Facts Fight Back Vol. 72 March 2013 The election date has been set. In the lead up to September 14, The Australia Institute will launch a Facts Fight Back Facts Fight Back website and a Wellbeing Agenda. Executive Director Dr Richard Denniss Richard Denniss explains why. Elections are the way that Foreign aid works democracies resolve disputes, and Tim Costello election campaigns are the way that political parties try to persuade us Getting the research that which disputes most need resolving. matters to the people who Is the election a ‘referendum’ on the matter Gillard government’s handling of Craig Mark Ogge Thomson and Peter Slipper, or is Tony Abbott’s character the central issue? The truth about the gender Should the election revolve around the pay gap decision to keep or abolish the carbon Anne Summers price or should industrial relations policy be top of mind? A culture of resistance Kerrie Tucker There are, of course, no right answers to such questions. Ultimately it is up Trouble with childcare to the 13 million Australian electors David Baker to decide both what their priorities are must be trusted to weigh their own and which political party they believe priorities, but they cannot be expected Paid to pollute can best address those priorities. to check the truthfulness of everything Matt Grudnoff The media play an important role they hear. Freedom of speech does in alerting voters to the existence not mean the right to scream ‘Fire!’ in Big business in Australia of some problems, and in turn the a crowded theatre, and free political David Richardson politicians are keen to influence the debate does not imply the right to media’s reporting, but ultimately it is simply make things up. For political Early intervention critical to up to voters to decide on which issues debate to strengthen our democracy mental health are most important to them. the political cost of deception needs Amanda Bresnan to be far higher than any political e will do our best advantage that flows from fabricating Hockey at it again to highlight the the facts. David Richardson existence of the As clearly shown by The Australia policy problems Institute in the past, our level of Time to flex shareholder Wthe political parties would public debt is among the lowest muscle prefer we didn’t notice and in the world, as is the level of tax Dr Richard Denniss to ensure that facts play an collections in Australia. These simple, important role in shaping independently verifiable, facts do not, Institute news those debates. however, impede many politicians from claiming the exact opposite. How ISSN 1322-1876 But while politicians should be free to can the public choose widely between ACN 061 969 284 make their case for what the big issues competing reform agendas when they ABN 90 061 969 284 are and why their policies are best at are deliberately misinformed about the [email protected] tackling them, they should not be free problems the nation faces? www.tai.org.au to make up their own facts. Voters Continued on page 2 Facts Fight Back from page 1

In recent weeks the national political as accurate information about who not evidence or ideas, but the political debate has finally caught up with benefits. will to implement such solutions. TAI’s agenda concerning the massive cost of the tax concessions for This election year we will be doing our Our Facts Fight Back website will superannuation. Since 2009, the best to both highlight the existence of provide a timely and accessible source Institute has published four research the policy problems the political parties of information to help voters, journalists papers, XX opinion pieces and given would prefer we didn’t notice and to and the politicians themselves keep countless interviews and presentations ensure that facts play an important role track of who is being loose with on the need for fundamental reform. in shaping those debates. In order to the truth. While the TAI website will achieve those objectives this year we continue to focus on detailed policy Analysis by The Australia Institute, and will be rolling out two major initiatives analysis and development, the Facts now analysis by the Commonwealth in the form of our ‘wellbeing agenda’ Fight Back site will keep things much Treasury, clearly shows that the claim and our ‘Facts Fight Back’ website. simpler. If we identify any politician that generous tax concessions for making spurious claims, or simply superannuation ‘take pressure off making things up, we will let as many the budget’ are demonstrably untrue. ow can the public people know as quickly as we can. Put simply, the costs of providing tax choose widely concessions for superannuation are between compet- So, from all us here at The Australia far greater than the associated savings ing reform agendas Institute, happy election year! While in the cost of the age pension. Hwhen they are deliberate- we will see plenty of the silly helmets, ly misinformed about the the bright safety vests and the walks According to Treasury, the cost of problems the nation faces? through shopping centres designed tax concessions for super will soon to make our politicians seem ordinary be more than $45 billion per year; and down to earth, we know there is The wellbeing agenda is the Institute’s far more than the cost of the age nothing ordinary about our members way of highlighting that simple pension or, indeed, the cost of health and supporters. We will work hard to solutions to big problems do exist. or defence. It is of course up to voters keep you supplied with the ideas, the Banning junk food advertising on kids’ whether they want to spend $45 billion analysis and the facts that we think TV will save us a fortune on future per year supporting superannuation, elections should revolve around, and health costs; slowing the rate of skilled just as it is up to voters if they want we apologise in advance for those in migration will create job opportunities to provide more than one third of the media and politics who will also this support to the wealthiest 10 per for those struggling to find work and be working hard to bombard you with cent of the population. But in making take pressure off our infrastructure stories based on so-called human such a decision voters need to be budget, and scrapping tax concessions interest and half-truths. provided with accurate information for fossil fuel use will raise billions and about the cost of such choices, as well discourage pollution. What’s missing is Thanks again for your support. §

2 Foreign aid works At a time when the Australian government has announced it will divert a large portion of its aid budget back to its onshore refugee commitments, World Vision Australia Chief Executive Tim Costello argues that we should consider the cost to the world’s poor, who would otherwise be the beneficiaries of the Australian aid dollar.

Foreign aid works. have been left vulnerable to potentially fatal illnesses. Almost a quarter of a It’s one of those simple statements million women had a skilled attendant that belies a great deal of complexity, present while giving birth. Basic but it’s also simply true. sanitation was provided for 1.6 million people, and 2.5 million people have Sadly, foreign aid is also an easy better access to safe water. target. When budgets run over or governments need a quick slash and burn, there is a temptation to eye y diverting $375 the $5.1 billion that Australia spends million of overseas improving the lives of some of the aid to helping poorest people in the world. refugees in Australia, Bwe became the third biggest I have seen the changes Australia’s recipient of our own foreign foreign aid program has made to the aid program. lives of millions of people and know exactly what less than half of one These are not luxuries. Australian per cent of Australia’s Gross National foreign aid provides bare necessities, Income can achieve. life-saving necessities, to people Development Goals — the world’s who have — through no fault of their blueprint for tackling poverty. ustralia still hasn’t own — been born in countries where While other countries are working met its commitment access to basics we take for granted hard to achieve the MDGs, Papua to spend 0.5 per isn’t a given. New Guinea is losing ground. Around cent of gross nation- 50 per cent of children don’t attend alA income on foreign aid. Australia is so fortunate. We have high standards of living and a social primary school and there are only 0.6 welfare net that protects those who fall health workers per 1,000 people. Goal Now, just a couple of months after on hard times. Unfortunately some of 5 aims to reduce maternal mortality by announcing that $375 million of our nearest neighbours have not been three quarters by 2015, but the rate of foreign aid would be diverted to fund so lucky. women dying in childbirth in PNG has domestic policies, the government has actually been rising. released the first annual review into In the Pacific region, four million people aid effectiveness. The numbers tell — or roughly half the population — live Timor-Leste, a new country that perhaps an even more dramatic story in poverty, and improvements in health gained statehood with such hope and of success than we may have dared are in danger of going backwards. optimism in 2002, ranks 147 on the hope. Every year 18,000 children in the Human Development Index, trailing region die of preventable diseases, the Solomon Islands at 142. PNG More than two million children have despite the global pledges made is behind even Timor-Leste, coming been immunised who would otherwise in 2000 as part of the Millennium in at 153. Australia sits at number 2. That means on a global comparison scale that takes into account health, Politics in the Pub Melbourne education and living standards, Australia is second only to Norway. The Australia Institute is thrilled to be bringing its Politics in the Pub sessions to Melbourne in 2013. The first event, held in February, featured Tim Despite that, Australia still hasn’t met Costello from World Vision Australia addressing the question ‘Is Australia a its commitment to spend 0.5 per cent good global citizen?’. of gross national income on foreign If you would like to receive information about these evenings, please send aid. Even though we fall short of that us your email address at [email protected] and tell your friends. We hope to goal and spend only 35 cents for every see you there! $100 on foreign aid, more than a Continued on page 16

3 Getting the ‘research that matters’ to the people who matter As local communities start to question the long-term impacts of the mining boom on their livelihoods, The Australia Institute’s public outreach is more important than ever, Mark Ogge explains.

The impact of the mining boom on Australia’s long-term industries is undoubtedly the most important economic issue facing Australia today.

Big manufacturing job losses are announced with depressing regularity — around 250,000 fewer tourists a year are visiting Australia in the midst of a global tourism boom, farmers have seen a dramatic reduction in their export earnings, and international student enrolments are dropping.

These impacts are a direct result of the staggering expansion of the mining industry, driving up the Australian dollar and creating a chronic skills shortage.

t’s one thing to look at the macro-economic statis- tics, but the really impor- tant thing is to understand epicentres of the mining boom like on their industries, and are keen to Ihow this plays out in farms, Mackay in Central Queensland and understand the causes and potential factories and homes across the coal seam gas fields in Southern solutions. the country. Queensland to the Hunter Valley and It is also important to talk to local North West regions of NSW, which elected representatives from the are also facing massive expansions of The Australia Institute is one of the different regions. Where possible both coal and gas. few organisations focusing on this vital we brief councils and local state and issue, having released 10 research We are also travelling to regions federal MPs as well as a range of papers on the impact of the mining not known for mining that have community opinion leaders. boom on the rest of the economy nevertheless been impacted as their over the last 18 months. Some of the key industries get crowded out by the e have released key papers include Mining the truth, boom. Areas like Cairns in Far North 10 research Pouring fuel on the fire, Too much of Queensland, where tourism arrivals papers on the a good thing and Beating around the have dropped dramatically, or the impact of the bush. Illawarra, which has suffered huge Wmining boom on the rest of When we do the ‘research that losses in manufacturing jobs over the economy over the past 18 matters’, we also want to make sure recent years — both as a direct result months. it gets to the people to whom it will of mining expansion. matter the most. Whether we are visiting a big city But it’s not a one-way conversation. like Brisbane, or a smaller regional While we feel it’s important to get This is why we are going out and our research out there, it’s also centre, we make sure we meet talking to people directly all over the enormously important for us to hear as many business leaders, union country about our research. the experiences of communities and representatives and farmers as their representatives — and to find out We are travelling to the regions most possible. All these groups are affected by the mining boom — from grappling with the impact of mining Continued on page 17

4 The truth about the gender pay gap Following a catch up period in the 1980s, women’s earnings seem to have atrophied against men’s in the last decade. Leading Australian feminist Anne Summers writes that, given the discrepancies in graduate pay packets between women and men, women are justified in demanding to know why they are being so heavily penalised in the workforce.

In the early 1980s, when I headed Back then I was certainly not is according to Australian Bureau of the Office of the Status of Women in pessimistic enough to envisage a Statistics average weekly ordinary the Hawke government, I would travel scenario in which, almost 30 years full-time earnings. On some other the country giving speeches about later, in 2013, I would be trying to measures the gap is considerably how women were faring. One of the explain why women today earn only wider.) positive trends I liked to identify was 83.5¢. Nor could I have foreseen that And these are just the averages. If the significant increase in women’s this gap is not merely persistent but you probe a bit, into occupation or earnings in relation to men’s. that it is actually widening. Nine years location, you will find disparities in pay ago, in August 2004, women almost hit that are positively Dickensian. Women Sure, women still earned only 80.1¢ the 85¢ mark, equalling a previous all- in Western Australia, for instance, earn for every dollar men got, but, I argued, time high. given the trend in recent years we fully 25 per cent less than their male were speeding towards parity. No colleagues, considerably less again omen are entitled in the mining regions. Women in the question about it. to question why finance sector suffer the worst pay Just 14 years earlier, in 1970, women they should discrimination, with a gender pay gap earned only 59.1¢, but that had risen bother working of 32.7 per cent in May 2012. And that Wharder, or at all, when the was a bigger gap than a year earlier. to 70.4¢ by 1973 and to 77.4¢ in 1975. In 1979 the figure was 80.6¢. lifetime penalty for doing so These statistics, released in August OK, in 1984 it was down a bit but, I is well over $1 million. 2012 by the Workplace Gender used to confidently assert, this is just Equality Agency, make for grim a temporary blip. The gender pay gap But it did not last, and the gender pay reading. There is barely an occupation, was definitely going to be banished gap now seems to be permanently a job, a sector or an age group in which from the Australian economy. stuck at around 17.5 per cent. (This women do not earn less, often hugely less, than men. Young women (aged 15-19) and women working part time in clerical, services, sales or labouring jobs earned more than men. But it is difficult to find a statistical example of women and men being paid the same.

So much for equality. And despite these few examples of a few categories of women earning more than men, the overall earnings outlook for Australian women is outrageously unequal.

In 2009 a report by financial services giant AMP and the National Centre for Social and Economic Modelling (NATSEM), based at the University of Canberra, made the shocking finding that Australian men with a bachelor’s degree or higher, and with children, could expect to earn $3.3 million over their working lives: “Nearly double the amount for women in the same category at $1.8 million,” the report stated.

Continued on page 6

5 The truth about the gender pay gap from page 5

A 25-year-old woman starting her in graduate starting salaries. This has Such cases are valuable and there working life was likely to earn $1.5 been a huge wake-up call for a lot of should be more of them, but they million over the next 40 years, but a people. cannot cover women in the professions man the same age would haul in $2.4 or other non-award occupations. The Workplace Gender Equality million. Something needs to be done that Agency has done us a great service addresses this inequity in a systemic That’s almost a million-dollar in compiling and publishing these fashion. difference, a finding that led me at the figures. In the past, we knew of these time to assert that there was a million- discrepancies only when individual As the figures make clear, the gender dollar penalty to being a woman in professions publicised them. For pay gap is a national scandal. It Australia today. instance, a few years ago the Law Council of Australia revealed that in amounts to a gender tax, with women Now, we find that women’s earnings New South Wales, male law graduates making a disproportionate contribution prospects have deteriorated further. were paid $70,300 in 2007, and to the national economy. (And that’s women only $63,500. on top of having the kids and doing Last October AMP.NATSEM released most of the housework!) a new report that showed a 25-year- Now we know that law is one of the old woman with postgraduate better professions when it comes to qualifications would, over her lifetime, pay equity. As reported this week, f you probe a bit, into earn $2.49 million. The 25-year-old female law graduates suffer only a occupation or location, man who had sat beside her in class 7.8 per cent gender penalty. Women you will find disparities would, by contrast, accumulate $3.78 architects face a 17.3 per cent in pay that are positively million. IDickensian. discrepancy, while women dentists’ pay lags behind men’s by 15.7 per This is bad enough, but what enraged cent. me about these new findings is the It is often pointed out that if Australian women’s workforce participation was fact that the 25-year-old woman with You would never know that under a postgraduate degree, earning her Australian law women and men are at the same level as men’s (79.7 per $2.49 million for her years of study, meant to receive equal pay. As Justice in cent instead of the current 65.3 per would take home less than a man with Mary Gaudron, the first woman to be cent) it would add around 13 per cent just a year 12 credential, who will earn appointed to the High Court, famously to GDP. $2.55 million. What kind of incentive said in 1979: “Equal pay was ‘won’ in is that for women to study and gain 1969 and again in 1972 and yet again Much government policy, including qualifications? in 1974.’’ And, she added, we still don’t the cruel pushing of single mothers off have it. the parenting payment onto Newstart, Those who do not want to face up to is designed to increase women’s the brutal facts of sex discrimination In 2009 Julia Gillard, then minister for workforce participation rate. against women in Australia in 2013 employment and workplace relations, usually argue that these discrepancies included provisions for gender pay But women are entitled to question why can be accounted for in women’s equity in her Fair Work legislation. they should bother working harder, or interrupted workforce patterns (due to But this law does not mandate equal at all, when the lifetime penalty for taking time out to have children) and pay, it merely provides that Fair Work doing so is well over $1 million. their greater propensity to work part Australia (FWA) can make an order for time. equal remuneration after an application The Prime Minister might want to by an individual, a union or by the Sex add this one to her list of examples Discrimination Commissioner. omen architects of sexism and misogyny at work in face a 17.3 per There has been one spectacularly Australia today. cent discrepan- successful application to date, that This article first appeared in The cy, while women by the Australian Services Union on Wdentists’ pay lags behind Sydney Morning Herald and is behalf of low-paid workers, mostly men’s by 15.7 per cent. women, in the community and services reproduced with the kind permission sector. The resulting order from FWA of Anne Summers. Anne’s articles That proposition has been knocked means these workers will receive pay are available at www.annesummers. on the head by this week’s release rises of up to 40 per cent, phased in com.au and she has a new of figures showing a large increase in over several years, starting December publication, Anne Summers Reports the past year of the gender pay gap 2012. (www.annesummers.com.au/asr/). §

6 A culture of resistance Antimicrobial resistance is an enormous global health problem, threatening the efficacy of the antibiotics we rely on to fight infection. The problem requires ongoing, concerted effort by governments — instead, The Australia Institute’s Kerrie Tucker writes, there is a long history of successive Australian governments dropping the ball on the issue.

“Unless we solve the problem of causes gonorrhoea was identified in Our use is more than double that of antimicrobial resistance to drugs, we 2011 to be highly resistant to all known Scandinavian countries, though no will be facing a post-antibiotic era antibiotics. This bacterium may soon obvious health benefits are apparent. where things as common as a strep become a true superbug, causing It has warned that by 2030 we may not throat infection or a child’s scratched untreatable gonorrhea. have effective treatments for common knee could once again kill.” Margaret illnesses like tonsillitis, let alone more Chan, Director-General of World Given the gravity of the situation, the serious illnesses like pneumonia, and Health Organization (WHO) 2012. uninformed observer could reasonably that life-saving operations such as assume that Australian governments, bowel surgery, appendix removal and The term ‘antimicrobial’ includes past and present, would have made organ transplants may no longer be antibiotics as well as compounds this threat to public health a high able to be performed safely. as diverse as alcohol, hypochlorites priority. This is far from the reality. (bleach), triclosan, silver and The Australia Institute has recently released a research paper, Culture of quaternary ammonia compounds. ustralia sits well resistance — Australia’s response to Those of most medical significance above the OECD inappropriate use of antibiotics, which are antibiotics, the discovery of average in its use of looks at how Australian governments which is one of the defining events in antibiotics. Our use have responded to AMR since the medicine in the 20th century, bringing isA more than double that of problem became evident in the 1980s. about a massive reduction in the Scandinavian countries. rate of human deaths from infectious Of particular importance in Australia’s bacterial diseases. response was the 1999 establishment NPS MedicineWise has made the point of the Joint Expert Technical Advisory But bacteria are increasingly resisting that “Australians are among some of Committee on Antibiotic Resistance these compounds, with a number the highest users of antibiotics in the (JETACAR). This committee was set of important antimicrobial agents developed world. Around 22 million up to provide independent expert no longer being effective in fighting prescriptions are dispensed every scientific advice on the threat posed the bacteria which cause serious year — that’s a script for every man, by antibiotic resistant bacteria to illness. This phenomenon is called woman and child in Australia each human health by the selective effect of antimicrobial resistance (AMR), year.” agricultural use and medical overuse and it is a major concern. Resistant of antibiotics. It was tasked with Australia sits well above the OECD microorganisms can often multiply average in its use of antibiotics. Continued on page 8 unchallenged and kill humans and animals, potentially spreading to others and ultimately imposing huge costs upon individuals and society.

Resistant bacteria can spread from human to human, animal to animal, animal to human or human to animal through direct contact or via the food chain. Wind, water and contaminated soil can also spread resistant bacteria. Of greatest concern is the creation of disease-causing bacteria with resistance to multiple antimicrobial compounds — so called ‘superbugs’. Bacteria have an extraordinary capacity to adapt to the different challenges presented by antimicrobials, and are theoretically able to develop and share resistance to any type of antimicrobial. Indeed, a strain of the bacterium which

7 A culture of resistance from page 7

domestically but also in the global fight against AMR.

The Australia Institute’s paper concludes that it is necessary to devise a much more accountable and transparent system of management of AMR in Australia if we are to avoid another largely wasted decade. Successful development and implementation of a comprehensive strategy and action plan to reduce AMR requires there be strong political leadership and will; accountable public sector practice; one government assessing the scientific evidence of undertakings were not carried out. department and minister with overall a link between the use of antibiotics Of particular concern is the failure to in food-producing animals and the develop a comprehensive national responsibility for reducing AMR; a emergence and selection of antibiotic- surveillance system of both usage single management body with its resistant bacteria and their spread to and resistance to antibiotics, as own legislative base which reports humans, and to recommend future risk recommended by JETACAR. Such a regularly and directly to the parliament management strategies. system provides an essential evidence and is empowered to self-initiate base for management of AMR and an reports where necessary; a long term f particular concern appropriate regulatory framework. In view and commitment with appropriate is the failure to 2012 a new Advisory Committee on and ongoing resourcing; a coordinated develop a compre- AMR was set up by the government cross-sectoral approach including hensive national and their first task was to oversee public, community and private Osurveillance system of both the production of a scoping study interests; and independent oversight and the development of a business usage and resistance to of progress. antibiotics. case for national surveillance of AMR and antimicrobial usage. Initially the study will only look at issues regarding he current Senate The Report of JETACAR provided a human health and resistance. It is of Inquiry into AMR ‘five-point plan’ covering regulation, great concern that there has been provides an oppor- monitoring and surveillance, infection a delay of 12 years in establishing a tunity for develop- prevention, education and research, credible surveillance system. Tment of a strong and credible the basics of which were equally Australian response to this applicable to human and veterinary In fact, most of the underlying global public health threat. medicine. The government generally factors listed by the World Health accepted the recommendations of Organization as drivers of AMR the report, stating that there was are evident in Australia, including Given the pressing nature of the international concern about AMR inadequate national commitment to problem and the catastrophic impact and that Australia needed to respond a comprehensive and coordinated of antimicrobial resistance, effective with strategies that were “consistent response; ill-defined accountability action must be taken urgently. The with and complementary to global and insufficient engagement of current Senate Inquiry into AMR initiatives”. communities; weak or absent by the Senate Finance and Public surveillance and monitoring systems; Administration Committees provides Initially there appeared to be strong potentially inappropriate and irrational an opportunity for development of commitment to implementing the use of medicines, including in animal a strong and credible Australian recommendations of the 1999 husbandry; a need for improvement response to this global public health JETACAR report, however, many in infection prevention and control threat. initiatives failed to result in any practices; and insufficient research comprehensive systematic response and development on new products. to the issue. Committees, taskforces Culture of Resistance: Australia’s and groups were set up but For a developed country like Australia response to the inappropriate use of disbanded; pilot programs failed to be this is a significant failure, not only antimicrobials is available to download anything other than pilot programs; in terms of protecting public health from www.tai.org.au. §

8 Trouble with childcare For years governments have tinkered with childcare costs, throwing money into benefits and rebates during election years, but never seeming to fix the problem of affordability permanently. David Baker argues there is a need for a better long-term solution.

In the prime minister’s open letter to increase is attributed to growth in the assistance payment replaced the the nation published in the Sunday proportion of children under five who previous Childcare Assistance and Telegraph on 13 January 2013, Julia are placed in long day care. Almost the Childcare Cash Rebate. Following Gillard effectively launched her re- one million children spend some time the introduction of the CCB, the election campaign. In her letter Ms in formal childcare. proportion of households reporting Gillard wrote of “more assistance cost difficulties rose from just under with childcare costs than before” — The affordability of childcare services three in ten households in 2001 up to here we go again. The politics and is an issue for many Australian almost 43 per cent by 2005. policies of childcare affordability form families, with a greater proportion of families reporting difficulties in a recurrent theme, guaranteed to ecent reforms of receive media coverage and regularly 2010 compared with 2001. In the government assist- feature as an election issue. Childcare intervening years there was a spike ance have only was an issue in the 2004 election and in recorded difficulties with the cost of provided, at best, again in 2007 — both times the result childcare in 2005 followed by a smaller Rrelief from rising costs for a was increased money for families spike in 2008. Both of these noticeable year or two. using it. But if money is allocated again increases in reported cost difficulties in 2013 this approach would appear followed federal election campaigns In the next two years reported cost to be limited in its ability to provide during which childcare affordability difficulties returned to a level similar sustained affordability. Perhaps a was made an issue. to that recorded in 2003. It is difficult better approach is needed to address to work out how much of the increase the affordability issues faced by he use of childcare in reported cost difficulties between parents and guardians? in Australia has 2004 and 2005 was attributable to increased in recent electioneering on this issue or how The use of childcare in Australia has years, along with the much of the decline that followed was increased in recent years, along with Tcost of childcare services. due to the introduction of the Child the cost of childcare services. Data Care Tax Rebate (CCTR) that provided from the Australian Bureau of Statistics a non-means-tested, but capped, (ABS) shows that since 1999 the use In 2000 the Howard government 30 per cent rebate for childcare costs. of formal care has increased from 17 introduced the means-tested per cent to 22 per cent by 2008. This Childcare Benefit (CCB). This new Continued on page 17

9 Paid to pollute Subsidies to the fossil fuel industry, including the mining industry, are effectively cancelling out any benefit created by the federal government’s carbon tax. Senior Economist Matt Grudnoff looks at why these industries have historically received such big hand-outs — and why it no longer makes good economic, let alone environmental, sense.

If people are asked what type of car industry worth it? Was the car Originally the government was industries are most heavily subsidised industry sustainable in the long run? concerned about generating they often talk about the car makers or Could the money have been better electricity and connecting every perhaps renewable energy. But neither spent elsewhere? All these questions house to the grid. Electricity was a of these come close to the amount of and many more were asked. Lots fantastic way to increase people’s assistance given to fossil fuel use. of opinions both for and against health and wellbeing. In fact the were raised. And the debate was an government was not just subsidising The fossil fuel industry is one of the important thing to have because it it; the government owned it. Back most subsidised industries in Australia. was, after all, a lot of money. before people were fully aware of The subsidies it gets are so wide the dangers of climate change, coal and so varied that it is difficult to pin Yet when we hand over $10–15 billion power seemed like a good way to point exactly how much they amount to the fossil fuel industry every year achieve that goal. to. Various studies have estimated there is no debate and no discussion. that the industry and the consumers Why is it that $275 million over nine of fossil fuels receive at least 10–15 years needs a debate but $10 billion he Clean Energy billion dollars every year. every year does not? Finance Corpora- tion has been given You might think that, as an economist, It’s a shame there is no discussion $10 billion to spend I would be against any form of about this, because even if we ignore Ton renewable energy out to subsidies — but this is not the case. the serious problems of climate change 2020. The fossil fuel industry There are many circumstances where and other environmental issues and gets at least that much every subsidising something makes perfect just focus on the economic issues, year. sense. there is still no case for subsidising fossil fuels. There is nothing in economics to As an aside, it’s important to note that suggest that things that have positive There are no positive economic spill- the government poured huge amounts flow-on effects or are highly beneficial overs or large benefits for society. of money into setting up electricity for society should not be subsidised. Indeed the burning of fossil fuels generation and distribution. This was The government subsidises all kinds creates pollution, which is damaging a time when not just coal fired power of things like this, including health and to humans and damaging to our stations were being built but also when education. environment. the Snowy Mountain hydro scheme was constructed. The fossil fuel industry is not in a he miners pay a temporary downturn. Indeed one of the At the time the Snowy Mountain hydro corporate tax rate biggest recipients of these subsidies scheme didn’t need to show that it which is, on average, is the mining industry. An Australia could pay itself back in five years. just 14 per cent Institute study found that the mining Looking back today, people don’t say Tcompared to the national industry receives $4 billion a year ‘wow that was a colossal waste of average of 21 per cent. from the federal government alone. money; I bet the politicians who made This does not include the substantial that decision are red-faced and living Governments might also give out subsidies from the state governments. in shame’. subsidies if the industry has long-term potential but is struggling because of It defies common sense to believe There is nothing wrong with the idea temporary circumstances. it needs government support. The that governments should fund large assistance it currently receives only infrastructure projects that will have Early last year there was a huge increases the amount of profit the benefits for decades to come. In fact debate over the federal and state industry makes. those kinds of projects make good governments’ decisions to give economic sense. Holden $275 million in assistance over In order to understand how to take nine years. The debate concerned away fossil fuel subsidies you have to The fossil fuel industry was built what this assistance said about us understand a bit about why they got on government subsidies. The as a nation. Was assistance to the them in the first place. Continued on page 18

10 Big business in Australia Concentrated power in business translates to a similar concentration of political power. This serves the narrow interests of a few, allowing them to circumvent regulatory attention and stifle important national debates, writes David Richardson.

Ross Gittins reported recently that the Woolies means those two companies as having 200 employees or more. On US political system has broken down. have an influence over virtually that basis large businesses had sales The US has entered a stage in history everything that is made in Australia. and service income of $1,117.5 billion in which the distinction between Figures from Deloitte suggest Woolies in 2010-11 or 80 per cent of GDP for government and business is blurred and Wesfarmers (which owns Coles) that year. and governments tend to promote the have sales of roughly 8 per cent of interests of big business, often at the Australia’s GDP compared with just ormer mandarins from expense of the 99 per cent of Americans 3.5 per cent for the top two retailers in the Reserve Bank and (or is it 99.9?) who don’t earn lavish the US and 5.5 per cent for the UK. Treasury now occupy Wall Street incomes. Economic power Fels points to the many cases brought plum positions among has turned into political power. The against Coles and Woolies for their Fthe big four banks. US economy is now characterised consistent abuse of power. by ‘inequality, corruption, corporate power, environmental threats and Other figures confirm the Australian We can also examine this question psychological destabilisation’. economy is dominated by big by looking at share market data for businesses and not the smaller the top end of town. Just the top five businesses found in more competitive non-financial companies by market ig companies are capitalisation had operating revenue often in a position economies. For example, the Australian Tax Office (ATO) publishes of $240.2 billion in 2012, which is to outspend cash- equivalent to 16 per cent of the figures for sales by size of the strapped regulatory Australian economy, while the top 10 Bauthorities and so win or companies. It defines ‘big’ as those controlled $323.9 billion or 22 per cent companies with sales and other income settle legal cases and intimi- of GDP. Note that the figures exclude of $1 million or more. 2009-10 ATO date these authorities. financial companies — especially figures show that 3,525 big companies the ‘big four’ banks which are four of recorded sales of $1,127 billion. That That raises the question of the extent the top five Australian companies by compares with total GDP of$1,292 to which the same could be said of value. The financial companies also billion in that year. Hence 87 per cent Australia. exercise considerable control over the of Australia’s GDP is accounted for by activities of the rest of the economy. A good indicator is the extent to which the sales of big business. The ATO However, financial companies do not sales from big business dominate the uses a fairly low threshold to define have a metric that is comparable to economy. Allan Fels has claimed that big business. The Australian Bureau sales. the increasing dominance of Coles and of Statistics defines a large business Companies that are in a powerful position are tempted to use their economic and political power to their own advantage. Big companies are often in a position to outspend cash-strapped regulatory authorities and so win or settle legal cases and intimidate these authorities. No wonder that business interests like to cut government spending and aim for slim bureaucracies! Big companies are also in a position to influence the public debates on matters such as the carbon and mining taxes. It is worth pointing out that the big four banks are able to offer very attractive post- retirement packages to influential public servants; former mandarins from the Reserve Bank and Treasury

Continued on page 17

11 Early intervention critical to mental health Amanda Bresnan, former Greens’ member of the ACT Legislative Assembly and Director of Policy of the Mental Health Council of Australia, writes that mental health requires real action rather than yet another roadmap or report.

Review of the mental health sector These priority actions are nothing new early on, particularly a young person, has received considerable attention — the sector has been at this same this will have a significant impact on in recent years. While there has been place many times before. They are all preventing crises and enable them to an increase in federal and some state areas which have been highlighted in lead a fulfilling life. There is currently no and territory mental health funding, the numerous reports and inquiries, both system of tracking what funding states problems with the system that have government and non-government. and territories spend on this crucial been highlighted for decades remain. Many people in the sector would area, and the Roadmap provides Most people have to be in crisis before have hoped by now that governments no leadership here. Crucially, there they receive help. Leading figures in wouldn’t have to be reminded, again, are delays in developing repeatedly the mental health sector lament that that mental health should be a priority. called-for indicators. reform has stalled and that it seems The landmark report by the Mental governments have moved on to the Health Council of Australia in 2005, he mental health ‘next’ focus issue — mental health is Not for Service: experiences of system doesn’t need no longer a priority. injustice and despair in mental health more plans and reports; it needs care in Australia, showed that the Taction. f a person with a mental mental health system was failing to illness is provided with provide care to people experiencing a help early on this will have mental illness and that the long-term We have little or no idea what a significant impact on impacts of this were dire. While the difference funding and programs are Ipreventing crises and enable issues identified in this eight-year-old having on the lives of people with a them to lead a fulfilling life. report are now at least acknowledged, mental illness — are their lives actually governments and entities such as improving? The Roadmap yet again the commission are still talking about delays the development of indicators. The most recent reports have been the agreeing on ways to address them. Some action can, at the soonest, be National Mental Health Commission’s They seem to be on a roundabout of expected by the end of 2013, while A Contributing Life: the 2012 National talks and discussions without actually other indicators won’t be developed Report Card on Mental Health and reaching reform. until mid-2014 or, at the latest, by Suicide Prevention, and the Council of 2016-17. Australian Governments’ (COAG) The After the Report Card, there was the Roadmap for National Mental Health so-called COAG Roadmap. Over the There were a number of other reports Reform 2012-22. last 10 years there have been four released in 2012 that confirm the national mental health plans, two impact the lack of services and focus The Report Card is disappointing in national policies, one national action on mental health is having on the that it doesn’t provide the critique and plan, the national Report Card and now community, particularly young people. analysis that was hoped for by the the Roadmap, along with various state The Butterfly Foundation released commission, particularly in relation and territory plans. The mental health Australia’s first socio-economic impact to the lack of detailed data on mental system doesn’t need more plans and report on eating disorders — Paying the health. It also calls for a focus on reports which re-state the same issues price: the economic and social impact issues that have been reported on and problems that are already known; of eating in Australia. This tragically many times before. The Report Card it needs action. overlooked report found that the total identifies four priority areas for action: economic and social impact of eating disorders in 2012 was $69.7 billion, • according mental health a high he Butterfly Founda- and estimated that the mortality rates national priority tion found that the are almost twice as high for people total economic and • developing a ‘complete picture’ and with eating disorders than the general social impact of monitoring and evaluating change population, with approximately 1,828 Teating disorders in 2012 was deaths from eating disorders in 2012. • agreeing on best ways to encourage $69.7 billion. improvement and better results A review of the admission or referral to • analysing where the gaps and For example, it is known that early discharge and transfer practices in barriers are and agreeing on intervention is critical — if a person with public mental health facilities and Australia’s direction. a mental illness is provided with help Continued on page 14

12 Time to flex shareholder muscle Soaring corporate profits don’t trickle down into our superannuation the way we are led to believe — in fact, returns to so-called ‘mum and dad’ investors are usually miniscule. Far more important, writes Richard Denniss, is the pressure smaller shareholders can exert collectively to ensure corporate responsibility.

‘Mums and dads’ seem to be replacing is unclear from recent commentary The biggest problem with the notion ‘working families’ as the focus of whether foreign mums and dads are as that superannuation means we are all political concern in Australia. The worthy of our concern as the ‘ordinary in it together is that it’s simply not true. biggest problem with the Whitehaven Australians’ we hear so much about. Only those who do paid work make Coal media release hoax, many superannuation contributions, which argued, was its impact on ‘mum and The miners, along with the means 50 per cent of Australians have dad investors’. superannuation industry and the big no superannuation at all. These people four banks, have done a remarkable with no super are disproportionately The language of mum and dad job popularising the idea that all low-income earners and female. The investors is as widely used as it is Australians own a share of all idea that the more profit the banks meaningless. Gina Rinehart is, of companies thanks to their super. By make from ATM fees the better off course, a mother of four children. Does that logic, anything that hurts any we all are is Orwellian language at its that mean she is one of the investors company is ‘bad’ for Aussie mums finest. that the commentators and politicians and dads. And that is, of course, the are so concerned about? impression that the corporate and Of course, many Australians do have political spin doctors are trying to superannuation, but that doesn’t mean that the corporate pie is shared evenly oaring bank fees create. But what about when the courts tell the banks they cannot impose either. The wealthiest 20 per cent of and mining profits households own 72 per cent of super or cuts to the corpo- punitive charges; is that bad for mum and dad investors as well? while the 20 per cent with the smallest rate tax rate, we are super balances own only 1 per cent of Stold, simply deliver benefits There can be no better argument that the assets. to ‘mums and dads’. Australians are all ‘in it together’ than that through superannuation, we are he problem in Austral- What about the adults without children all the common beneficiaries — and ia is that all of the talk who may have lost money? Are we common victims — of all acts against about the benefits of really unconcerned about them or is corporate Australia. Soaring bank share ownership is it just that the emotive language of fees and mining profits or cuts to the Tdominated by talk of money ‘mums and dads’ is so attractive to corporate tax rate, we are told, simply rather than governance. all concerned that its inaccuracy is deliver benefits to ‘mums and dads’. overlooked? Similarly, anything that hurts a big While superannuation has done little, Mining companies in Australia are company is now described as hurting if anything, to redistribute wealth from predominantly foreign-owned but it us all. the mums and dads with billions to the mums and dads with nothing, it does have the potential to drive the kind of changes in corporate conduct that the vast majority of Australians think is fair and reasonable.

Most of Australians are concerned about climate change and most accept that you can’t tackle climate change by carving out new coalmines. But as with attitudes to same-sex marriage and voluntary euthanasia, the majority opinion doesn’t rule in Australia. But it could.

The tiny, tiny shareholdings and super balances that deliver tiny returns to most Australians add up, in most cases, Continued on page 14

13 Time to flex shareholder muscle from page 13 to substantial shareholdings in many of While the distribution of Australian harmful projects when in fact it does Australia’s biggest companies. And the shareholdings is more equal than so regularly. directors of companies, as well as their in the United States, the notion of corporate conduct, are determined by shareholder democracy is much While the hoax’s impact on ‘mum the majority of shareholders. more deeply entrenched in America and dad’ shareholders was massively than it is here. Each year hundreds exaggerated, the potential power of he goal of the new of motions to restrict companies these shareholders is systematically ACCR is to not just from using slave labour, report underestimated. While few Australians their greenhouse gas emissions put motions for own anywhere near enough shares to and limit their use of contractors as improved corporate notice the impact of the daily wobbles replacements for permanent staff are Tgovernance at shareholder in share prices on our incomes, put forward and debated in the US. meetings but to shift the vote together we all own enough to make necessary for such motions The combination of member-owned most companies do exactly what we to succeed. super funds and member-initiated shareholder motions could be a want. The challenge is to focus that powerful reforming force in Australia, power through well-crafted motions The problem in Australia is that all of but only if organisations such as the and to ensure the super funds that the talk about the benefits of share new Australasian Centre for Corporate manage our money on our behalf are ownership is dominated by talk of Responsibility are successful in both willing to support those motions. The money rather than governance. drafting implementable motions and Australasian Centre for Corporate But a step towards overcoming that convincing the big super funds to focus Responsibility will hopefully play an problem was recently taken with the on the broad interests of members, not important role in achieving both. establishment of the Australasian just the short-term financial returns on Centre for Corporate Responsibility, which CEO bonuses are based. This article first appeared in The whose goal is to not just put motions for improved corporate governance at The hoax press release by Jonathan Canberra Times as part of Richard’s shareholder meetings but to shift the Moylan was designed to highlight fortnightly column. All of Richard’s vote necessary for such motions to the fact that the ANZ bank says it columns are available on the Institute’s succeed. doesn’t lend money to environmentally website. §

Early intervention critical to mental health from page 12 services in Western Australia, accountability for consumer care and While governments continue to debate undertaken by Professor Bryant consistent process and practices, and indicators and argue about who is responsible for mental health, the Stokes, noted that there appeared to that these tensions were exacerbated needs of people living with a mental be an absence of a single point of by demand not being met by service illness and their carers are not being authority with responsibility for provision. met and they will continue to suffer. §

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14 Hockey at it again In a recent speech, Shadow Treasurer Joe Hockey praised Hong Kong’s system of low taxes and the reliance on family for financial support. What emerges from his rhetoric is the Coalition’s vision of low taxes for the rich, and vast welfare cuts for everyone else, writes David Richardson.

In an interview with the Australian against cutting the corporate tax rate, need to cut entitlements to ‘live within Financial Review published on 17 shows there is no evidence for the our means’. January, while many of us were still proposition that taxes cause investors In his London speech Joe Hockey went on holidays, Joe Hockey made it clear to go offshore. But ever since Reagan into more detail about the entitlement that the Coalition’s agenda will include in the US the catch cry has been that model he prefers. He stressed that tax cuts for the rich and benefit cuts we are forced to cut taxes for business Hong Kong is ‘without a safety net’ and for the poor. and the rich and, when the revenue ‘the sense of government entitlement disappears, we have to cut services … is low’. He made this claim after for everyone else. he mobility of high his visit to Hong Kong in September income earners and The other topic raised in the AFR last year and presents it as a very corporations is used desirable feature of the Hong Kong as an excuse to tax interview is his speech in London in April last year, ‘The end of the age of model. Hong Kong also has very Tthem lightly. low tax rates, with a company tax entitlement’, in which he praised the economic model in countries such as rate of 16.5 per cent compared with 30 in Australia, and, for people, a Hockey said there would be “greater Hong Kong and stressed that ‘Hong top marginal tax rate of 15 per cent ‘respect’ for taxpayers, including the Kong is our competition’. In the recent compared with 45 in Australia. very wealthy”. He talked about the Financial Review interview he said: French case of Gerard Depardieu and The implication is that we should scrap the fact that Nathan Tinkler moved to It [reducing entitlements] will be the dole, sole parent benefits, the age Singapore last year. Tinkler may be a theme for me and it sits very and disability pensions and any other a bad example — Australia’s tax rate comfortably within the Coalition’s entitlement that goes to poor people. is probably the last thing on his mind theme. That is the commitment to live as the creditors circle his assets. The within our means. Australians can no mobility of high income earners and longer afford a lifestyle that is fuelled oe Hockey seems corporations is used as an excuse by debt. to think the modern to tax them lightly, but one unhappy welfare state can be French actor is not strong evidence. So we cut taxes for the rich because replaced by returning Certainly with respect to the company that is just the logic of the marketplace Jresponsibility to the family. tax, a recent Institute report, The case but, having sacrificed revenue, we Hockey said that in Hong Kong, “the family unit is very much intact and social welfare is largely unknown”. He went on:

The concept of filial piety, from the Confucian classic Xiao Jing, is thriving today right across Asia. It is also the very best and most enduring guide for community and social infrastructure.

So Hockey thinks the modern welfare state can be replaced by returning responsibility to the family.

If the Hong Kong model is so good, what is the position of the poor in Hong Kong? The reality is of course very different to Hockey’s ideal; it is unlikely that he met up with many of the poor while in Hong Kong.

Continued on page 19

15 Foreign aid works from page 3 million children were enrolled in school Next time a conflict or crisis hits, will information that is accessible and who otherwise may not have had an we have to tell some of the 16.5 million available to Australians”. education. vulnerable people we helped in the past that this time they are on their Foreign aid works. The government’s Australian aid also trained almost own? Are some of the 1.38 million own report proves it. There is no 125,000 teachers and provided people who received health and food excuse for diverting money out of 3 million textbooks. vouchers going to be left without? overseas programs in violation of a Do we deny children an education or repeated commitment to increase When the announcement was made immunisation, the things we would foreign aid. To do so without explaining to divert $375 million of overseas never deny our own children? who will suffer compounds the injustice aid to helping refugees in Australia, by undermining the government’s our nation became the third biggest commitment to transparency. recipient of our own foreign aid program. n the Pacific region, four million people — or There are seven and a half months until roughly half the popula- While visiting development projects Australians go to the polls, but before tion — live in poverty, and I have seen time and again the they do, both parties need to explain difference that this money makes, Iimprovements in health are in where they stand on foreign aid — and danger of going backwards. giving hope of a better future to that should involve acknowledging children who, in some cases, have the very real difference it makes to so never known anything but the most The government prides itself on the many lives. desperate, oppressive poverty. Yet our transparency of its foreign aid program, government won’t even reveal which and the report specifically highlights You can learn more about the work programs will be impacted by the one of the key pillars of effectiveness of World Vision by visiting www. diversion of those funds. as a “transparent aid program with worldvision.com.au §

Trouble with childcare from page 9

That there were delays in the actual have previously argued that this trended upwards, exhibiting some payment of the CCTR of between ratio should be five and six per cent correlation with reported difficulties 18 months and two years, due to the respectively for low income families. but without the same decline following need for parents to incur the costs The Department of Education, elections. Cost difficulties are an before receiving the rebate, suggests Employment and Workplace ongoing issue for Australian families that a sizable proportion of the spike Relations has promoted the success and recent reforms of government in reported difficulties was likely due to of government policies that have assistance have only provided, at electioneering. achieved a higher ratio of 7.5 per cent. best, relief from rising costs for a year or two. During the 2007 election campaign he prime minister affordability was again an election has already flagged Families paying for childcare are issue. A new government was elected that further money facing persistent problems with the and delivered on a promised increase for parents will be cost of childcare and need sensible to the CCTR from 30 to 50 per cent. Ton offer in the 2013 election policies that will address the issue of The Rudd government also made the campaign. affordability. The prime minister has CCTR a direct payment and renamed already flagged that further money it the Child Care Rebate (CCR). Once for parents will be on offer in the 2013 again, having spiked after an election Analysis of the Household, Income election campaign. The problem is that campaign the rate of reported cost and Labour Dynamics in Australia these policies only deliver short-term difficulties again returned to the levels (HILDA) Survey data included in increases in support, and, arguably, recorded after the last spike. The Australia Institute’s forthcoming policy brief, Trouble with childcare, do more to increase profits for private Cost difficulties can be measured finds this government threshold is childcare providers. It is time for policy by calculating a ratio based on the being exceeded by many Australian proposals that consider how public proportion of household disposable families, including families living in money might be better allocated income spent on childcare. The areas of lower relative socio-economic to achieve longer lasting childcare Australian Council of Social Services advantage. The data also shows that affordability rather than simply and the Brotherhood of St Laurence between 2003 and 2008 the ratio promising more money. §

16 Getting the ‘research that matters’ to the people who matter from page 4

what matters to these communities the global rise in tourism to the drop Newcastle, Mackay, Louisa Creek, — to inform our research. It’s one in international visitors to the Cairns Townsville, Melbourne and Cairns, thing to look at the macro-economic region, and its relationship to the among others. In each of these areas statistics, but the really important thing mining boom. Being in a position we have met with local councils, is to understand how this plays out in to present such relevant research regional development associations, farms, factories and homes across the allowed us to present to the Cairns regional tourism bodies, university country. Regional Council, meet local MPs staff, manufacturers, labour councils, and business leaders, and generate unionists, farmers, state and federal Of course, we don’t just talk to industry considerable media interest. MPs and many community groups representatives and politicians. We running strong grassroots campaigns hold regular public forums, and Similarly, the release of Beating against coal and coal seam gas. speak at events organised by local around the bush, a study showing the communities. And again, we are finding enormous impact of the high dollar on a huge appetite for understanding the farmers’ export incomes, coincided here is a huge forces behind local business closures, appetite for under- with a public event in Cairns where job losses and the industrialisation of standing the forces Nina Murray from Agforce and Andrew rural areas. behind local business Dettmer, the National President of Tclosures, job losses and the AMWU, spoke publicly about the We also conduct research relevant to the industrialisation of rural impact of the mining boom on their the specific regions we visit and the areas. industries that are most important to industries. The report gained an those regions. enormous amount of media attention across rural Australia. Next up is North West NSW, visiting On a recent visit to Cairns, where Tamworth, Narrabri, Moree and I spoke at the Reef at Risk forum Over the past six months, we have Gunnedah — with further events organised by the local Cairns and presented the findings of our research planned for the Hunter Valley, the Far North Conservation Council, we papers at events and public meetings Sunshine coast in Queensland and released new analysis contrasting held in Gloucester, Wollongong, Toowoomba.

Mining employs around two per cent Free resources for your community meetings! of the Australian workforce. The If you are holding a community meeting or public forum on how your region industries most impacted by mining is being affected by coal or coal seam gas, the Institute provides free employ millions of Australians. The resources for download via our website. Australia Institute’s public outreach seeks to make sure this important Check out www.tai.org.au/resources or email Mark Ogge, our Public research reaches the people who Engagement Officer, at [email protected]. need it most and that their experiences help inform our research. §

Big business in Australia from page 11 now occupy plum positions among the are appointed to the inquiries into The US had a tradition of busting up big four banks. business tax arrangements — as if concentrations of economic power, no one else had any interest in the such as the break-up of Rockefeller’s On top of that, when we examine revenue governments are able to get Standard Oil monopoly and more the ownership of the top Australian out of the top end of town. recently ‘Ma Bell’, the telephone companies we find the same owners monopoly. The US used to put severe Perhaps we are not yet as bad as the dominate. There is also a relatively restrictions on how big the banks could small group of company directors US but the same tendencies are there and it pays to be ever vigilant. get. As Fels says, Australia has let its in Australia who sit on each other’s two retailers get too big — it is likely boards and the remuneration One difference between Australia and we have also allowed other dominant committees of those boards. These the US that Gittins did not mention is firms to get too big in the Australian are also the people governments that the US has a tradition of suspicion market. like to consult when devising new about big business that Australia does policy and appoint to inquiries into not have. Steinbeck’s Grapes of Wrath A copy of Corporate power in matters of public policy. For example expresses well the loathing people had Australia is available to download from it is normally business people who of the big eastern banks in the 1930s. www.tai.org.au. §

17 Paid to pollute from page 10

Carbon price “Polluter pays” or “pay the polluter”? ... tug-of-war pay What we pay polluters What polluters

$13.33b Fossil fuel subsidies from government $7.69b Carbon price paid by industry . 4. Trade $ Assistance review. Assistance $ Trade 4. .

$920m Tax concession for Avgas3 $7.69b Revenue from sale of carbon units 2012–131

$424m Research and development concessions for mining4 2011 Statement Expenditure Tax 3. 2012–13. Budget Commonwealth Accelerated depreciation for planes, $1,115m oil and gas assets and commercial vehicles3

$5,614m Fuel tax credits for non-road users2 and meanwhile... News flash $970m Fringe benefit tax concessions for company cars3 If subsidies are greater than Martin Ferguson announces $90m for brown coal: $2,851m Free carbon permits1 penalties, how effective are current “ We’ve got to give it a go and who knows what policies as tools for changing will come out of it.” $1,009m Energy security1 behaviour?? Sources: 1. Clean Energy Future: Appendix C: Fiscal tables. 2. tables. Fiscal C: Appendix Future: Energy Clean 1. Sources: $430m Tax concessions for diesel and liquid petroleum gas3

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If you would like to view all our infographics on topics ranging from climate change, forestry, loneliness and government debt, log on to our Tumblr site via the icon on our homepage www.tai.org.au infrastructure was built before the full they are quietly paying less tax year by if you let the three biggest mining impact of the environmental damage year. companies design a mining tax then that the industry does was known. But they would end up paying very little? it’s an industry that is used to getting There is of course no real difference subsidies and an industry that will fight between paying billions of dollars less The carbon price is another example to keep them. tax and getting billions of dollars in of the government’s inability to hand-outs. It’s just that tax concessions stand up to vested interests. The Unlike industry assistance to car tend to escape government and media biggest polluters were able to get the makers, the mining industry receives scrutiny. government to hand over enormous most of its assistance from tax amounts of compensation, including concessions. That is, rather than the most polluting industries getting getting cash they are allowed to pay he government is 94.5 per cent of their permits for free. less tax. giving over $13 billion in subsidies to fossil The third reason why the fossil fuel These tax concessions are huge. So fuels but has only industry has been able to hang onto large in fact that the mining industry Tcollected about 7.7 billion government subsidies for so long is has the lowest average corporate tax dollars from the carbon price. because the fossil fuel industry has far rate of any industry in Australia. The more incentive to hang onto them than miners pay, on average, just 14 per the rest of society has to remove them. The second reason that they have cent compared to the national average been able to hang onto their subsidies Tax concessions mean that the of 21 per cent. is because governments generally, and fossil fuel industry pays less tax and Getting tax concessions has allowed this federal government in particular, because of this the rest of us have the industry to avoid scrutiny because have been particularly bad at standing to pay more tax. The rest of us are a there is no actual transfer of money. up to vested interests. You only need large group and therefore only pay a There is no line in the budget that to look at the debacle of the mining tax bit more each. But that ‘bit more each’ shows how much is going out. Instead to see why. Who would have thought Continued on page 19

18 Paid to pollute from page 18 adds up to billions of dollars. So while fuel use is a dollar spent encouraging collected about 7.7 billion dollars from the incentive for each of us to stop people to create more emissions. the carbon price. the subsidies is small, the incentive for the fossil fuel industry to keep the We introduced a price on carbon in In fact the really sad thing about this subsidies is very large. As a result the an attempt to reduce our emissions of is that rather than introducing the fossil fuel industry have well-funded greenhouse gas. If people have to pay carbon price, the government would to emit greenhouse gases then they and organised lobby groups to prevent have achieved more if they had simply will be discouraged from doing so. those subsidies from being removed. scrapped subsidies to fossil fuels. You can see how keen Australia is So how do we remove these But it now has an opportunity to make about tackling climate change by looking subsidies? The answer is for the real in-roads into changing Australia’s at the money the government is rest of us to understand that this is reliance on fossil fuels. Taking away collecting to discourage us from creating a fight that cannot necessarily be subsidies to fossil fuels will not only greenhouse gas emissions, through won quickly — that it will require a reduce people’s incentive to use fossil the carbon price. And compare that to consistent campaign that constantly fuels but will also free up billions of the amount of money the government asks governments and the media why dollars for the government to subsidise is spending to encourage us to release we subsidise fossil fuels. things that can help fight climate greenhouse gas emissions, through change. And the reason that we can ultimately fossil fuel subsidies. win that fight is because there is no And we’re not talking about small The fact that they are doing both at good reason why you would subsidise amounts. To put this in context, the the same time is like a tug-of-war. With the fossil fuel industry. It makes no Clean Energy Finance Corporation subsidies to fossil fuels pulling one sense for the environment. It makes has been given $10 billion to spend way and the carbon price pulling the absolutely no economic sense and it is other way. on renewable energy out to 2020. The fundamentally unfair that one industry fossil fuel industry gets at least that should get such special treatment at When we look at it this way we much every year. Imagine what could the expense of the rest of us. understand the infographic seen be done with that amount of money. opposite. Of course subsiding fossil fuels is not You can’t go forward until you stop just a bad idea on economic grounds. If You can see the giant mining truck going backwards. It’s time to stop we are serious about climate change it is winning the tug-of-war against the subsidies to fossil fuels. is a stupid thing to do on environmental electric car — the subsidies are beating grounds. Fossil fuel use is the biggest the carbon price. This is because the This is an extract of a speech given creator of greenhouse gases. Every government is giving over $13 billion by Matt Grudnoff at the Sustainable dollar we spend subsidising fossil in subsidies to fossil fuels and has only Living Festival in Melbourne. §

Hockey at it again from page 15

The aged and infirm in Hong Kong support. But parents are reluctant to Australia all the way to Hong Kong, live well below the poverty line. In fact ask their children to sign. Supporting or at least not quickly. But this is the London speech did not mention parents becomes a huge burden on the vision they have in mind. John the 1.26 million poor in Hong Kong. the young, both financially and in the Howard’s vision was to smash the According to CNN, many of Hong sense of sharing scarce and expensive unions and switch much of the tax Kong’s poorest are living in ‘coffin rental housing. burden onto indirect tax. He didn’t do homes’ — tiny homes little bigger than it immediately, but eventually we got coffins. Oxfam says one-in-six poor he implication is that the GST and Work Choices. At first families are caught in a hunger trap we should scrap the and many have to scavenge for food. Howard denied he would go as far as dole, sole parent the recommendations of the National Seventy two per cent of poor children benefits, the age and Commission of Audit, but eventually eat leftover foods. Tdisability pensions and any he did. Many of the aged do rely on their sons other entitlement that goes to and daughters for the bulk of their poor people. Hockey has now warned us about the income, including income in kind. They Coalition vision. can get a reasonable pension only if This is the brave new world of Joe they get their offspring to sign a ‘bad- Hockey. Even if the Coalition won The case against cutting the corporate son’ statement — a statement that control of both houses of Parliament tax rate can be downloaded from their son or daughter will not provide we know it would not dare to take www.tai.org.au §

19 The Australia Institute LPO Box 5096 University of Canberra Bruce ACT 2617 Institute News

New publications Facts Fight Back

Still beating around the bush, M Grudnoff, February 2013

Culture of resistance, K Tucker, February 2013

Corporate power in Australia, R Denniss and D Richardson, February 2013

The case against cutting the corporate tax rate, D Richardson, December 2012

Opinion pieces

All opinion pieces written by the Institute’s staff can be downloaded from the “Time is not for wasting. So decisions have website www.tai.org.au to be made about how we use our time this year.” Prime Minister Julia Gillard, PM stokes the wrong fire, Australian Financial Review, 19 February 2013 National Press Club, 30 January 2013

Every CSG well another nail in manufacturing’s coffin, The Drum, 14 February We agree! Which is why we’re hoping 2013 you will help us put progressive ideas front and centre of the election Population policy ignored, Australian Financial Review, 5 February 2013 campaign.

There is no “opt out” clause, The Canberra Times, 2 February 2013 We couldn’t stand it if the next seven months focused on scare campaigns Limiting Australia’s ballooning coal exports is good for the economy, about boats and debt. The Conversation, 1 February 2013 If you want to hear our politicians be Competition vital in online marketplace, Australian Financial Review, challenged on real issues like why 22 January 2013 fossil fuel companies receive government Time to flex shareholder muscle, The Canberra Times, 19 January 2013 handouts or why the very rich receive billions of dollars in tax concessions, while Timber looks to bailouts, concessions to ward off undertakers, Crikey, the government struggles to find money 18 January 2013 to fund essential services, then please DONATE to The Australia Institute’s The CCA’s forestry fumble, Climate Spectator, 20 December 2012 Research Fund.

We will be launching our Facts Fight Back website very soon and with your Youth engagement help we can check even more facts — or fictions — that arise over the cause The Australia Institute is taking its research to the problem-solvers of the of the long election campaign. future by making papers, newsletters and membership offers available to university students during O-Week. Our material has been sent to Please consider making a one-off or more universities in NSW, Victoria, Queensland and Canberra. This year TAI will regular donation. All donations of $2 and also launch a nation-wide writing COMPETITION for students and young above are tax deductible and every cent people, with an opportunity to be published in the quarterly newsletter. The will be spent on research. You can donate Institute also hopes to survey first-time voters in the lead-up to the election via the website www.tai.org.au or give us to find out what is likely to influence their vote. a call on 02 6206 8700.

For more information contact TAI’s Youth Engagement Officer Bridget Let’s make this election campaign Griffiths email: [email protected] ph: 0450 050 927 and keep an eye on count for all of us who believe in a more our Facebook page www.facebook.com/TheAustraliaInstitute for upcoming progressive and fair Australia. events in 2013. Thanks again for your support.