—a factor which claimant workers, this was not done denies common-law also applies to another frequent hot retrospectively. potato, health insurance. As the quality of the debate on rights to some in- The basic costs are going to be the that matter left a lot to be desired, it same in total regardless of whether is worthwhile looking at the subject these are funded out of: from first principles, analysing the jured workers really •direct payments by the persons problem before looking at a possible causing (or deemed to cause) in- solution. amounts to a cross- jury, or • insurance premiums, or THE MORAL ASPECTS subsidization from • consolidated revenue. The concept that, in a civilized so- However, the associated costs for ciety, persons who cause injury to accident victims to lawyers and the like will, of course, other persons should, as a matter of differ considerably according to the morality, compensate their victims is their employers way the community chooses to han- well established. dle these issues. This principle, long enshrined in One possible advantage of an in- the common law of England (and house onto a passer-by or even when surance scheme is its ability to im- Australia), now covers all manner of a motorist drives into a tree—were pose a discipline on employers, en- situations and is not confined to the left out of these arrangements. So couraging them to set up safe work workplace. Naturally, compensation this legislative approach, with its practices. This can happen where needs to have regard both to pain obvious anomalies, was really flawed premium rates are aligned to the per- and suffering and to economic loss. right from the start. ceived risks. Such a discipline, how- One difficulty which can arise in As time passed, a number of so- ever, could also be imposed in other practice is that a party found liable called improvements were built into ways—for example, through the in such circumstances might lack the the workers’ compensation system— criminal law. wherewithal to meet the damages for example, benefits were extended ▲

R E V I E W JUNE 2001 19 EMPLOYER COSTS proach to damages in regard to the feasible, to rehabilitate) workers If compulsory insurance is to be used amount of damages awarded—so that injured in the course of their em- in the workplace, then naturally the the quantum but not the liability is ployment. premiums become a cost to employ- still litigated. Naturally, this is the •The secondary objective should ers. But this applies equally to all the approach least favoured by those be to do this at the lowest possi- other expenses of running a busi- wanting to reduce the cost of claims. ble cost to employers, to custom- ness—wages, rent, electricity, tel- Alternatively, no-fault cover ers, and to the wider community. ephones, and so on. can use a ‘table of maims’, a statu- It follows that administrative ex- Employers do not expect to get tory schedule prescribing the penses should be kept as low as pos- their raw materials at less than cost, number of dollars compensation for sible and that lawyers should be kept so why should they expect to pay less various types of injury. Although out of the process as far as possible. than the true worth of work-related such a basis avoids the flow of This could be achieved by treat- injuries—which, after all, are just ing industrial injuries as a commu- another part of the total costs of pro- nity responsibility, and by extending duction? Administrative the current social security system to Any system which denies com- embrace what have traditionally mon-law rights to some injured expenses should been regarded as workers’ compen- workers really amounts to a cross- sation claims. subsidization from accident victims be kept as low as This would have a number of dis- to their employers, which is hardly tinct advantages: an ethical principle. • Benefits could be integrated with Naturally, any premium increases possible and … the existing disability support pen- from making a scheme more gener- sions and with payments to carers. ous have to come from somewhere. lawyers should be • Benefits would become uniform In practice, they are no doubt passed throughout Australia. on by employers in the form of kept out of the •All genuine claims lodged by in- higher prices to their many custom- jured workers would be handled ers, but if the present approach is to process as far speedily and sympathetically with continue, then it seems more appro- a ‘social welfare’ attitude rather priate that customers themselves as possible than as part of an adversarial cul- should pay a few extra cents for ture. something in the supermarket than • The concepts of fault and deemed that a seriously injured employee money to lawyers, it is really a far fault would become irrelevant. should be deprived of thousands of less satisfactory approach in the •The relatively inexpensive exist- dollars due by way of equitable com- case of serious injuries—as will be ing Centrelink appeal mecha- pensation. obvious by considering the effect of nisms would become available— an injury to the hands of, say, a con- the Social Security Appeals Tri- FAULT cert pianist. bunal (SSAT) and the Adminis- Another aspect of the debate which True insurance is voluntary and trative Appeals Tribunal (AAT). shows evidence of confusion con- involves premiums set in the market- •There would be recourse to the cerns fault. Quite clearly, any system place by competitive forces having Commonwealth Ombudsman of no-fault compensation can save regard to individual risks. In contrast, and the ability to use the Freedom the community much money be- social security involves universal of Information Act. cause it eliminates the costs of estab- coverage funded compulsorily out of •The long delays involved in the lishing through the legal system just taxation. Australians seem to favour present court system would be who is to blame for any particular a sort of middle course which is re- avoided. (Incidentally, keeping injury. ally only a form of ‘pretend insur- such cases out of the congested However, it merely shifts the di- ance’. They are then getting the courts would also help to reduce viding line between what is covered worst of both worlds. the delays for other litigants.) and what is not—after all, an injury •Money would not be wasted on incurred while playing sport will REFORM the administrative effort cur- have exactly the same effect on the The time has come to rethink the rently required to collect and unfortunate victim as an identical problem afresh and to face reality process employer premium pay- injury while working for a boss. while making some compromises: ments and to prosecute employ- No-fault cover can take two forms. •The primary objective should be ers who fail to pay the correct It can preserve the common-law ap- to compensate fairly (and, where amounts.

R E V I E W 20 JUNE 2001 • Benefits other than reimburse- ments of actual expenses would be paid in the form of ongoing Cultural Wars pensions rather than as lump sum awards. RON BRUNTON • Pensions would be automatically adjusted for inflation. A new two-step approach to fund GaitaManne Robert Manne, to examine his con- the above arrangements is also science as well. needed: In a 1997 Quadrant essay on ‘Geno- Two years ago, Mitchell offered to • While employers would be re- cide: the Holocaust and Aborigines’, send Manne on a trip to learn about lieved of the need to pay insur- Raimond Gaita made a strange ad- genuine cases where Queensland ance premiums as such, they mission. Stating that ‘many Austral- Aborigines are being destroyed. should pick up the first $2000 ians are now obliged to examine their Manne would travel with Noel (say) of each claim—a sort of ‘ex- consciences for reasons similar to Pearson and the Courier-Mail’s vet- cess’ in insurance terminology. those which obliged Germans to do eran reporter Tony Koch, who for Apart from leading to savings on it after the war’, he offered an anec- some time has been writing searing the overall claims budget, this dote designed to show that this was accounts of the appalling violence, would act as a useful financial not just hyperbole. sexual abuse and other forms of so- incentive for all employers to put During the late 1960s he had at- cial breakdown in Aboriginal settle- in place safe working conditions tended a meeting of the Melbourne ments in the state. Manne would for their staffs. It would also au- University Labor Club, then a club then be in a position to use his con- tomatically reward sound occu- of the radical Left, at which a visit- siderable influence to inform the pational health and safety prac- ing speaker said that Right-wing denizens of the leafy suburbs of Syd- tices. Such an excess would also émigrés, from the southern states of ney and Melbourne that circum- reduce handling costs by keeping the USA, ‘had moved to Queens- stances were not quite as their fanta- very small claims out of the sys- land, where they sometimes went on sies would incline them to believe. tem. hunting parties in their four-wheel- Mitchell was dismayed to find that • The balance of the cost would be drives to shoot Aborigines’. Ac- Robert Manne showed no interest in met out of taxation revenue— knowledging that this story was ‘al- the proposal, even though all ex- which, of course, already includes most certainly false’, Gaita excoriated penses would have been met by the large sums paid by employers by himself and the others at the meet- Courier-Mail. way of payroll tax and by their ing, claiming ‘that although we found This seeming indifference to the customers in the form of the the story credible, I am sure that not contemporary suffering of Aborigines GST. As these two taxes both one of us did anything to find out is in marked contrast to Manne’s very flow to State Governments, whether it was true’. public identification with the suffer- whereas social security is a Com- One does not expect a moral phi- ing of the ‘stolen generations’. In his monwealth responsibility, some losopher to trouble himself with em- most recent writing on the Aborigi- financial adjustments between pirical evidence. But I suspect that nal victims of past child-removal the State and Federal Govern- he is being too harsh on his comrades, policies, in the first issue of Quarterly ments would probably be neces- in the narcissistic expectation that Essay, he condemns ‘the Right’, who sary. they were all like him. Perhaps many are supposedly ‘in denial’ about what One final point. The above approach of them understood only too well that really occurred. Those who do not would provide better protection for this was just another example of the ‘hunt in packs’ are mostly too ‘mean- employees than the present legisla- outrageous humbug which saturated spirited’, too lacking in ‘empathy’, to tion, because all large claims would those times. But in any case, how can appreciate the ‘depth of grief and bit- be capable of being met even in the he be so sure that no-one attempted terness and powerlessness’ that Abo- event of insolvency on the part of to check the story? rigines suffered. So they have become an employer or an insurance com- Nevertheless, I recently had oc- willing parties to a supposed con- pany. casion to recall Gaita’s anecdote af- spiracy directed against the ‘stolen ter hearing another Queensland tale generations’ that has been orches- from Chris Mitchell, the editor of the trated by his successor at Quadrant, Nick Renton, an actuary, is the author of Company Brisbane Courier-Mail. If Gaita was Paddy McGuinness, and strongly sup- Directors: Masters or Servants? and Family Trusts really serious in his 1997 essay, he ported by the Howard Government. (Wrightbooks). could now be expected to ask his Perhaps Manne feared that his I P A protégé and comrade-in-virtue, own abundant capacity for empathy ▲

R E V I E W JUNE 2001 21 would overwhelm him were he to maining 90 per cent is similarly re- face up to the reality of contempo- plete with tendentious errors and rary life on some Aboriginal settle- omissions that have no place in the Musing… ments. That would be an understand- writings of someone who presents able justification for his apparent himself as a scholar, as others who Funding and Bias unwillingness to take up Mitchell’s Manne has slandered are also point- by MIKE NAHAN offer. A less favourable interpretation ing out. would be that Manne has become Manne is no fool. Nor, one as- To Mr Littlemore, the IPA is a ‘mon- totally committed to a view in which sumes, is he engaged in some kind of eyed propaganda machine’. Why? Aborigines can only be the innocent kamikaze mission against his own in- Because we are funded by businesses. victims of ‘Right-wing’ iniquity, and terests. The only reasonable expla- To him, business funding leads to bias never the perpetrators of injustice nation of the utterly cavalier ap- whereas public funding is pure and themselves, so he is unwilling to con- proach that he has taken towards fac- objective. front any evidence tual evidence is But wait a minute. Is public fund- that might force It is likely that many that he is confi- ing necessarily unbiased? him to reconsider dent that he can When was the last time you came this emotionally of his academic col- get away with it. across a government-funded report and politically sat- The members of which argued for less government isfying position. leagues and media the pack with spending or for no new government Like the Aborigi- whom he hunts, programmes? To be fair, there are a nal communities admirers would think such as Raimond few—but only a few. whom even The Gaita and Peter Is it only coincidence that the Age has finally ac- less of Manne were Craven and other government-funded ABC is uni- cused of refusing ‘public intellectu- formly supportive of more govern- to acknowledge he to make a public als’, will always ment spending and sceptical of pri- the widespread defend him. What vatization? child sexual abuse apology for his false- happened to poor Have you ever heard of research in their midst (in Michael Warby— generated by the welfare lobby—it- an article called hoods and omissions for unintentional self largely government-funded— ‘Who cares for sins, for which he which finds that poverty is on the Matilda?’, published on 9 May), quickly apologized—will never hap- decline (which it is) or which ex- Manne may be ‘in denial’. pen to Robert Manne. No-one is go- presses concern about welfare de- The plausibility of such an inter- ing to ask him to resign from his po- pendency (despite seeing evidence pretation is strengthened by the wan- sition as a columnist for The Age, or of it every day)? ton disregard of facts in Manne’s as an Associate Professor at La Trobe Have you ever come across re- Quarterly Essay, which at times de- University, just because he has made search funded by the Australian generates into the fabrication of evi- a wilfully misleading attack on ‘the Greenhouse Office that questions dence. Of course, these are serious Right’. After all, ‘the Right’ is the en- the Kyoto Agreement (despite it charges, and they are not made emy of all proper-thinking intellec- being fundamentally flawed) or re- lightly. I have demonstrated that they tuals, and who better to attack it than search funded by the QUIT cam- are warranted in a lengthy document someone who was once so strongly paign people that does not see a firm titled ‘The False Scholarship Syn- identified with ‘the Right’ himself. link between passive smoking and drome’, available on the IPA Website Look at the favourable attention they death? (www.ipa.org.au). This carefully de- now give Malcolm Fraser, the man Now clearly bias can, and indeed tails the very large number of false- whose surname they once spelt with does, creep into work funded by busi- hoods and other major failings in an a swastika in place of the ‘s’. Indeed, ness; not only by design and selec- essay intended to launch a quarterly it is likely that many of his academic tion but also out of conviction. But series, which the editor, Peter Cra- colleagues and media admirers would just as clearly, government funding ven, risibly promises will bring its think less of Manne were he to make suffers from the same tendencies. readership ‘the widest range of politi- a public apology for his falsehoods The solution lies with the old cal and cultural opinion which is and omissions. They might take it as fashioned way—publish results, compatible with truth telling’. The evidence of backsliding. make use of peer review and debate, document on the IPA Website deals and make sure that there is funding solely with Manne’s treatment of my Dr Ron Brunton is a Senior Fellow with the Institute of Public Affairs. for research from a range of views. work, which covers only around 10 per cent of his whole essay. The re- I P A

R E V I E W 22 JUNE 2001 Family and Work

ANDREW MCINTYRE

Not All Things Are cussion in the course of the debate is can researcher Thomas Schmidt has the 1961 Commonwealth Marriage Act. found that ‘life-long faithfulness is al- Equal in Relationships Its many provisions are important in most nonexistent in the homosexual the context of the debate because they experience.… Under 8 per cent of both There has been sporadic reporting in set out a process that in practical terms men and women have a so-called the media about disgruntlement with requires people to go to a lot of trou- ‘long-term’ relationship, defined as the Victorian Statute Law Amend- ble and not inconsiderable expense to more than four years.’ [Straight & Nar- ment (Relationships) Bill. The Bracks either get married or exit a marriage.’ row: Compassion & Clarity in the Ho- Government’s declared reason for the It is salutary to look briefly at just mosexual Debate, 1995]. Bill is to extend to same-sex relation- what these troubles involve. Under It would seem that the Victorian ships equal rights under the law, spe- this Act a couple is obliged to lodge Government and Opposition have cifically those enjoyed by married and an advance notice of intent, must show both got the argument back to front. de facto couples. It also claims that the official proof of age and official proof They have now achieved a new dis- reform in no way encroaches on the that they are free to marry. There are crimination and uninvited govern- institution of marriage. many restrictions on documentation, ment interference against those indi- The first draft of the Bill gave al- consanguinity and affinity, parental viduals who choose to move in and most anyone in any kind of ad hoc do- consent, solemnization and authoriza- out of uncommitted relationships at mestic arrangement complete parity will. Inadvertently, these people, who with marriage. Hasty redrafting has for very good reasons of their own since explicitly redefined the new op- The fact is that mar- choose not to make any commitments, erative term ‘domestic relationship’— riage … does produce will have the long arm of the ‘Granny which supersedes the old de facto no- State’ interfering with their liberties. tion—to include a range of factors that measurably beneficial For the seemingly unfair cases of those must be taken into account, includ- who believe they should be protected ing duration, nature, financial arrange- outcomes for partici- from predators, there are other solu- ments, commitment, and care and tions. There is nothing to stop hetero- support of children. pants, children and sexuals, at least, from marrying. For the Although Dr Robert Dean, the government budgets rest, other mechanisms already exist shadow Attorney-General, recognizes through the writing of wills, joint own- the need ‘to protect the family at all ership of property and investments, costs and to promote long-term rela- tion. The Act contains 120 sections, and the designation of power of attor- tionships’, he is largely happy with the all provisions of which attract finan- ney in medical and other matters. revamped Bill. It is, however, still to- cial penalties for breaches. From all of this, it would seem that tally unacceptable to the National The fact is that marriage, when those pushing for the new domestic Party, to its leader Peter Ryan and to compared to all other types of domes- relationships want to have their cake two independents, Craig Ingram and tic arrangements, does produce meas- and eat it too. Russell Savage. They believe that the urably beneficial outcomes for partici- In the light of the just-released notion of marriage is so important that pants, children and government budg- American 2000 census which shows the other options contemplated in the ets. Although it is true that the new that barely 52 per cent of US house- legislation cannot match it, and are Bill tightens up the expectations in holds were living as married couples, therefore inappropriate and not ac- existing de facto relationships—still a and declining, whilst there are huge ceptable. poor second in outcomes when com- increases in unmarried couples, it is The central accusation is that the pared with marriage—the new Bill is also difficult not to agree with pro- Bill undermines marriage. Mr Ryan being passed essentially to extend mar- marriage groups that marriage as an believes that reducing all relationships riage rights to same-sex partners. Trou- institution is indeed being weakened. to those of married couples is in fact bling evidence suggests that these cou- discriminatory against marriage. ‘The ples provide even less stability, and Andrew McIntyre is Public Relations Manager at one pivotal act of Parliament that has thus benefits to children and society, the Institute of Public Affairs. not been the subject of any direct dis- than do traditional de factos. Ameri- I P A

R E V I E W JUNE 2001 23 R E V I E W Free_Enterprise.com by Stephen Dawson File View Go Bookmarks Options Directory Window Help

There were two watershed points in dividual empowerment because the the development of the Internet as language of the Web (HTML for we now know it. The first came very Hyper Text Markup Language) is so early: e-mail was invented in the simple that anyone can learn the early 1970s. This was, in computer basics in an hour, because to create speak, the ‘killer app’ that made the a Web page requires very little com- whole Internet worthwhile. puter software (everything you need But it required something else to is in a current Windows installation make the Internet attractive to a or Mac), and because every creator broad population. That came about of content makes his or her own in 1991: the World Wide Web. And decisions about how to structure it this was thanks almost entirely to and how, or indeed whether, to link able to attend IPA conferences, you just one man and his employer, the to other Web sites. could well be more interested in the European Particle Physics Labora- As Berners-Lee said in 1999 speeches delivered at these. A re- tory in Geneva. when describing the genesis of the cent example is the March 2001 ses- The immediate problem was Web (http://www.w3.org/1999/04/ sion: ‘Their ABC or Our ABC?’. I how to share information between 13-tbl.html), ‘there was a certain shan’t detail the rest of the site, but the different researchers in the par- fear that the Web would break struc- be assured that if you derive pleas- ticle physics community in a way tures… [A] lot of people I spoke to ure and knowledge from this jour- that would not be burdensome ei- initially wanted the Web to be hi- nal, there is much, much more at: ther to those seeking the informa- erarchical because they wanted the http://www.ipa.org.au/ tion or those providing it. But Tim hierarchical feeling of control.’ Berners-Lee wanted to go beyond What he developed was an open, Note, this is not www.ipa.com.au. that and provide a system that free-wheeling system that allowed The latter, a worthy enterprise I feel would work internationally, and people to build a hierarchical struc- certain, is a personnel recruitment without regard to scientific disci- ture within it if they chose, but was company, not a think-tank. pline. He produced his proposal in itself unconstrained. 1989, developed the model in 1990 These days, the Web is a place LIBERTARIANZ and released the first primitive web where you can read about, or dis- Advocacy of libertarianism is not browser in 1991. Of course, it wasn’t cuss, political views of Left, Right the business of the Institute of Pub- primitive then, but revolutionary. or other persuasion, buy computer lic Affairs. Advocacy of intelligent, It is hard to believe that just a software, download pornography, effective and useful public policy is. decade has since passed. As the US sign petitions, engage in networked Regular readers may well have prepares to celebrate (http://www. processing undertakings to solve sci- sensed, though, that I consider lib- centennialofflight.gov/) the passage entific problems, or even read the ertarian policy (or, in many cases, of a century since the first heavier- output of pro-market think-tanks. anti-policy) to be just that: intelli- than- air flight, something achieved gent, effective and useful. Just as without government help by a cou- THE INSTITUTE OF PUB- importantly, libertarians in their ple of bicycle-makers in December LIC AFFAIRS various guises are amongst the most 1903, I have to wonder what air I have been unforgivably tardy in vigorous advocates of the virtues of travel would be like now if it had making mention in these pages of the untrammelled market. developed as fast as the World Wide these pages. But here it is at last, the Yet libertarianism as a move- Web. Unfortunately, unlike the Website for the publisher of the very ment is almost invisible in Australia. Web, flight has been heavily regu- periodical you are now reading. Not so across the Tasman, it seems. lated almost since its inception. Naturally, there are back issues There is even an active political Berners-Lee’s development was of the Review, at least to 1998. Since party seeking to promote it: radical in structure, based on hyper- you are already reading the Review Libertarianz. I suspect that it will not text. It represents an extreme of in- but may, like me, find yourself un- be conducting that nation’s govern-

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R E V I E W 24 JUNE 2001 R E V I E W Free_Enterprise.com by Stephen Dawson File View Go Bookmarks Options Directory Window Help

ance in the near future, but the mere Marshall Mathers aka Eminem aka simistic moments, I think that giv- fact that it exists at all is quite ex- Slim Shady. Go to: ing up on trying to convince today’s traordinary. Go to: adults (if you can call certain http://www.freeradical.co.nz/ policymakers adults) would be the http://www.libertarianz.org.nz/ index.html most sensible option, and instead index.htm THE AUSTRALIAN LIBER- talk to kids. But it seems that they’ve FREE RADICAL TARIAN SOCIETY been doing their own work. One of the main people behind Even Australia is not entirely devoid Libertarianz, and a former leader of of libertarians. I know nothing of the party, is broadcaster Lindsay the Australian Libertarian Society Perigo who publishes The Free Radi- beyond what it says on its limited cal, which is also explicitly libertar- Website. It was founded as recently ian. It does have a couple of oddi- as 1999 and has issued a number of ties. For one thing Perigo is, unac- sensible press releases on matters of countably, an unabashed fan of public policy. This could well be one Mario Lanza (only kidding here!) to watch. For another, Perigo tends to view http://www.geocities.com/ the world through an Objectivist libertarian_society moral structure and thus rejects Hayek’s The Fatal Conceit as being MANNKAL ECONOMIC No silly rallies against capitalism, morally flawed. This is unfortunate EDUCATION FOUNDATION globalization, Nike, energy use or any because, in my view, Perigo misun- Before leaving these shores, I must of that overwhelming trendy non- derstands Hayek’s approach. mention another Australian site sense from these young people, that I’ve previously mentioned. But BureauCrash proclaims that it ‘is a it is well worth another look. That network of guerilla activists who op- is Ron Manners’ Mannkal Eco- pose the growing disease of the bu- nomic Education Foundation. The reaucratic state.’ And, nicely, it has organization is loosely modelled on a style about it reminiscent of the the influential Foundation For Eco- Leftist radicals of my youth. Go to: nomic Education and is still in its http://www.bureaucrash.com/ early days, but the site has changed significantly since I last mentioned NIKE it. Go there for a free membership And on the subject of global capi- and the resulting wider access. talism, just remember that informa- While you’re at it, click on the cal- tion is power. That Nike is an ob- culator to determine what your per- noxious example of the West’s ex- On the positive side, libertarians, sonal ‘Tax Freedom Day’ is—the day ploitation of the world’s poor and Objectivists and free market liber- on which your annual income taxes underprivileged is now a cultural als share a large overlapping body are paid and the (small) remainder given. Take this opportunity, of views which Perigo puts forth in of your income remains your own. though, to learn the facts: an entertaining, sometimes unique Go to: http://www.nikebiz.com/labor/ way. And he has attracted as con- http://www.mannkal.org/ index.shtml tributors such worthy people as Chris Matthew Sciabarra of New BUREAUCRASH FEEDBACK York University, a leading Ayn Rand Let’s face it, the words ‘Think Tank’ I would welcome advice from read- and Hayek scholar, who provides a encapsulate it all. Free-market ad- ers on any other sites of interest to thoughtful analysis of the newest vocacy seems so staid, so intellec- IPA Review readers. E-mail me at controversy in modern music: tual so, well, lifeless. In my more pes- [email protected].

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R E V I E W JUNE 2001 25 Education Agenda KEVIN DONNELLY

Spitting the Dummy in childcare and the incidence of Even worse, some feminists argue anti-social behaviour. that children do not need a father on Childcare To quote from one of the NICHD and that any woman is entitled to investigators, Jay Belsky (as reported be a mother in her own right. Is the traditional two-parent, one- in The Washington Post, 19 April Once again, recent research income family the best way to en- 2001), children who spend more proves the opposite. Last year, the sure educational success for children? than 30 hours a week in child care: Sydney-based Centre for Independ- Judged by many in the baby- scored higher on items like ‘gets ent Studies released a meta-analysis boomer generation, the answer is in lots of fights’, ‘cruelty’, of the relationship between sole-par- ‘no’. Forget about mum staying at ‘explosive behaviour’, as well as ent families and educational disad- home or about giving children the ‘talking too much’, ‘argues a lot’ vantage (Issue Analysis No.11). benefit of two parents. It is all about and ‘demands a lot of attention’. Its conclusion is that students lifestyle choice and ‘quality time’. During their early years, children from single-parent families are less Put the kids in childcare? Fine. are at their most vulnerable, both likely to complete their school edu- Want to separate and do your own emotionally and intellectually. In- cation and, when compared with stu- thing? That’s OK too. After all, kids stead of being placed in a foreign, dents from two-parent families, are are resilient and it’s better to be open sometimes hostile, environment, re- more likely to achieve at a lower and honest if things aren’t working moved from their loved ones, chil- level. As an ex-teacher myself, I can out. You can always spoil them by attest that such students are often taking them for that holiday in more disruptive in the classroom; a Noosa. serious problem in itself. Unfortunately, the evidence is Recently-released Even more alarming is the fact proving the opposite. Over the last that, as quoted in the CIS publica- year, research, both here and over- findings demonstrate tion, the incidence of sole-parent seas, is showing that children have families has risen dramatically over the best chance of success if they are that the more time the last ten-or-so years. In 1989, sole- raised in a stable, loving and support- parent families represented 14 per ive home environment where both spent in childcare, cent of all Australian families; by parents are present. 1998 this figure had jumped to 21.5 For many years, the argument has the more chance per cent. been that taking young children out It has become customary to blame of the home and putting them in that children will teachers and schools for those stu- childcare is good for them. After all, dents who under-perform or who are kids need a stimulating environment anti-social. and they learn how to socialize! have of being violent The reality is that teachers, and Recently-released findings dem- the education system, can only do so onstrate, however, that the more and aggressive much. Instead of expecting teachers time spent in childcare, the more to be social workers and child psy- chance that children will have of chologists, and to have to deal with being violent and aggressive. It is no dren respond more positively when the end result of what, after all, is accident that some teachers, how- they are raised in the home; as com- the responsibility of parents, it is time ever unfairly, label students with be- mon sense would suggest. to focus on the home. havioural problems as ‘crèche kids’. Divorced and single-parent fami- An American longitudinal study lies represent another baby-boomer Dr Kevin Donnelly is Director of Education carried out over the last ten years by shibboleth that needs dispelling. The Strategies, a Melbourne-based consulting group. His experience includes teaching for 14 years in the National Institute of Child argument that the boomers often Victorian secondary schools and being Health and Human Development give is that it is better for children, if the father of two teenage children. (NICHD) shows a clear relationship a marriage is not working, for the between the amount of time spent parents to separate. I P A

R E V I E W 26 JUNE 2001 The Role of Judges in the 1998 Waterfront Dispute

MURRAY CRANSTON

view has emerged in re- The waterfront dispute began on A fortnight later, on 21 April, Jus- cent years, particularly in the night of 7 April 1998 as a conse- tice North handed the MUA its first certain political and em- quence of Patrick Stevedores locking significant victory in the dispute by A ployer circles, regarding a out its entire workforce of 1,400. The ordering Patrick to reinstate its entire tendency within the Federal Court to years of frustration with the lethargic workforce. In his ruling, the Labor- shelter unions from the realities of pace of reform had finally bubbled over appointed judge found, amongst other workplace reform by handing them and by the end of that night the only things, that there was an arguable case favourable rulings. Unease with this workers at Patrick’s wharves were a that Patrick had dismissed its work- pro-union inclination came to a head large contingent of hired security force simply because its employees in February last year when The Aus- guards. The Maritime Union of Aus- were members of a union. The judge tralian Financial Review ran an edito- tralia (MUA), having already sus- came to the conclusion that, as this rial expressing its concern with ‘the pected Patrick’s intentions, went to the was part of a grander plan by the com- growing tendency for the Federal Federal Court the day before seeking pany to de-unionize its workplace, Court to interpret the Workplace Re- an injunction to prevent the company Patrick had engaged in an unlawful lations Act in ways that help unions.’ from terminating its workforce. The conspiracy. The newspaper’s action was prompted Meanwhile, the wharves from by a significant ruling from Justice which Patrick had been operating had Gray, a Hawke appointee, which had The waterfront been effectively cut off by large num- prevented BHP from offering non- bers of picketers and demonstrators, union agreements to its iron ore work- dispute may well many of whom saw violence as an in- ers in the Pilbara. tegral part of their campaign. In Vic- While the extent of the Federal be an isolated toria, on 16 April, the Melbourne Court’s sympathies towards the union Ports Corporation sought an injunc- movement has now become difficult example, however tion stopping the protest action of the to measure, it is worth examining more MUA at its docks, claiming that it was closely whether a correlation has ex- an innocent third party in the dispute. isted between the political complex- the perception of The judge hearing this particular case ion of the government making an ap- against the maritime union was Jus- pointment to the Federal Court and bias in the Federal tice Rosemary Balmford, appointed to the rulings which that judge subse- the Victorian Supreme Court in 1996 quently makes—particularly in cases Court remains by the former Kennett Government. of conflict between employers and or- She granted the Corporation an in- ganized labour. A useful case study in judge selected to hear this crucial ap- terim injunction against the MUA which to explore the possibility of such plication was Justice Tony North. Jus- and eleven other individuals restrain- a link is the waterfront dispute of tice North had been appointed to the ing them all from ‘occupying or re- 1998—the most significant conflict in Court in 1995 by the former Keating maining upon the Corporation’s land, workplace relations this country has Government and had considerable ex- preventing or interfering with access experienced in many decades. While perience in representing unions as an to and egress from the land, threaten- other analyses of this dispute have industrial barrister. He granted the ing or intimidating any person enter- examined the court rulings delivered MUA a stay on Patrick’s action the ing or leaving the land’ until 21 April. (see Glasbeek, 1998; Dabscheck, following day, ruling that the company An application was then brought 1998) it is worthwhile to consider the could not terminate the employment before the Victorian Supreme Court judges themselves and the role they of its workforce until he had heard the seeking a continuation of the injunc- played in determining the outcome. union’s injunction. tion against the MUA. It was then ▲

R E V I E W JUNE 2001 27 amended so that it would become Court judge, Justice Kevin Parker. Jus- appropriate to say we have read, and much broader in its effect. It sought tice Parker, appointed by the former carefully considered, the whole of to ban from the picket lines former Government of Richard Court, held North J’s reasons for judgement but we Premier Joan Kirner, and prominent that the MUA’s picket at the Freman- find them free from appellable error.’ union officials Bill Kelty, Greg Com- tle port raised a serious question to be Justice Finkelstein’s concurrence in bet, Leigh Hubbard and Dean Mighell. tried against the MUA in relation to this ruling proved to be the only oc- The judge hearing the application was public nuisance, intimidation, unlaw- casion throughout the entire dispute Justice Barry Beach, appointed to the ful interference with trade and business where a Liberal-appointed judge had court by the former Liberal govern- and interference with contractual re- handed a completely favourable rul- ment of Premier Sir Rupert Hamer in lations. In His Honour’s view, there was ing to the MUA. Patrick’s lawyers 1978. On 20 April, Justice Beach immediately appealed for a stay but the granted Patrick a very broad injunc- Labor-appointed majority, once again tion to clear the picketers. In fact, it It would be naïve joined by Justice Finkelstein, refused was so broad that it banned from the to grant it. Before the union move- picket lines not only the MUA’s mem- to expect judges ment could be given the opportunity bers and officials but anyone who had to celebrate this victory, Patrick went participated in the first picket on 8 directly to the High Court. April and anyone who had been part … not to harbour Justice Kenneth Hayne was ap- of the picket line since that date. The pointed to the High Court by the Liberal-appointed judge had given from time to Howard Government in 1997. On the Patrick its first significant victory in evening of 23 April, he had the task the dispute. time a certain of deciding whether to grant Patrick a Justice Mary Gaudron was ap- stay on the Full Court’s ruling. In pointed to the High Court by the philosophical bias in Waterfront by Helen Trinca and Anne former Hawke Government in 1987. Davies, Counsel for the MUA, Mr On 21 April she presided over an ap- their considerations Julian Burnside QC, is quoted as ar- peal by Patrick and PCS Stevedores guing before Justice Hayne: challenging the Federal Court’s juris- even if it is only for symbolic ef- diction to hear the MUA’s allegations a clear prospect that Patrick would suc- fect, it would be, to say the least, of unlawful action. Justice Gaudron ceed at trial, at least against the MUA unkind and at worst extreme, po- rejected the stevedores’ application for and its State Secretary. Justice Parker tentially unsettling at the water- special leave. She stated that granted Patrick an injunction, although front, if the symbolic victory were there is nothing in this case to not as wide-ranging as the company taken away from them [the suggest that the jurisdictional had wanted. MUA], when there is no apparent questions which arise … should Already three weeks into the wa- need to take it away from them. not be determined, in the first terfront dispute a clear trend had been Justice Hayne was not convinced instance, by the Federal Court … established. The MUA was gaining and granted Patrick the stay. The fol- there is much to suggest that it favourable rulings from judges ap- lowing day, Justice Hayne extended would be inappropriate for them pointed by Labor governments, and the stay and told the parties that the to be determined without the Patrick Stevedores was gaining favour- High Court would hear Patrick’s spe- benefit of relevant factual findings able rulings from judges appointed by cial leave to appeal. Just when it ap- by that Court … there is little, if Liberal governments. As the conflict peared that the Federal Court would anything, to commend any of the between the company and the union hand the MUA victory in the dispute, applications for removal, appli- wound its way through the appeals the Liberal-appointed Justice Hayne cations which, if granted, have the system, this trend remained signifi- threw Patrick a desperately needed potential to delay or disrupt the cant. lifeline. proceedings presently before the Back at the Federal Court, Patrick The wide-ranging injunction Federal Court. appealed Justice North’s decision to a granted to Patrick by Justice Beach was By dismissing this application for Full Bench of the Federal Court. On appealed in Victoria’s Court of Appeal special leave and preserving the juris- 23 of April 1998, the Full Bench, com- by the MUA and other parties, includ- diction of the Federal Court in this prising a majority of Labor-appointed ing Mrs Kirner. The Court of Appeal dispute, Justice Gaudron gave the judges (the Hawke-appointed Wilcox was established in 1995 by the Ken- MUA an important victory. and Von Doussa) and an early Howard nett Government with all ten of its On 23 April, another injunction Government appointee, Justice Ray current members having been ap- was granted against the MUA, this Finkelstein, upheld Justice North’s pointed by that Government. On 28 time by Western Australian Supreme ruling. The justices stated that ‘it is April, Justices Winneke, Brooking and

R E V I E W 28 JUNE 2001 Charles upheld Justice Beach’s injunc- ing the majority creditors, the employ- case of the waterfront dispute, the evi- tion against the MUA and its officials. ees) to take the decisions about con- dence reveals that the philosophical The Full Court stated that ‘the behav- tinued trading.’ By placing the final expectations of the appointor were iour of many of the MUA members decision with the Administrators the transmitted in the rulings of each of and picketers was extremely violent majority concluded ‘In the orders his respective appointees. This is a and dangerous and we think fully jus- which follow, priority is given to the natural product of carefully screening tified the terms of His Honour’s order, powers of the Administrators of the judicial appointments, and there is lit- which, as now amended, will remain employer companies but, subject to tle one can do to prevent certain mem- in effect against the MUA and the those powers, the orders seek to restore bers of the judiciary from time to time other defendants’. The three Liberal- the position that existed prior to 7 following the line pursued by those appointed judges, noting the ‘persist- April 1998.’ And with that, one of responsible for raising them to the ent lawlessness by both members of Australia’s largest industrial conflicts Bench. the MUA and numerous others’ stated had finally come to an end. The waterfront dispute may well be that ‘the learned judge in his reasons With the exception of Justice an isolated example, but the supposi- described the situation as alarming and Finkelstein, there was a relatively tion of bias in the Federal Court re- said that the material before the Court strong correlation in this dispute be- mains. This is despite the fact that demonstrated that many of the persons tween the political background to a employers have recently gained some picketing East Swanson Dock and judge’s appointment and the type of significant victories in the Federal Webb Dock had been guilty of serious ruling which either the company or Court from Labor-appointed judges criminal behaviour. His Honour’s the union received. It is clear that (see BHP Iron vs AWU and others, statement was wholly justified.’ Con- judges play a vital political role in our where a Full Court of Labor appoint- cerning Mrs Kirner and the other ap- society. The very fact that all appoint- ees permitted non-union contracts; pellants, the Full Court upheld their ments to the Federal Court must be and Stellar Call Centres vs CEPU, appeal stating that Justice Beach’s in- approved at the highest echelon of the where a Full Court of Labor appoint- junction ‘cannot be granted against political sphere in the Common- ees handed employers a key victory the world at large.’ wealth, the Cabinet, means that short- regarding outsourcing). Neither the MUA nor Patrick listed candidates must endure a formal In the end, not even the Courts could claim victory when the full High could contain the pressing need for Court handed down its decision of 4 waterfront reform. Today, the shares May. The ruling comprised three sepa- In the end, not of Patrick’s parent company, Lang rate decisions. One of those decisions, Corporation, have increased fivefold by the Labor-appointed Justice Gaud- since the dispute; crane lifts on the ron, let Justice North’s original ruling even the Courts waterfront recently reached the sup- stand, which would have permitted posedly unattainable level of 25 con- the maritime union to claim victory. could contain tainers per hour; the MUA’s member- The decision by the Liberal-appointed ship has been devastated and it is now Justice Callinan upheld Patrick’s ap- the pressing need contemplating a merger with the peal and would have given the steve- CFMEU; and the level of casual la- dores victory. The remaining justices, for waterfront bour on the docks has increased dra- a mix of Liberal and Labor appoint- matically. ees, came down in the middle. Essen- reform tially, they altered Justice North’s or- REFERENCES der so as to give the administrators the responsibility to decide the fate of the and informal vetting campaign. Judi- Glasbeek, 1998, ‘The MUA (Maritime workforce. The majority decision cial appointments have always been Union of Australia) affair: the role of law found that ‘it is one thing to restrain an intrinsically political process. In vs the rule of law’, Economic and Labour Patrick Operations from giving effect fact, it would be naïve to expect Relations Review, Vol. 9 (2), pages 188– to the termination of labour supply judges, especially those overseeing 221. contracts and restraining those com- cases involving workplace relations, Dabscheck, 1998, ‘The waterfront dis- panies.… But it is a very different not to harbour from time to time a pute: of vendetta and the Australian thing to fetter the discretion of the certain philosophical bias in their con- way’, Economic and Labour Relations Re- Administrators (and of the creditors) siderations. Whether or not such a bias view, Vol. 9 (2), pages 155–187. in the exercise of the powers they pos- explicitly manifests itself in a ruling is sess under the Corporations Law.’ The another matter, but to assume that Murray Cranston is a Research Officer majority stated that ‘It is for the Ad- judges are entirely insulated from po- for Senator Jeannie Ferris. ministrators and the creditors (includ- litical influence is unrealistic. In the I P A

R E V I E W JUNE 2001 29 Letter on America NIGEL ASHFORD

Bush Tells It Like It Is the US requests was that more flex- ible mechanisms for reducing emis- ‘A gaffe is a politician telling the truth.’ sions should be considered. For exam- The media constantly berate politi- ple, the free trading of emissions, in cians for being ‘economical with the which A might pay B to reduce their truth,’ duplicitous and lying. Yet when emissions instead of their own, would a politician tells it straight, he is ac- lead to the same reduction but at less cused of being undiplomatic and ag- cost. The US also wanted to be cred- gressive, and having made a grave er- ited for ‘sinks’ such as forests that ab- ror. sorb the most important greenhouse A classic case of this arose when gas, carbon dioxide. The US has many President George W. Bush stated that more ‘sinks’ than Europe. (Science, he would not be sending the Kyoto 1998). If the goal was genuinely to re- Treaty for ratification to the Senate for Bush was correct in his assessment duce emissions, these proposals would two reasons: it would not pass; and it of the political prospects of passing the have been eagerly accepted at The would severely damage America’s eco- treaty. Article I of the US Constitu- Hague. The failure to do so was seen nomic interests. These are two factu- tion requires treaties to be ratified by by many Americans as evidence that ally accurate statements. The interna- the Senate. In a resolution in 1997 the real goal was to undermine US tional reaction was a ferocious outburst (S.R.98), the Senate voted by 95 to 0 competitiveness. (Bruce Yandle, Inde- of criticism, outrage and bombast. that it would not ratify any treaty that pendent Review, Summer 1999, at The Kyoto agreement of 1997 excluded most of the world and would www.independent.org). called for industrialized nations to cut damage the US economy. This is why There also remain severe doubts the emissions of greenhouse gases be- the Clinton Administration never pre- abut the existence, degree and conse- low 1990 levels through a series of tar- sented it to the Senate. quences of possible global warming. gets and timetables. At the negotia- Bush was also right that the treaty The evidence is almost totally tions on implementation of the treaty would do immense damage to the US based on computer models, not empiri- in The Hague in November 2000, economy. It would require the US to cal studies. Over 1,000 scientists, led Vice-President Gore was unable to reduce its current emissions by more by Professor Richard Lindzen of MIT, agree on the Clinton Administration’s than 40 per cent by 2010. Economists signed a petition challenging the junk behalf to the rigid proposals insisted calculate that annual household in- science behind much of the case about upon by the Europeans. come would decline by $2,700 per an- global warming. (www.junkscience. The critics are guilty of hypocrisy. num and 2.4 million jobs would be lost. org) Some scientists, such as Sir Fred Only one of the signatories of the Gasoline prices would have to rise by Hoyle, the physicist, claim that warm- treaty (Romania) has ratified it; not more than 50 cents a gallon. The ing is desirable to avert another ice age. one of the USA’s most vociferous Eu- growth of GDP would be cut by more The severe economic costs of Kyoto ropean critics has done so. They know than half as businesses moved else- could only be justified if it was clear that they are unable to meet the stand- where in the world, most of which is that profound and irreversible damage ards commanded in the treaty. Only not covered by the same rules. GDP to the environment would result from two European countries are likely to could be 4 per cent lower, costing about global warming, which could be pre- meet the goals: the UK (because of a $397 billion, according to the US De- vented by adopting its policies. The dramatic dash for gas which contrib- partment of Energy. evidence is not there. (www.esef.org). uted to the collapse of the coal indus- Political opposition to Kyoto has George W. Bush told the truth try), and Germany (due to the closure centred on a strong feeling that it was about Kyoto. For that, other politicians of much of industry in the former East written in a way that was unjust to the cannot forgive him. Germany). The EU’s other members USA. 80 per cent of the world is ex- would fail. They were hoping that cluded from compliance. China alone, Dr Nigel Ashford is Senior Lecturer in Politics at someone else would take the blame at current levels of economic growth, Staffordshire University, England, and co-author of before they had to act. There is no would emit more within just a few years US Politics Today (Manchester University Press). obstacle to them ratifying the treaty. than would be saved by Kyoto. One of I P A

R E V I E W 30 JUNE 2001 Book Review

And Freedom for All … If Australia should get these is- Since the mid-1980s, Australia sues wrong, we stand to pay a very participated in this trend more ener- John Hyde reviews big price—maybe even lose the next getically and more consistently than war. This document is therefore most nations but, since we came off a In Support of worth the couple of hours it takes to higher base, the proportionate im- Free Enterprise read it. The risk that the reader faces provement in our living standards was is, of course, the old one that he less than in many poorer nations. by The Chamber of Commerce might be inspired to do something Nevertheless, during the ’90s our liv- and Industry of Western Australia noble such as admitting publicly that ing standards ceased to decline rela- his own privileges are not strictly tive to other developed nations, un- 2001, 35 pages, free (while stocks last) justified. On the up side, unless he is employment rates fell by one third, unusually well informed, he will be we enjoyed 37 successive quarters of In 1776, Adam Smith observed that relieved of some misconceptions that growth and we shrugged off the so- ‘people of the same trade seldom have been thrust upon him by other called ‘Asian crisis’. At the end of the meet together, even for merriment vested interests. century, a dispassionate observer or diversion, but the conversation During the last quarter of the might have expected us to be rather ends in conspiracy against the pub- twentieth century, governments re- happy little Vegemites, but dispas- lic or in some contrivance to raise laxed their control over what their sionate observers are almost as rare prices’. Since then, the Guilds have citizens produced, consumed and as industry lobbies that eschew spe- become Chambers of This and That, cial pleading. Instead, we are com- where people of the same trade meet plaining noisily about the processes to conspire in contrivances to raise The risk that the that had got us as near to a material prices—most often and most simply Utopia as we had ever been and we by suborning the legislators. Other- reader faces is, of are voting in droves for minor parties. wise, little has changed. Therefore, The phenomenon is not peculiar I can but wonder what Smith would course, the old one to Australia. Noise may be a poor have made of the WA Chamber of reflection of numbers; nevertheless it Commerce and Industry publication, that he might be is enough to worry those who believe In Support of Free Enterprise, that that globalization, economic ration- advocates a genuinely free market, inspired to do alism, competition policy, free trade without a hint that I can detect of and privatization are not only the special pleading. something noble way to prosperity but also the best The Chamber sets out to demon- hope of avoiding war. It is not just strate the link between ‘a free mar- such as admitting that we want the capacity to main- ket economy underpinned by law tain a strong defence force for Aus- and respect for property rights’ and publicly that his tralia: we want the international ex- ‘a high quality of life in all senses of change and absence of xenophobic the term’. Industry lobbies that ad- own privileges are fear and misconception that will al- vocate ‘private enterprise’ are two- low it never to be used. The policy pence a dozen but those that really not strictly justified trend has slowed—in Australia’s case support ‘free enterprise’ are more dif- to a trickle—but has as yet suffered ficult to find. Although every trade only a few reversals. The rhetoric has, depends for its existence on a mar- exchanged. As competition replaced however, changed markedly. The ket economy, each would like to en- command in the several economies, backlash has not been an accident of joy the advantage of higher prices at the flow of goods, capital, people and nature. While its shock troops have everyone else’s cost. Those who will ideas between them increased sev- been Anarchists, Trotskyites and defend the system, like volunteer eral fold. The trend became known their like, and its line regiments the soldiers who in war-time choose not as ‘globalization’ and living standards NGOs, churches and their like, its and life expectancies—especially in planning, organization and motiva- to leave the task to the other fellow, ▲ deserve some respect. Asia—increased enormously. tion have come from those who lost

R E V I E W JUNE 2001 31 their privileges, mainly the unions before us, and with just as much tion. In fact, job mobility has de- and protected industries. (See Jarol apparent reason… On what clined very slightly. B. Manheim in the March edition of principle is it that when we see Non-economists find the fact that IPA Review.) nothing but improvement behind trade benefits both parties so coun- The counter-thrust for the hearts us, we are to expect nothing but ter-intuitive that they don’t accept and minds of voters has not been ac- deterioration before us? either theory or inter-country com- cidental either. It is the considered The words are those of Thomas parisons. The document’s authors response of people such as those in Macaulay, the Whig politician, essay- found a new twist to this old argu- the Western Australian Chamber of ist and historian in 1830. Fortunately, ment. Commerce and Industry. Since the Britain at that point still had over If an embargo is indeed an effect- time of the anti-conscription and half a century of relatively free mar- ive punishment, which denies the anti-apartheid protests, economic kets and very satisfactory (on the embargoed country the benefits liberals have left the streets to the comparison with all history to that of free trade, why should we deny other side. Instead they fight with point) economic growth ahead. May those same benefits to countries words. In Support of Free Enterprise is we be as fortunate! we wish to help? one of the very best forays in this They go on to question the morality counter-counter-attack of which I of banning the import of products know. It would not have been suffi- The Chamber is made in poor countries. Quoting cient to demonstrate that free enter- UNICEF: prise is good at producing wealth if it signally careful Child workers, mostly girls, were could not also have been shown that summarily dismissed from gar- it produced wealth for those who had to judge free ment factories. A study sponsored least. The Chamber is signally care- by international organisations ful to judge free enterprise by criteria enterprise by took the unusual step of tracing from which its opponents dare not some of these children to see what dissociate themselves. The level of criteria from which happened to them after dismissal. real GDP in the advanced countries Some were found working in has risen at an increasing rate since its opponents dare more hazardous situations, in 1970 to be 2.5 times greater today. unsafe workshops where they That is impressive but it is modest not dissociate were paid less, or in prostitution. compared with the 4.4 fold increase The WA Chamber of Commerce and in the developing economies. Hav- themselves Industry traces the link between eco- ing improved at a faster rate than the nomic and political freedom and be- developed countries since World War tween both and life expectancy. Peo- II, these economies sharply improved Whether to reassure us or to ple live 20 years longer in the 20 per their rate of improvement around frighten us, In Support of Free Enter- cent of the most free nations than in 1990. In 1969–71, a third of the prise includes a little table prepared the 20 per cent of the least free. The world’s population was undernour- by the Club of Rome in 1972 that size of the disparity may surprise, but ished; today the proportion is still a predicted the years in which the not its tendency, surely. It shows the horrible 6 per cent but let us not deny world’s supplies of selected minerals link between government regulation the fact of improvement, lest we would be exhausted. Copper, gold, and corruption—the ‘permit raj’ of overlook the cause. Such data, and lead, mercury, natural gas, petroleum, India, crony capitalism in Indonesia others such as improvements in lit- silver and tin were all to run out be- and WA Inc in Australia. The last eracy, life expectancy and even travel tween 1981 and 1994. They will word to The Chamber: opportunity, are difficult to refute. never run out and will run short only A free market system founded on Opponents of globalization and if we regulate the price! individual choice ensures that we economic rationalism have therefore The document addresses some alone suffer the consequences of tended to concentrate on the un- popular misconceptions. An extraor- our follies and that we do not known future. Here The Chamber dinary (to me) 83 per cent of News- suffer the consequences of others. admits as much uncertainty as this poll respondents believed that ‘the It is a damage limitation system quote implies: rich are getting richer while the poor which recognises human imper- We cannot absolutely prove that are getting poorer’. In fact, the rich, fectability. those are in error who tell us that poor and middle are all getting richer Amen. society has reached a turning and both extremes are getting richer John Hyde is a Senior Fellow with the point, that we have seen our best faster than the middle. Jobs have not Institute of Public Affairs. days. But so said all who came become less secure since globaliza- I P A

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