4
Jul
2014

Budget Problem; Union Corruption; Climate Change Correction.

In what was foreshadowed as a major speech, Abbott’s claim last night that he would get the budget through – even if it took two more goes – offered no indication about how he might do it. I have previously suggested the government should publish an explanation of why this is not a tough a budget and offer adequate explanations of the main measures based on the large increase in real incomes per head over past 20 years. But there is no sign that this course might be followed. Indeed, rather the opposite: by promising further reforms at the next election, an opportunity now exists for further commentary about how “unfair” the government is and will be if re-elected.

Unless the new Senators have radically different attitudes to what they appear to have, the Australian’s political correspondent, Crowe, correctly argues below that the government has painted itself into a corner from which it is difficult to see an escape route.

Meantime, more information is emerging about union corruption and the links between Labor and unions in Victoria, with the Herald Sun presenting a highlighted front page lead (see below). It appears that the Royal Commission will be considering some of this on Monday –and doubtless interviewing some of those involved. But the focus today has been on the CFMEU and the behaviour of that union reinforces the need for police back-ups to any improved regulatory arrangements. Hopefully, the RC will have sufficient whistleblowers to further extend its interest to, in particular, the union (AWU) in which Shorten was involved.

The revelation at the RC that the big transport company Toll has been paying the TWU to establish a “training fund”, and to report on competitors, has raised the question of whether “big” companies may be using the existing regulatory system to advance their own interests. That seems quite likely: but labour market (and other) regulatory systems provide opportunities for “smart” companies and unions to minimise their cost and maximise their benefits under that system. The way to reduce the scope for unions to maximise their benefits is to minimise the regulatory arrangements for labour markets. It would also be surprising if big companies did not employ people to advise on what their competitors are doing.

CORRECTION: In yesterday’s commentary praising Greg Sheridan’s article (“We’d be crazy to enter into an ETS”) I suggested there should be more media challenges to commentators who make false assessments of various climate change facts. As an example I said that the claim that average temperatures increased over the past century by 0.8 of a degree overstated the increase by 0.3-0.4 of a degree. A sceptical scientist has pointed out to me that this is not correct. The calculation of daily average temperatures (by averaging the maximum and minimum) does overstate the level of temperatures by 0.3-0.4 of a degree but that does not reduce the increase over time. But even accepting the 0.8 of a degree increase it remains the case that it is a false assessment that it all reflects usage of fossil fuels. About half of the increase was due to natural causes arising from the Pacific Decadal Oscillation from a sudden replacement of cold water with warm water along the western Pacific coast of the North Americas.