The devastating double leak

Cabinet leaks are never fun. Unless you’re on the other side of the chamber and can dine out for weeks at a time on the information. There’s a couple of things alarming about the recent leaks, both regarding petrol.The first leak regarded Martin Ferguson’s objections to the Fuel Watch scheme inside the apparent sanctity of Cabinet; and he was forced to front the press with an admission of arguing against it in Cabinet, but he backed the policy as Cabinet had decided it. Embarrassing.

The second, and in my opinion far more damaging, appeared last night in a Laurie Oakes exclusive. It showed that several departments (Finance, Industry, Treasury and the PM’s own DPM&C) had provided advice that the introduction of the Fuel Watch scheme nationally would impose high compliance costs on independent retailers, and eventually have an upward influence on prices rather than the opposite.

The FuelWatch scheme has at its centre an idea to set the prices the night before and not have them change for the duration of the day, under threat of fines and other penalties. Even if this is on a day by day basis, it resembles the introduction of a price floor and a price ceiling, which tends to disrupt prices. The effort of attempting to collate prices from across an entire nation is admirable, but by forcing service stations to set their prices in advance may preclude consumers from accessing fuel at the lower prices. Over the course of say, a week, the average price will be set for the entire week; eliminating the fuel price drop on Tuesdays. Is this really going to help working families*, who know of that lower price?

The Government has firmly relied on the economic modelling from the ACCC, but newspaper headlines around the country suggest he has actually misrepresented the advice. A highlighter was passed across the table in Question Time yesterday, which asked the PM to highlight the relevant sections of the ACCC report, an offer that was passed up. Kevin Rudd was shuffling papers like a casino croupier, putting them into different piles on the Table.

But back to Cabinet leaks. It’s very worrying to have a Cabinet leaking this early into the life of a government. The electronic system for circulating Cabinet papers may not be as secure, or the bureaucrats who had their advice ignored got angry. All sensitive leaks are investigated, but the culprit is often never found. Which leads to the suggestion that Ferguson himself may be angry about being overridden in Cabinet, or that his criticism was not given a fair hearing. Marn’ being of the Victorian Left, could this be the factions reasserting themselves. If their views aren’t respected, they may leak.

As I recall, the various incarnation of the Howard Government rarely leaked, as Howard made sure that each of the opposing views was heard, even if he didn't act on it. Cabinet was tight. If every minister's decision is leaked, it just encourages discussion out of cabinet. Ironically, the corridors of Parliament House are far less secure than the Cabinet Room. As petrol prices continue to rise, maybe a bit of panic is settling in. After the Opposition's divisions on the excise, it must be a welcome change to have some disunity in the government.


*If I hear the term working families once more from Kevin Rudd, I’m liable to put a brick through my television.

I cannot believe this

What has Sarkozy actually achieved since being achieved since being elected, from his policy basket.

France will keep its 35-hour working week in order to enable employees to add tax-deductible overtime to their salaries and boost growth, President Nicolas Sarkozy said on Tuesday.

Petrol Competition

Petrol once again has dominated politics, this time with the Prime Minister admitting that more could be done on the GST applied to the fuel excise, or the entire excise. Any change would certainly impact on the budget of states, through the GST collection. Maybe Brendan Nelson has found a way to cause some disquiet amongst the wall to wall Labor governments? As I’ve said before, I disagree with the “five cents off” provision, mainly as it can be easily wiped out by an overnight change in the oil price.
Then again, politics is never always necessarily about what’s right for the economy, often rank populism gets you air.

Brendan Nelson is starting to find his own way. An opposition leader always lurches from one ‘important/crucial test’ to another. In Nelson’s case, it was navigating the opening of the new parliament, climate change and most recently the Budget Reply. Unfortunately, it never stops, as the Gippsland by-election is the next stop. But Nelson has managed to appeal to Rudd’s me-tooism, and he’s now (reviewing) at least the budget measures. The next couple of weeks will be tough for Rudd, as he has to deal with the comment that his government has done everything physically possible to help with the cost of living. The increase in fuel prices must transfer through to the cost of consumption goods; ‘working families’ must be really pleased that no further help is in the offing from government.

To be fair to Rudd and his government, a lot of the price increases are not due to Australian factors; petrol is a component of the CPI, but he must deal with the promises made at the election to all those he promised life would be better.

So You Think You Can Sue...

In one of those weird alignments of celebrity, politics, war and scandal, the allegations aired in a Department of Defence document smack of chauvinism, and those stereotypes the army is desperate to avoid. The story was broken by former Bulletin editor Gary Linnell; who pointed out a slightly seedy connection or pun:

Zaetta was the co-host of 1990s television show Who Dares Wins, which is also the motto of the Australian SAS.

The claims were contained in a defence briefing document which had as recipients Defence Minister and other departmental honchos suggested that the Bollywood star had engaged in inappropriate conduct with troops, despite briefings that fraternizing with troops would be a breach of internal Defence regulation. Kevin Rudd has to deal with the fallout:

Defence has apologised in terms of their handling of this particular document.

There is a full defence investigation under way in relation to two matters - what transpired there (Afghanistan) and, secondly, on the question of the actual handling of this document.

He also reaffirmed Ms Zaetta's right to sue if the document proved to be incorrect. The defamation payout may however not compensate her for the mud that may stick to her and rub off on a Bollywood career, with The Hindustan Times' main online headline: "Who dares loses. Starlet Tania romped with troops in war zone."

In a conservative movie culture where producers have been sued for allowing an on screen kiss, even the allegations of misbehaviour may be enough to end her career.

And thanks to the magic of Youtube, here's a bit of Tania circa 2002, co-hosting Who Dares Wins with Mike Whitney.

HECS Repayments

In the press over the last couple of days, Bruce Chapman, the inventor/architect of the HECS system has suggested that sportspeople who have benefited from training at government at government institutions such as the Australian Institute of Sport, and the elite sport bodies dotted around the states.

The first targets of course, are those who possess a huge public profile, such as Lleyton Hewitt. Earning over AU$15 million per year, the repayment of Australia’s investment in him would be a drop in the ocean. Scholarships for sports at the AIS are within the region of $50,000; an amount that is somewhat equivalent to some HECS debts built up by university students over the course of their degree.

Lleyton's manager said he only received support for one year, and did not 'live in' at the AIS. So reasonably, he would not be liable for the full amount.

It seems unfair to try and retrospectively enforce it on those who have already had success, as the motivations for entering the ‘elite sports system’ are determined not just by the scholarship but things such as the repayment of debt. The potential repayment threshold should be set at a level that does not interfere with their capacity to progress in the sport.

Surprisingly Angus McFarland, National Union of Students President, is against such a proposal ever making it onto the statute books.

Sport is a cultural investment in the country, and athletes give a lot back to the community in the pride that we get from their achievements internationally.

Unfortunately, someone still has to pay for it. In a case of selective hearing, the NUS is happy for payments to flow from HECS style levies into its own coffers:

Under the NUS model, a compulsory HECS-style levy would be charged for student services. Students could then choose whether to become a member of their university student union. Fees from those students who chose not to would be used for a “Community Facilities Fund”, which would be used for such things as “student space, computer labs and sporting grounds.

It is always an honour to represent your country in your field, whether it be science, sport or occasionally holding your end up in a London pub, each of us has been trained. In the upcoming Olympics, beyond the scholarships provided by the AIS, there is a huge amount of government support that is often never seen, and oft forgotten when athletes mount the dais.

The expansion of the system should not be seen as lingering toll poppyism, and making a grab at money for those who are rich, and can pay. In the case of gymnasts, whose careers in the Olympic fields are short when very young, they have an entire lifetime ahead of them in which to repay the amount. The program shouldn’t be about naming and shaming those who should pay but haven’t, the system should be based on fairness. Some free-marketeers would question the existence of the original HECS system; but inherently, this allows the collection to occur rather than not. The administration costs are yet to be seen; would it be a revenue positive proposition?

I can’t predict their goodwill, but it would be very Australian to give something back voluntarily as recognition that the reasons for their success is shared between their own aptitudes and talent, as well as the Australian people, whose taxes were used to develop them. A side question would be how to treat Australians who list their primary place of residence as being outside Australia (Pat Rafter and Bermuda anyone?), and how legally income can be collected.

At ANU, Professor Denniss is preparing a list of the top 50 earning Australians who have received support, probably with an implicit requirement that they pay it back. Tennis is again at the forefront, with Jelana Dockic estimated to have had $250,000 of contributions made. In 'absconding' she has followed the lead of many young graduates who head overseas and don't repay their uni fees. Often the main purpose is not to avoid the tax, but to explore working in other countries. Chapman had a solution for this that he presented last year:

"The first way to fix the overseas problem is write on the bottom of HECS contracts that in the event that you are going overseas for six months or more, you are obligated by law to pay the minimum HECS," Professor Chapman said. He said while this repayment would not be linked to income, it was not much money and most graduates going overseas to travel or work could afford to pay.

(Electoral) Petrol Shock?

Currently, the most politically divisive issue relates to bowser prices at the local forecourt. Brendan Nelson's budget reply was sprinkled with opposition to many of the means testing provisions, as well as his pledge to cut fuel excise, which is interesting in itself.

Rudd strategy to provide relief is to give assistance in the broader "family" budget and lift the burden through tax and transfer payments. This frees up money to pay for the rising cost of petrol. If you're not a working family though, you're missing out on that end.

Nelson's excise play was openly opposed by his Treasury spokesman, Malcolm Turnbull. He's now fallen into line, but not without some damage to the consistency of the position adopted. I personally disagree on two fronts. The first is that for each cent 'saved' by motorists, there is huge amount of money to be set aside for it in the forward estimates period, that can certainly be spent on infrastructure projects. The other has particular regard to the huge rises in the cost of raw oil, and any potential savings to be wiped out, especially with the sharp rise in the price of crude. The fluctuations, with an increasing trend, would make very little difference.
Then again, if you're not a motorist, you miss out on the relief there. It's being sold as a 'real' tax cut.

Although it feels like we've come full circle on the link between Petrol and by elections. The Age editorialised on 26 April 2002:

A fortnight before the Ryan by election, Mr Howard cut fuel excise by 1.5 cents a litre and cancelled twice-yearly indexation for inflation - at a cost to revenue of $2.6 billion over four years. Then on the eve of the Aston by election, a turning point in the Coalition's fortunes, he launched an inquiry, to report back last month, into fuel taxation and pricing.

Sound familiar? Replace Ryan with Gippsland, and the method of cutting fuel costs. That was the last major change to the pricing of fuel in the country, at least from the government side. The then Howard government also gave back the "Tax on A Tax" by eliminating the GST applied on fuels.

Not surprisingly, the Nationals candidate in that by election, Darren Chester, is 100% in support of that same policy, despite the three corner contest between Labor, Nationals and Liberals:

“Cutting the fuel excise by five cents per litre is a saving of about $3 per tank on the family Falcon and the benefits would flow through to reduced transport costs for industry."

The by election caused by the retirement of Peter McGauran becomes the first test of whether the electorate feels Kevin Rudd has delivered on the style promised on the hustings in November last year. Do families feel that the government has done all within its power to limit increases in grocery, house and petrol prices. The realpolitik comes into play now, and it tests Brendan Nelson in particular.

The other sentiment that may flow through (and I've been waiting for it) is that consumers have to realise that their contribution to stem global warming needs to be paid out of their pockets. Turnbull has even called for petrol to be excluded from the trading scheme. The effects unfortunately don't stop on the petrol side, with the Oz reporting that the European Union has estimated the prices of cars themselves may rise by up to 6%.

Wayne Swan, enjoying the limelight from a budget that was seen a firm but fair, can only look forward to more leadership tension within the Liberal party.

Kevin Rudd appeared on the ABC program Q&A, and was very smooth. It reminds of the UK based TV show called "Question Time" and I think this is where the show will head, as Difference of Opinion fell flat in delving too far into subject material without making it interesting. The format would not have suited John Howard, as I think he would really struggled to keep that slightly petulant side of his persona in check. An ABC audience is not a place where Howard thrived; perhaps that's part of why there was a large amount of control on media appearance and set pieces were always tight.

Rudd on the other hand appeared relaxed and eager to talk, and was open to all sorts of question, some which he dodged very nicely (he must have swotted up), although Tony Jones is going to need to watch that the questioners don't run the show with continuous supplementaries and interjections, it kills the flow.

Hiatus Interruptus

The cobwebs have certainly been growing around here, I'd almost forgotten all about this blog. Reading back over the 40ish posts so far, I can't say my mind has changed. I would not have picked the outcome of the US Primaries, and didn't foresee the long honeymoon that would accompany Kevin Rudd through the first six months of his government, or the dwindling oppositions at a Federal level, Victoria, West Australia, New South Wales, Tasmania and generally low levels elsewhere. The Queensland conservative parties have to make up their minds about merging, and the ACT opposition leader has a very young leader.

So I'm coming back to blogging, and I'll start off slowly, but with a distinctly Australian feel. There'll certainly be more important stories as they emerge on the international front, but depending on their importance and relevance may not be in the same amount of detail.