IPCC’s Failure to Explain Pause; Budget Education by The Australian, not Hockey; Competition in the Labour Market

IPCC’s Failure to Explain Pause

Bill Kininmonth’s letter published in yesterday’s Australian (see below) is an important reminder of the failure of the last IPCC report (the 5th) to identify any substantive reason for the so-called pause in global warming since 1998. I have recently referred to research which questions the idea postulated by some that radiation from the atmosphere has been “stored” in deep parts of the ocean. This research shows, however, that the areas of deep ocean covered have slightly cooled in the past 20 years.

Kininmonth’s letter points out that Working Group 1 of IPCC’s 5th report (that is the Science section not the Summary prepared for politicians) says that the trend increase in temperatures over 1998-2012 is estimated to be around one third to one half of the trend over 1951-2012 — that is, 0.04C per decade compared to 0.11C per decade. It also shows that this very low rate of increase occurred despite a significant increase in CO2 emissions. Kininmonth also points out that the previous IPCC report had predicted a much higher rate of increase in temperatures.

Governments are now set to hold a number of conferences to consider yet again a possible international agreement on a program of reducing emissions, ending in Paris early next year. Although not on the agenda for the G20 meeting here in Australia in November, climate change is likely to be discussed and the opportunity exists for an Australian submission to the G20 conference recommending an inquiry into the disparity between temperature and emission changes back to at least 1940 and whether a reduction in government expenditures on emissions reductions would help with achieving the G20 objective of increasing the rate of economic growth by 2% pa.

Kininmonth refers in his letter to the decision by the Australian Press Council to heavily criticise a report by The Australian in September 2013. That report had predicted that the then imminent fifth IPCC report would publish a lower rate of warming than previously for the period since 1951. Specifically, The Australian’s report predicted the IPCC would show a temperature increase of 0.12 degrees per decade since 1951, not the 0.2 degrees per decade published in previous reports. In fact, when published the IPCC showed an increase in warming of 0.11 degrees per decade between 1951 and 2012. The incorrect prediction in The Australian was then criticised by the Press Council on the ground that it “was not corrected with sufficient speed, clarity and prominence”. As Kininmonth suggests, a slap on the wrist!

Budget Education

Hockey’s ill-advised comments in his biography and since seem largely to have escaped criticism in the Fairfax press. At the same time The Australian is publishing the kind of educative material which Hockey should have been using, such as the fact that those experiencing reductions in assistance from the government would still be net recipients after paying their tax share (see editorial below).

What has happened to the Competition Commission?

Under Australia’s Fair Work legislation unions are able to exercise monopoly powers by threatening or actually disrupting business activity unless they are granted so-called rights which the FW administration is prepared to approve, indeed to award as legal. Most obviously, individuals are not allowed to accept wages and hours of work lower than those awarded by FW in response to claims made by unions on behalf of their members. Hence employees who are members of unions are allowed to bargain for wages as a monopoly while businesses are (rightly) not allowed to agree on their prices.

The underlying rationale for allowing union monopolies as awarded by FW is the (absurd) belief/assertion that employers have the bargaining power to operate as monopolies and “force” wages down. Hence (sic) employees “have to be” protected by government regulatory legislation.

As with all such regulatory arrangements, attempts are made by “businesses” to find ways around the awards or to ensure that competing businesses are not finding their way around. Given the extent of the regulatory arrangements, such action by businesses (and unions) is actually encouraged.

One way around the regulations is for businesses to employ people who are “independent contractors” and operate as businesses themselves. The use of independent contractors can be an important vehicle of competition, which the HR Nicholls Society has long supported.

In the transport industry, however, despite the widespread use of independent contractors attempts are currently being made on both the business and union sides to prevent or limit competition (see article below). A current dispute involves action taken by a transport company (Toll) to use the relevant union (TWU) to “spy” on other transport companies and report if those companies are getting around awards for those who are either employed in the industry by the company involved or (presumably) have contracts with individuals which are more competitive. While it would not be unusual for companies to employ agents to check on competitors, it is most unusual for a union to be the agent and there appear to be questionable arrangements between the union and the company “employing” the union.

The body responsible for regulating restrictions on competition (ACCC) is reported, however, as having granted an interim exemption from competition law, a decision which is being challenged by the head of Independent Contractors (who is also a board member of the HR Nicholls Society) as involving harassment of competitors of Toll.

Whether or not the exemption is justifiable, the dispute serves to highlight the anti-competitive characteristics of the Fair Work legislation and it’s administration. It also highlights the apparent inability of the ACCC to restrict anti-competitive behaviour by unions. It is to be hoped that the Heydon Royal Commission will make recommendations to at least limit the scope for such behaviour.