Jan 26, 2025 | Governance, Leadership, Personal Rant
John Maynard Keynes once said, “The difficulty lies not so much in developing new ideas as in escaping from old ones.”
On this Australia Day, it feels particularly apt as we continue to grapple ineffectively with deeply embedded issues that requires systemic adjustment. This sort of change is beyond the short-term populist sport that passes as leadership in this country.
The 26th January is just a date, but one that has become an institution for many. It does not mean the many injustices by current standards perpetrated on indigenous inhabitants should be forgotten or dismissed in any way. Perhaps by contrast we should be celebrating that most of those injustices have been acknowledged. Effort, ineffective as it may be if measured by the gaps in health, education, and opportunity of indigenous Australians, is being exercised to reverse the lingering effects.
They could also choose to see it as a day to celebrate what small amounts of indigenous culture remain, and see the day as an opportunity to inform others about what has been lost, the cost to us all of that loss, and the agonies of the frontier wars that so few of us, particularly my generation, know anything about.
Marketing 101: take a negative and find a way to turn it into a positive.
WooHoo, an election.
We all look forward to the coming tsunami of creative press releases making flimsy, transparently self-interested promises daily. They will inhabit our lives along with the high viz jackets, hardhats, and staged media events that bear no relation to reality until life returns to normal after the poll.
Our three-year cycle, combined with the election dates being in the hands of the government are too short. The first months of a new parliament are spent crowing and blaming, the next 12-18 months is spent back patting, and the last period moving towards an election ensures that nothing will get done. From now, speculation about poll dates, claims and counter claims about anything that can be boosted up to the level of trivial will crowd out anything resembling sensible policy debate, development and more importantly, implementation from now until the poll results are called.
The AI Revolution.
The rise of artificial intelligence is reshaping industries and redefining the future of work. Generative AI, while transformative, is prohibitively expensive to train. This will leave the development in the hands of a very small number of individuals creating an extremely powerful oligopoly. This will leave small businesses at a cost and capability disadvantage. Australian SMEs, the backbone of our economy, are struggling to implement even basic AI tools for back-office automation, and the pace will continue to accelerate. Many will go to the wall, some of them deservedly so, but many valuable enterprises will disappear simply because they do not have the wherewithal to invest in harnessing AI to compete effectively.
Yet, there is cause for optimism. AI is not about replacing jobs, although people using AI will replace those who do not. The number and type of jobs that emerge will outweigh the losses, as has happened every time in history when a transformative technology emerges. In the transformation will be many opportunities, if we are smart enough, and ready to grab them.
The challenge lies in avoiding overhyped claims. Social media is awash with “AI-powered” solutions that often offer little substance. The real opportunity lies in training workers and rethinking education systems to prepare Australians for an AI-enabled future. I look forward to seeing the policies to generate positive outcomes being unveiled, and more importantly, deployed after the election.
Housing: A long term ‘Crisis’
For decades, Australia has underinvested in public housing while urban migration has intensified, leading to skyrocketing rents and property prices. Young Australians find themselves trapped, unable to afford homes in cities like Sydney or Melbourne, while regional areas remain underdeveloped.
‘Crisis’ is the wrong word to describe 40 years of policy failure. It implies a short term phenomenon, when the drivers of the current situation are anything but short term. Those poor, short term policy choices across several domains of responsibility have cemented in a systemic housing shortfall that will only be addressed by painful in the short term but long term focussed remedies.
Sadly, in the coming election I expect housing to be a political football, abused and accused by all colours of politics.
Education: Cost or investment?
Our education system is at a tipping point. While private schools thrive with abundant resources, public schools are starved of funding. Stories of teachers buying basic supplies like pencils and paper for their classrooms are sadly common, something I know first hand. These disparities perpetuate inequality, leaving students in disadvantaged areas with fewer opportunities over their lifetime. This suppression of opportunity also supresses the vitality and competitiveness of economic activity, which affects us all.
We need to reimagine education as an investment, not a cost. Finland’s model, where public schools are well-funded and attract the best educators, proves that equity and quality are achievable. Equipping every child with access to air-conditioned classrooms, modern technology, extracurricular programs, and professional ‘cream of the crop’ teachers should not be a luxury but a baseline expectation.
Beyond infrastructure, we must value vocational education and practical skills. The loss of manufacturing jobs in Australia has eroded our trades base. The car industry, once a “university of engineering” for many Australians, is gone. If we want to build a nation ready for the future, we need to invest in apprenticeships, technical training, and industries like renewable energy component manufacturing, technically advanced machine tools, cutting edge pharmaceuticals, value added processing of Australia’s inventory of raw materials from bauxite, iron ore, rare earth minerals, and wool.
The economy is stretching, where is the limit?
Australia’s tax system is increasingly unbalanced, with a disproportionate reliance on PAYE taxpayers while wealthier individuals and corporations exploit legal loopholes to reduce their obligations. This creates a growing divide between those who contribute their fair share and those who shift profits to low-tax jurisdictions or benefit from capital gains and resource rents taxed at far lower rates. PAYE taxpayers bearing the brunt of funding essential public services which others dodge, must have an end point.
The consequences of this imbalance are stark. Social cohesion erodes as the gap between the “haves” and “have-nots” widens. Essential public services: education, healthcare, infrastructure, social services, all face increasing demands for their services, while resources are becoming increasingly scarce. The Henry Tax Review, released in 2010, highlighted these inequities and proposed reforms. All but a very few of its reasoned and economically sensible recommendations remain unimplemented.
Politicians across the parliament have been spooked by the modest efforts of the Shorten-led opposition’s push to close a few obvious loopholes, presented to the electorate in the 2019 election. Without substantial reform, which history proves must be bipartisan, the system risks imploding under the weight of its inequities. It is time to revisit comprehensive tax reform to ensure a fairer distribution of the burden and a more sustainable future.
Energy transformation.
Australia’s energy transition is both a challenge and an opportunity. Electrification is accelerating, with everything from transport to manufacturing shifting away from fossil fuels. This increased demand for power risks overwhelming our grid unless investments in renewable energy and storage are fast-tracked, and the dilemma of a dependable on/off base load power resolved.
The quality of debate about energy policy over the last 20 years would make schoolkids blush. The need for change has been obvious for years, but that need has been passed around like a parcel at a kids birthday party. Well, the music has stopped, and the parcel seems not to have a chair.
There are initiatives like community-owned solar farms and battery projects that show the way. Yackandandah in Victoria is one such example. The town has become a model for energy independence, aiming to generate 100% of its power from renewables. Projects like this are tiny experiments, out on the fringes, which is where most change starts. The complexity and cost of scaling from local initiatives to an economy wide electrification are huge, but the path is very clear, and the necessity absolute.
Geopolitics.
The world appears to be stumbling backwards, and at the same time becoming increasingly polarised between the old fashioned descriptors ‘left’ and ‘right’. These descriptors no longer apply. China has demonstrated an ability to generate, harness and deploy capital while building capabilities at an unprecedented pace, hallmarks of capitalism, unmatched by that icon of capitalism, the US. The re-ascension of Trump to the big house, and gathering kleptocracy that surrounds him triggers uncertainty, mistrust, and will result in an implosion of geopolitical trust and collaboration, already at a very low point. The wars in Europe, the Middle east, and the less publicised but no less savage civil war in Somalia, on top of tensions around the Taiwan straights are a poor starting point for a peaceful world. There are also a number of regional conflicts that barely raise a sweat globally, all of which could be a catalyst for wider conflict.
Our defence expenditure is increasing as the world becomes more unstable, all from the diminishing tax base, and we have harnessed ourselves to a potentially erratic US (at least for the next four years) and a lame duck UK by the arrangements of AUKUS. This is a huge ‘all or nothing’ bet on nuclear subs, which to me seems muddle headed at best. There are potentially significant technical and industrial benefits to be gained, but the cost is effectively unknown, the defence capability doubtful, and the time frame long. Usually I am a supporter of long term thinking and placing bets on the shape of the future, it just seems that the bet on AUKUS is a poor one.
Something will break, somewhere.
The environment.
The place we live is the glue that holds the rest of the forgoing together. We must figure out a way to protect and nourish it, while accommodating the accelerating demands coming from an increasing population.
We are in a crunch. The demand for electricity is increasing, and will continue to do so driven by the predicted geometric increases in consumption by digital systems. At the same time, we are winding down power sourced from fossil fuels. The loser, unless there is a dramatic change in direction, will be the natural environment. If that continues to be the case, our grandchildren and (for me at least) great grandchildren will be screwed.
The Path Forward
As a group, we Australians need to exercise the muscle between our ears.
Stop listening to the ‘news’ and accepting the nonsense presented as news as fact. Instead, be philosophical and examine the sources of that ‘news’ and consider the bias that will be inherent in it.
Treat the filter of ‘news’ by social media with the contempt it deserves. Social media is a great tool, which we have seen monetised by a small number of billionaires for their own purposes, by using our behavioural instincts in ways evolution did not foresee and has failed dramatically to adjust to.
Look for sources of the opposite of what is fed to you by ‘news’ publishers and the cesspool that is social media. Perhaps then you might get a better picture.
Whenever we build a ten foot wall to address some sort of problem, or shortcoming, the smart set, armed with lawyers, morality deprived publicists and urgers, turn up with an eleven foot ladder. There is nothing we can do but be vigilant and continue to repel the pirates wherever they appear. This takes leadership, resilience, and a sense of duty to the wider community that is sadly lacking currently. The pirates are swarming over the fences, and if the US is any measure, the supposed good guys are being deployed to remove bricks.
Keynes was right. Escaping old ideas is hard. However, if any country can rise to the occasion, it’s Australia.
Pop a beer and throw an extra snag on the barbie for me. Have a great Australia day and consider the calls for a change in date to be motivated by a desire to have the best possible outcomes for all Australians.
Jun 27, 2022 | Governance, Leadership, Personal Rant
The ‘Insiders’ program on the ABC yesterday morning featured considerable debate about the coming wave of inflation, the increasing wages gap, the structural deficit now built into the national budget, and an interview with the new treasurer Jim Chalmers. I was struck again by the narrow focus of the conversation on the expenditure side of the equation, irrespective of the specific topic of the moment.
It seems to me that while we have an expenditure problem, about to become worse with the combination of inflation and the promises made to get elected, the real problem is with revenue.
While it is both sensible and well overdue to chop out the waste and costly lifestyle cushioning of liberal ‘mates,’ that will not solve the problem.
Long term we need a more productive economy, which does not mean less jobs, but it does mean that we need to edge up the international productivity ladder. This requires further investment in education, technical training, and investment in science and the means to commercialise the outcomes of that science.
Unfortunately, this takes investment at a time when investment is challenged by the scarcity of money. Anyone running a business understands this to their core. They also understand that to dig out of the hole, they need to generate added revenue to enable the investment, as cutting costs can only be useful at the fringes, and longer term is well documented as a failed strategy.
The government simply must examine revenue and put in place measures to increase it. Politically, and practically, increasing personal income tax is off the table. In addition, the temporary cut in fuel excise will end on 28 September, adding to costs throughout the economy and no doubt creating howls of protest.
The obvious way to generate revenue is to really bite the bullet politically and chase multinational companies that currently pay little or no income tax in this country. That would invite a huge PR response from these companies, comfortably headquartered in many of the tax havens around the world, exercising transfer pricing, related party loans, and the many other rorts that go on. They will claim that the competitiveness of investing in Australia has been destroyed, and deliver a litany of tales about the damage to the economy the withdrawal of that capital will deliver. Remember the effort the Minerals council made to force the Rudd government to abandon the mining ‘tax’? That would pale into insignificance compared to the shouting a real across the board tax collection effort would bring.
Bring it on I say. I am sick of seeing multinationals use the infrastructure, resources, and capability of Australians to benefit a group of obscure owners and shareholders hiding behind the curtains of tax minimisation and avoidance possible as a result of the simple reality that tax rules are national, while money is international, aided by political hubris.
Header Cartoon credit: Scott Adams and Dilbert.
May 8, 2022 | Governance, Personal Rant
Last Tuesday’s prime rate increase has been positioned as a disaster level cyclone by the opposition, and an inevitable but minor storm in a well-managed teacup by the Government.
Which is it?
Anyone who has been using their brain over the last months recognised there would be a rate rise, soon.
House prices have surged, supply chains are broken, energy and telco prices are ramping up, there is a not so little war going on in Europe. China is locking down millions in response to Covid outbreaks, and we, along with the rest of the developed world have been printing money like Darcy Duggan on day leave.
If ever there was a recipe for an inflationary breakout, this is it.
Unfortunately, or fortunately, depending on your point of view, we are in an election campaign characterised by ever more expansive promises to spend more in pursuit of a few votes.
Who now cares about the rhetoric that previously dominated the political agenda: Debt and deficit? Seemingly the current government has had some sort of shape-changing conversion on the road to Kooyong that makes all that former fiscal rectitude irrelevant.
Meanwhile, the opposition, while squarely blaming the government for the inflation rate is determined not to be outspent in the vote buying contest.
All this is happening while teachers in NSW strike for better pay for the vital job they are doing, Nursing home staff are as rare as non-drinkers on Anzac Day, and hospital staff are exhausted after two years of intense pressure on them while listening to politicians tell everyone not to worry, everything was under control.
There has been a wholesale replacement of fact by opinion and belief.
A fact is repeatable, its veracity can be tested, and the impact of changing input variables measured. A belief by contrast cannot be put to the test, but for some it becomes an absolute truth that is beyond dispute, and any disagreement is treated as some form of advanced blasphemy.
At some point, the piper will have to be paid, and ignoring that simple fact only makes the day of reckoning more painful.
Whichever party wins on May 21, they will inherit a generational mess of its own making. Trouble is, we, the voters, will be paying for it while politicians and by then former politicians will be running for the publicly funded sinecures provided
Header cartoon credit: the great Leunig
Apr 11, 2022 | Governance, Personal Rant, rant
On Sunday as the 2022 election was being called, I was sitting in a café in one of those affluent strips observing life, and gathering my thoughts.
It occurred to me that the blather we are all now about to face will avoid any reference to the key question that should be addressed: the growing distance between the ‘haves’ and ‘have-nots’, and how to redress the balance.
This is not about the cost of living, price of petrol, or availability of some subsidised form of income. It is about the national income, and the way governments of both persuasions over the last 50 years have let the money required for schools, hospitals, aged care facilities and all the rest slip through their fingers, while ensuring some sticks to selected fingers on the way through.
A brief economic history lesson, recognising I am neither an economist nor historian.
Towards the end of WW11, recognising the coming challenges of post war reconstruction, the allies set about removing the danger of the wild ride that had been the relative value of currencies up to that time. The result was an agreement amongst the allies in the little New Hampshire town of Bretton Woods. That agreement laid out the mechanism by which post war currencies would be tied to the price of gold, pegged at $US35 an ounce. The US dollar became the ‘reserve currency’, a guarantee to exchange an ounce of gold for $US35. At the time, the US was about the only solvent nation, and held most the world’s gold in Fort Knox (Remember ‘Goldfinger’). The International Monetary Fund was created as a part of the agreement as a release valve to address short term fluctuations.
The laws of supply and demand being what they are, the value of gold outside the official control of central governments soared, leading to an active unofficial gold market where it was traded for multiples of $35. Trouble is, you had to move the stuff, and it is heavy. (Goldfinger again)
Over time the core problem of a fixed currency regime became obvious. Money is international, it can be moved and exchanged globally, while the regulatory control of any one country ends at their borders. The obvious example of this disconnect is the so called ‘pirate’ radio stations positioned in the North Sea just outside the international boundary of the UK. These popped up because the BBC which controlled all the UK radio stations refused to play the emerging ‘Pop’ music of the 60’s and early 70’s. Being outside the border, the BBC could not close them down, but those who wanted the music could listen as easily as they could to any other radio station, just move the dial a bit.
Analogous to the pirate radio stations, the gnomes in Switzerland who were sitting on huge and very private sums of hidden wealth that could not be easily used by the owners created their own pirate system: bearer bonds. These enabled those hidden fortunes to be put to work, not only earning interest on the loans, but increasing the capital value of the investments, previously impossible.
By the late 1960’s the Bretton Woods system was clearly broken, and the US terminated the convertibility of US dollars to gold at the fixed $35 in 1971, followed closely by the pound sterling, and other major currencies. In effect we then had floating exchange rates, in an environment where countries still had regulations that stop at their borders, while money is globally mobile. It did not take long for countries to recognise the value of attracting this previously inaccessible capital by a range of means around low tax rates, banking secrecy, and personal anonymity. The lawyers and accountants since then have made this disjoint between the mobility of money and the static nature of sovereign borders a financial bonanza for those individuals and organisations with the money and will to hide their assets and ensure they do not pay tax. Hundreds of billions have been looted from the system by these ‘legal’ means, leaving those with insufficient income to fund the legal complexities to hide their income to pay for the schools, hospitals, and aged care facilities we are all demanding.
This is, to my mind, the core challenge of this election that will not be spoken about.
Labor policy is to collect tax from multinationals by denying deductions for royalties to related parties. This makes sense, but will be hard to enforce, and does not address the inequities in other huge areas of tax minimisation and avoidance. Besides, when sovereign rules change, the tax arrangements of corporations and individuals change as well, moving to a more accommodating regulatory environment. On top of that, those who make the rules are also the ones who benefit, so while there might be some ineffective fiddling at the edges for a press release, real change which requires global collaboration and endorsement currently is just a pipe dream.
However, the first step in solving any problem is to recognise that we have a problem.
Unfortunately, this conversation will not be started by either party in this coming election. For the long-term health of Australia, and Australians, as well as every other person on the planet, apart from the tiny minority of looters, it is a conversation that needs to be started, and followed through.
I need another coffee after all that.
Dec 31, 2021 | Leadership, Personal Rant
I had not intended to publish another post until 2021 was behind us after the review a few days ago.
However, the decision of national cabinet yesterday, coupled with today’s Covid numbers changed my mind.
In the back of my memory is an early Monty Python sketch.
Two characters discussing the very disturbing rise in murders, and what should be done. One finally suggests that murder be made legal, end of the problem with murder rates and associated public outrage.
Yesterday our politicians ‘led’ by #scottyfrommarketing decided to change the definitions of what constitutes a ‘Close contact’. While the definitions and consequences have varied across states to date, they are now consistent, and will reduce the number of tests, and therefore the number of cases of Covid reported.
Problem solved?
Not as such.
Perhaps the political problem has been massaged, but Covid has not gone away. The collective memory of Australians will be that once again, politicians have, if not lied, then creatively massaged numbers to make black look a bit more like white.
It is Ok to acknowledge that this pandemic has become endemic, and despite all the science at our disposal, we are stumped, for the moment. That admission however tacitly concedes that people will become sick, and some, particularly the old and in some way vulnerable, will die. Not a good election promise.
The header graph is NSW covid cases to December 29th. The 30th, yesterday was 21,151 and today, the 31st will be added tomorrow, January 1, 2022. Probably not a good beginning to the year.
Yesterday’s 21,151 came from 148,410 swabs, a 14.3% infection rate. This is a number that very recently would have induced political panic, now it is just a number to be massaged.
I wonder what the gagged scientists think of the massaging?
Have a good, and distanced, new years eve celebration.
Aug 23, 2021 | Governance, Leadership, Personal Rant
The Prime Minsters performance on ‘Insiders’ yesterday reminded me of Erwin Schrodinger’s cat thought experiment.
This was an absurd illustration of wave function collapse, a characteristic of quantum mechanics. (Note: I understand absolutely nothing about quantum). It proposes that the imaginary cat can be both alive and dead at the same time. Clearly a challenging situation, for the cat at least. Dead but not dead, perhaps just not buried yet?
It also seems to represent the Morrison governments chattering about climate change, and the choices that are needed, and not needed, all at the same time, amongst several other important questions.
As with Quantum, I fail to understand the half in the box and half out of the box ambiguity that is presented by those supposed to be making the tough choices on our behalf, and then acting on them.
Perhaps they are acting and not acting at the same time as well, and perhaps acting, taken in the context of performing rather than taking action is appropriate.
The resurrection of Barnaby Joyce to the exalted role of Deputy PM may be another kitty both in and out of the box. It seems to depend on whether he is berating the Labor party (who have their own litter of pussie-cats hidden away, unseen in the box) for some infraction of his imaginary rules, or defending George Christianson’s right to blather nonsense in the federal parliament.
I guess George does have the right to blather nonsense in parliament, he had a solid majority in his electorate at the last election, so some must think he is on the money, but the Nats also have the right to kick him out of their box. Label him clearly as a dead cat! Problem of course that they want to hold the seat, so he must remain alive as well, at least until they can find some alternative feline just as screwy to replace him at the next election.
This is a ‘Schrodinger Government’ both dead and not dead at the same time. Disturbing to see them still stumbling around blathering.
The pussy is also busily clawing at the response/non-response to the question of enabling businesses making covid vaccination mandatory. They are hoping business will do their job for them, again, and carry the risk of legal action brought under the provisions of an act clearly not reflecting the current need.
That comes on top of the narrative happening in Kabul. The PM blathered yesterday about how hard the government has worked to get out those who helped us in the 20 years of slog, and how honourable the sacrifices made by our armed forces. The fast words delivered with the conviction of a snake-oil salesman will carry little weight at all to the families of the 41 killed, and 249 injured, and those we leave behind in that sad place.
At least the chronic decision making vacillation and teflonesque reflex to dodge outcomes is consistent!
Header cartoon courtesy www.howstuffworks.com
