Defence’s Spending Debacle

If you still have faith in the natural efficiency of government, there’s a quick way to eliminate that.

Read the first dozen pages of the Australian National Auditor Office’s report into the Defence Department’s Lightweight Torpedo Replacement Project, which was released last week.

In the mid-1990s, Defence decided it wanted a new anti-submarine torpedo that could be deployed on frigates, helicopters, and patrol aircraft. Phase 1 of this acquisition started in March 1998.

Twelve years and two months later, $391 million has been spent and there’s still no torpedo. The whole thing would be substantially over budget if they hadn’t eliminated three of the five platforms the torpedo was originally supposed to be deployed on.

In fact, the auditor general has now pointed out the torpedo will never do what the Defence Department wanted it to do.

The audit catalogues the project’s decade long history of poor planning, mismanagement, buck-passing, and careless decision-making. The Defence Department thought they were buying an off-the-shelf piece of equipment, already being used by other countries, but it took them “several years” to realise that was “not the case.”

Not a resounding success, then.

Certainly, some big government projects don’t function as advertised. The Rudd government has worked hard to remind us of that truism.

But the list of Defence projects that are over-budget and mishandled is pretty impressive.

The $16 billion F-35 Joint Strike Fighter is well on its way to becoming as iconic a debacle as the Collins class submarine. The Seasprite helicopter was cancelled in 2008, because it was already running seven years late, and we’d already spent $1 billion on it.

The Wedgetail airborne early warning program is four years overdue. The Tiger Armed Reconnaissance Helicopter: also four years overdue, and mired in contractual disputes.

The upgrade of the M113 armoured personnel carriers are three years overdue. The Auditor General found the M113 upgrade had been characterised by “poor project management practices; ineffective project planning; inadequately defined project objectives; and technical problems”.

Indeed, “poor” is a word commonly encountered in Defence audit reports. A report published in March covering explosives procurement documented poor budgeting practices, poor lines of responsibility, poor contract management, and poor project administration.

Even a new program designed to cut down on waste – a logistics information system to track Defence assets – has blown its budget by 20 per cent and delayed three years.

It’s almost as if Defence is constitutionally incapable of buying new stuff without being overcharged.

A McKinsey report earlier this year found Australia’s military spending was among the least efficient in the world. The consultancy compared the amount of money we spend with the amount of equipment we procure. In a list of 33 major countries, we tied with the United States for worst at getting value for our Defence dollar.

Part of the problem is politics drives procurement. Politicians want to buy Australian-made.

The McKinsey report noted those countries which tried to procure their equipment domestically tended to get worse value for money. That’s obvious here: the Auditor General found a desire to support local industry meant the torpedo program was pushed ahead despite critical difficulties with the project.

You’d have thought the government would have learnt from the Collins class submarine fiasco, which was built in Australia to everyone’s great regret. But the government intends to build the next generation of submarines in Adelaide too. In fact, two-thirds of the $100 billion expected to be spent on defence acquisitions over the next decade will be spent in Australia.

That’s because politicians don’t like to miss any opportunity to claim they’re “creating jobs”.

The bigger the problem is the easier it is to spend other people’s money irresponsibly. Reckless spending is common across all areas of government. But it’s especially common in Defence, where decisions about what to buy are based on guesstimates of the strategic environment 10 or 20 years down the track.

Yet once procurement programs are started, they’re hard to stop. One military insider told The Australian earlier this year, “to question the F-35 inside the Defence Department is a dangerous career move”.

The Rudd government intends to clean up military procurement.

But don’t hold your breath. Ever since the Turana project – a pilotless target aircraft for the Navy – was embarrassingly cancelled in 1979 there have been frequent reviews into reforming Defence procurement processes. They all find endemic mismanagement, and they all recommend greater accountability.

Defence procurements are highly technical, often secretive, and far removed from the eye of the taxpayer. But the torpedo program makes the home insulation scheme look like the ideal model of policy development.

It would be delusionally optimistic to believe this is the last indictment of a Defence program we’ll see.

Why trimming the waste line is harder than it looks

It must be election time: fiscal conservatism is fashionable again. Tony Abbott and Joe Hockey go into this election with a battle cry about the Rudd government’s budget deficits and ballooning national debt. Kevin Rudd claims the budget is heading unstoppably back to sweetness and surpluses, but the opposition still has a case – by 2011, the government will owe $90 billion, 6 per cent of our GDP.

Hey, fiscal conservatism worked for Kevin07. It might work for TonyTwentyTen. But fiscal conservatism is easy when budgets are riding high and government debt is negligible. If the budget isn’t balanced, and debt needs to be reduced, then you’ll want to identify government programs to cut.

In his budget reply on Thursday, Abbott identified a couple of cuts – abandoning the national broadband network, fiddling with the building education revolution, and a freeze on hiring new public servants for a while. And reducing government advertising. Every opposition wants to reduce government advertising.

It’s a pretty tepid start, but it’s a start; Joe Hockey will apparently propose more cuts this week.

He’ll need to. If the Liberals want to walk the ”high road of expenditure restraint” and clear the national debt as soon as possible, they have to cut a lot more spending. Luckily, nobody has to look far to find things to cut.

The government is giving a not-for-profit $120,000 so they can host an interstate rickshaw ride to raise awareness of poverty. We’re giving a wallpaper company in New South Wales $36,000 to update its website, and $70,400 to another company so it can develop a ”social game platform”.

As well, $15,000 went to a team of glass percussion artists, $100,000 has gone to a Hervey Bay company to build two new cabins in their caravan park, and $8000 of federal money paid for an electric scooter-charging station in Victoria Park, Western Australia.

These are all part of multimillion-dollar programs that could be eliminated instantly.

Then there’s the $13 million we give to the Australian Wine and Brandy Corporation, and the Grape and Wine Research and Development Corporation’s $27 million. (They’re different, apparently.)

And the $150 million the government plans to spend on that idiotic ”Nothing Like Australia” tourism campaign. And the $254 million for elite sport programs.

That should be the test. You’re not serious about reducing government spending if you’re unwilling to upset the men’s Olympic volleyball team.

With so many so obviously absurd programs, you’d think eliminating waste would be easy. But every program, no matter how silly or unnecessary, has passionate supporters.

When the government spends, it makes some individuals and industries reliant on that spending. And public servants whose careers depend on that spending’s future. No matter what, someone, somewhere, gets upset when you cut a government program.

So governments are usually reluctant to get rid of anything.

Take the Department of Climate Change. Its 640 hand-picked bureaucrats were charged with implementing the government’s emissions trading scheme.

So you would have thought once the government abandoned the scheme, those bureaucrats might no longer be needed. More fool you. They’re still there: patiently waiting for their real jobs to start, filling in the long hours of the day tinkering with renewable energy regulations and trying to fix the insulation program.

On the Labor side, politicians with ties to public service unions hate the prospect of eliminating the jobs of their supporters.

And when Joe Hockey flagged the possible public service reductions earlier this year, his Liberal parliamentary colleague Gary Humphries said Hockey would have him ”to reckon with”. Humphries is the Senator for the ACT, and Canberra is a government town.

Right now, no one is more aware of how hard cutting the size of government can be than the new British Prime Minister, David Cameron. He enters No. 10 with the country labouring under more than $A1.3 trillion of national debt. If the United Kingdom doesn’t want to become the Greece of the north, Cameron will have to do something drastic.

Certainly, both Gordon Brown and Cameron went into the general election saying how much they wanted to tackle this debt. Brown proposed reducing government expenditure by 10 per cent, cunningly campaigning on an ”I broke it, I’ll fix it” platform.

But neither candidate was eager to go into too much detail about just what spending they planned to cut. Because many of those cuts will have to be public service retrenchments.

No matter how much the British people say they want the UK’s budget back in the black, it will take a lot of political courage for Cameron to get it there.

In Australia, that’s a big problem too. There’s much government waste to cut. But waste has friends and cutting waste makes enemies. Nobody wants to make enemies in an election year.

Should terror suspects be protected by politics?

In Dr Strangelove, the crazed General Jack D Ripper claims ‘war is too important to be left to the politicians’.

So, it seems, is terrorism.

It’s been just over one week since a Nissan Pathfinder caught fire in Times Square. The press has focused on the modest drama of stopping the departing Emirates flight carrying the alleged terrorist Faisal Shahzad, as he tried to leave the country.

But still,it seems he was pretty easy to catch.

The Pathfinder was taken to a forensic lab where investigators quickly traced its provenance – it had been sold on Craigslist, two weeks before the incident. The sale was made in $100 bills in a supermarket car park.

But the seller had the buyer’s mobile number. And, with a sketch artist, was able to draw a picture of buyer’s face. Better: the buyer had driven himself to pick up the Nissan, and left his black IsuzuRodeo in the car park.

With the registration of the Isuzu, investigators now had Faisal Shahzad’s home address. They didn’t even have to break in. The key to his apartment was in the Nissan’s ignition.

Shahzad was in custody 53 hours after the bomb was left in Times Square.

The tale of Shahzad’s speedy arrest makes him look less like a formidable jihadist with Pakistani terror camp training, and more like an incompetent, failed criminal.

But it’s worth dwelling on the particulars of how Shahzad was identified and arrested because the legal system largely worked.

What little effort Shahzad made to cover his tracks was easily side-stepped. He took two days to try to leave the US. The US government says Shahzad claims to have learnt bomb-making from the best, but his bomb didn’t work.

And the legal case against Shahzad seems to have been made even easier because he started chatting to the FBI, apparently giving them “valuable intelligence and evidence”.

Seems too simple, doesn’t it? That’s because the politicians haven’t become involved yet.

Take the question of whether Shahzad should have been informed of his legal rights at his arrest. After investigators confirmed there were no other attacks imminent, he was. John McCain claimed doing so was a mistake. And the ranking Republican on the Homeland Security Committee, Peter King, strongly agreed, adding: “I know he’s an American citizen but still…”.

Joe Lieberman upped the ante by proposing to give the government power to remove anybody’s American citizenship if they are merely suspected of being a terrorist. In their view, the rights we afford criminals are getting in the way of winning the war on terror. But the sorts of legal changes they recommend could very well lose it.

Terrorism is against the law. It’s against a lot of laws. And even in a post-Guantanamo world, terrorism trials are conducted in the shadow of centuries of legal precedent, an adversarial court system, and extensive avenues of defence and appeal.

Those bombastic tough-on-terror politicians – if they got their way – could easily undermine terror prosecutions. Because it’s not a question of whether terrorists deserve legal rights. It’s that ignoring those rights allows terrorists to avoid justice.

As David Frum has pointed out, if Lieberman’s proposed citizenship laws were in effect, the US would be on its way “to court right now to litigate the issue whether the Times Square bomber’s bombing plot indicated an intent to relinquish his nationality. Only after taking that issue through trial and appeal (maybe multiple appeals) could we get to work questioning and punishing him”.

It’s happened before.

Ali Saleh Mohamed Kahlah al-Marri was arrested shortly after the September 11 terrorist attacks, accused by the government of being an al-Qaeda sleeper agent, and taking orders directly from Osama bin Laden.

With all the charges against him, al-Marri potentially faced 143 years in prison if convicted in a civilian court, according to the Cato Institute’s David Rittgers. But the Bush administration was eager to show that American counter-terrorist efforts were a ‘war’ in America as much as Afghanistan. It moved him out of the civilian court system and into military custody.

As a result, after years of legal wrangling and a Supreme Court case, he was convicted in October 2009 on just one count of material support for terrorism. He got eight years.

If you want to punish terrorists to the fullest extent of the law possible, that’s an awful outcome.

Like Australia, the United States has a civilian legal system which has evolved from centuries of English legal precedent. It’s handled mass murderers and politically-motivated misdeeds for hundreds of years.

Terrorists believe they are freedom fighters; captured terrorists believe they are political prisoners. Let’s give them the disrespect they deserve and treat them like common criminals
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Spurious notions of ‘national character’ aren’t helping

Are Australians racists? Well, yes. And no. Some are, some aren’t. It’s a mind-numbingly circular question, but just the sort of mind-numbingly circular question that those in the social commentary business love. (Six idiots dress up in blackface on Hey Hey it’s Saturday, and that’s the first half of Q&A over with, two weeks’ worth of columns in quality broadsheets, and a comfortably full switchboard on ABC radio talkback.)

Let’s try to wrap up this question now. It would be fair to assume that somewhere between one and 22 million people within Australia’s territorial borders are racist. It’s faintly ludicrous to attribute any sort of character to a collective group of people. Either the characterisations end up as utterly banal — Australians like barbecues! — or completely nonsensical.

A columnist trying to get to the bottom of the recent spate of attacks on Indian students in Melbourne writes that Australia ‘has a cultural tradition that in large part is underpinned by aggressive opportunism’. Michael Leunig reckons: ‘Our culture has thrived on the stabbing impulse.’ But on the other hand John Brumby has argued that ‘Victorians are committedto tolerance’ in an article condemning racially motivated attacks by some of those apparently tolerance-committed Victorians.

Maybe ‘we’ are racists, but ‘we’ also must be pretty cluey. A recent article discussing the Howard government’s environmental policies says that ‘the Coalition’s new-found eco-friendly initiatives were deemed greenwash by the electorate’. Very perceptive. Makes you wonder why a full 22 per cent of the electorate believe in witches, at least according to a Nielsen poll late last year. Headlines in the National Times declare that ‘we will forget Haiti’, that ‘we give our kids names fit for puppies’ and that ‘we love to click on’ Naomi Robson. I don’t plan on doing any of those things.

The idea that Australia has any sort of national character obscures our understanding much more than it facilitates it. Individuals, actions, and laws can be objectively racist. Nationalities cannot. After all, even the clearest example of racism in this nation’s history, the White Australia Policy, had its opponents, particularly among the free trade movement.

Of course, national circumstances — politics, history, geography, religious belief, sheer bloody luck — can influence the cultural attitudes of individuals within that nation. But you only have to watch our Prime Minister’s awkward attempts at Australianisms to see how artificial these national tropes can be.

Personalities do not change at national borders. How many times have you been told by recently returned overseas holidaymakers that ‘the people were just so friendly’? There are more than 3,000 hits for ‘the people are friendly’ on the Lonely Planet website. There is just one for ‘the people are unfriendly’ — you won’t want to go on holiday to Rome.

A 2005 study in Science sought to test views about national character against personality traits of individuals within that nation. The study found that ‘Perceptions of national character are not generalisations about personality traits based on accumulated observations of the people with whom one lives’; in other words, there was no correlation between a belief that Australians are extroverts, and the number of Australians you’ve met who are actually extroverts. And the study found that people vastly exaggerate what little differences do exist between countries. There is much greater variety of character within a nation than between nations. If you don’t believe that, compare Mark Latham with Kevin Rudd. Hard to believe they’re from the same party, let alone the same country.

It would be nice to believe all Australians recognise that democracy should be tempered by the common law, political power and judicial power should be in constant opposition, and human rights need constant and aggressive defence. But once again: 22 per cent of Australians believe in witches. This isn’t just a complaint about vapid rhetoric. When faced with reports of attacks on Indian students, it would probably be better to avoid all this empty navel-gazing about the possibility that racism is inherent in our national character, and focus on what concrete political failures may have tolerated those attacks.

Victoria has the lowest number of police per capita in any Australian state. That is surely more a factor in the state’s urban violence problem than any ‘cultural tradition [of] aggressive opportunism’. A psychological profile of Australia’s national character — if it’s even possible — is of absolutely no use when we can’t get basic policing right.

Capitalism Is Ruining The Planet, And Pigs Might Fly

The home insulation program has been scrapped. And the emissions trading scheme has been abandoned.

But try not to worry too much. We are all a lot more environmentally sustainable than you imagine. Just look what happens when a little piggy goes to the market.

In 2008, a Dutch conceptual artist, Christien Meindertsma, chose a single pig and followed what happened to every part of it as it was slaughtered, sold, distributed and processed around the world.

Pigs are not just made out of ham. Her pig – Pig 05049 – went into 185 separate products. Pig hair goes into paintbrushes. Protein from the hair is used to soften bread dough. Some pig skin is eaten (scratchings), and some sold to become practice canvas for tattoo artists. Pig leather becomes safety gloves. Collagen from the skin is sold to become glue, beauty masks, an ingredient in energy bars and a binding agent for liquorice.

Gelatine is derived from the collagen, which goes into pretty much every dessert – jelly, cupcakes, nougat, custard pastry, marshmallows, chocolate mousse, ice-cream and tiramisu. That’s just the outside of the pig.

The bladder becomes the skin of a tambourine. Haemoglobin goes into cigarette filters, and is added to ham to enhance its appearance. From pig’s bone fat we get antifreeze, floor wax, toothpaste, crayons, anti-wrinkle cream, make-up foundation, and hair conditioner.

And even bullets. Gelatine from pig bones helps move gunpowder into shell casings.

There are more than 150 other products. No pig bits are wasted.

But Meindertsma’s findings are extremely counterintuitive. We’ve been taught that we live lives of reckless, wasteful consumption. We’re told we have “affluenza” – an illness of consumerism with symptoms that include high credit card bills, environmental degradation and moral soullessness. Australia’s affluenza theorist, Clive Hamilton, has written that “consumer capitalism loves waste”.

By contrast, every school child learns that the Native Americans used “every part” of the buffalo they killed. Often they did – that’s subsistence living for you. But sometimes they herded them off cliffs (“buffalo jumps”) thousands at a time.

One 19th-century explorer, Meriwether Lewis, saw tribes killing “whole droves” of buffalo, salvaging only “the best parts of the meat” and leaving the rest to “rot in the field”.

Even at their most frugal, earlier societies could never match the resourcefulness of the global marketplace.

Pig 05049 shows how magnificently complex and refined global capitalism really is. Everything in a pig can be sold to someone, somewhere. Nobody wants to miss an opportunity to profit, even if it involves selling pig bones to be burnt into ashes which are then sold again, and again, and again, eventually helping produce German train brakes.

Or, to put it another way: waste is expensive. Time and energy are extremely valuable, and, as farmers know, so are pigs’ pancreases (to produce insulin).

After all, our entire economic system has developed on the idea that one person’s trash is another person’s treasure. We sell things that other people can use better.

A competitive economy encourages businesses to be less wasteful. To reduce the amount of energy used in production, or to reduce packaging to its absolute minimum, is to save money.

Ikea “flat-packs” its furniture because it’s more economical to ship that way, and it burns fewer fossil fuels for their buck.

Walmart justified its packaging reduction program (a target of just 5 per cent less packaging by 2013) by pointing to the $3.4 billion the company would save. Corporations aren’t altruists. That’s why a 2008 survey found that 76 per cent of corporate sustainability efforts were aimed at reducing package waste.

Anybody who has travelled in the past few years will have seen that many hotels don’t wash linen any more, unless it is specifically requested. Good for the environment, perhaps, but definitely good for the bottom line.

Even the globalisation of food produce is an example of market forces pursuing sustainability.

“Food miles” advocates believe we should only eat food produced locally, that it’s environmentally obscene to be transporting food across the world.

But the biggest carbon contribution of food isn’t how far it has travelled. It’s how efficiently it was produced. And efficiency is caused by things like climate. So a British government report found that importing tomatoes from Spain was more sustainable than growing them locally. A study by three New Zealand academics found that the same was true for apples grown in New Zealand and sent to the United Kingdom.

Sure, that seems bizarre. But we live in a world where tiny bits of pig are used to produce the copper that makes up computer circuitboards, and other bits used to reduce moisture in newspaper. Globalisation is definitely weird. But it’s not as unsustainable as everybody says.

Green Policies: Too Much Of Not Enough

It can’t be a coincidence: the worst examples of bad policy making and implementation in the last few years have been green policies.

The Federal Government has spent the last few months trying to neutralise the fallout from the home insulation scheme. And not totally successfully: last night’s Four Corners program uncovered even more prior warnings about the dangers of the Government’s policy. Kevin Rudd can’t fire Peter Garrett twice.

But don’t forget: the Government has also been embarrassed by problems with its solar panel subsidies. And its green loans scheme. And its National Green Jobs Corps.

There’s just something about the environment that leads politicians to abandon the basic principles of good policy making.

The Hawke Review of the Administration of the Home Insulation Program, released this month, found public policy essentials, like eligibility criteria, means testing and co-payments – that is, getting homeowners to put a little skin in the game by contributing some of their money – were conspicuously absent from the program.

Whether the program should have included co-payment was apparently raised in Cabinet. It was rejected.

And the Hawke Review found that advice to homeowners that they get at least two quotes for installation was abandoned before the program was fully launched. Recommending consumers follow basic market diligence was against the Government’s interests.

The Government still claims we had an insulation subsidy-led economic recovery. As Lindsay Tanner has argued: “I don’t think it’s right to say we should have sat back… dotting the i’s and crossing the t’s because we were in a crisis situation.”

There must have been a few more i’s left to dot. The cost of cleaning up the insulation scheme (around $1 billion) is nearly as much as the cost of implementing it in the first place ($1.5 billion was spent before the scheme was pulled).

By any standard, that makes the home insulation program an absolute debacle.

But the insulation program was perhaps not as much a debacle as the less-publicised green loans program. Under this program, homeowners could borrow up to $10,000 for four years to make sustainability improvements to their houses. The Government helpfully paid the interest on the loan.

Unsurprisingly, such generosity led to widespread rorting. The Government was forced to shut the whole thing down. Penny Wong announced last week that taxpayers are going to cough up another $4 million to audit the green loans.

Another policy fiasco: the solar panel subsidy scheme. That also had to be shut down early. It was supposed to cost $150 million. The final price tag is around $1 billion.

Then there is the Government’s National Green Jobs Corps. Apparently, when it announced it mid-2009, the Government didn’t actually mean to imply they would be green “jobs” – they’d be work experience for people getting Centrelink benefits.

I guess you shouldn’t judge a policy by its title.

Last year, Liberal MP Joanna Gash rightly described the green corps as “basically work for the dole with a green bent”.

But then in January Tony Abbott announced his own low-carbon copy – a 15,000-person green army.

Indeed, the Opposition’s direct action climate policy is swollen full of clever little green schemes. Twenty million trees will be planted. Grants will be provided for towns to convert to geothermal, tidal, and solar power. Rebates for home solar panels will be extended.

Abbott’s environmental centrepiece is an annual $1.2 billion emissions reduction fund. Companies which reduce their emissions below an individually determined baseline will be compensated. Those which exceed their baseline will be penalised.

The most important thing for a company will be getting a favourable baseline. Imagine how many opportunities there will be to game that system.

A report last week from the Commonwealth Auditor General found that state and federal governments are usually uninterested if their climate change policies are successful or not. The public accountability of individual environmental policies “has generally been poor.”

The Auditor General counted at least 550 separate climate change programs across the country, many of which were Howard government programs. We don’t really know which ones work. And if the ad hoc way bureaucrats report the results of their environmental programs is any indication, governments don’t seem to mind.

Obviously, it’s about green quantity, not green quality.

Could we expect anything else of policies which have ‘save the planet’ as their criteria for success? Public debate about the environment is characterised by emotion and ideology. Governments respond with the same.

The insulation program, the green corps, the solar panel subsidies, and the green loans program made stately headlines when they were first announced.

But the goodwill generated by those headlines doesn’t last when time reveals how poorly thought out the green policies actually are.

Taxation’s violent history

Any change in the tax system is a change in our relationship with the state.

But when the Henry tax review was released on Sunday, it was seen as a bit of an anticlimax.

The document has been sitting on Wayne Swan’s desk for more than four months. We’ve known about some of the big-ticket items for nearly as long: a simplified tax return system, and increased taxes on mining companies (presumably because Kevin Rudd hates Western Australia). We could have guessed some of the other ones: volumetric prices for alcohol. Since January, we’ve even known how thick the damn thing is: 10 centimetres of wonky glory.

But it’s definitely worth paying attention to.

In the relative luxury of twenty-first century Australia, it’s easy to believe government can never fail too badly – what could possibly go wrong with a few tax increases here and there?

But excessive taxation has been one of the great driving forces of history. Bad tax policy has destroyed industries, governments, nations, and empires.

Heavy taxes imposed by the Stuart monarchy led to the English Civil War. Dissatisfaction with Spanish taxes led to the Dutch revolt. Iniquitous taxation led to the French Revolution. And, of course, the cry of ‘no taxation without representation’ echoed throughout the American colonies as they rebelled against England.

High taxes can even be blamed for the fall of Rome. The economic deterioration in the third century AD which left the empire susceptible to external threat was to a large degree caused by skyrocketing taxes. Taxation was so heavy some free citizens renounced their liberty to become slaves, and therefore tax exempt. This was common enough for the Emperor Valens to declare doing so illegal.

In the early Middle Ages, taxes levied on infidels helped spread the Islamic faith – Muslim conquerors made it cheaper for conquered peoples to become Muslim than remain Christian.

Australia has its own violent tax history.

After all, it was excessive taxation which caused the Ballarat miners to rebel. They believed the increase in the price of a miner’s licence was tantamount to tyranny. This was particularly bitter for those who had left the Old World to find liberty in Australia. The Italian Raffaello Carboni wrote that he had travelled “16,000 miles in vain to get away from the law of the sword”.

So those anti-tax strikers at the Eureka Stockade had more in common with modern free marketeers than modern social democrats.

Even some of the great social movements were tax inspired.

In the United States, suffragettes in the 1870s formed women’s taxpayer’s associations and anti-tax leagues. In Australia, the women’s rights activist Mary Lee asked why “Should not those who had their property taxed have a voice in the representation of the taxpayers?”

Excessive taxation shows up in popular culture. The extremely high taxes of 1960s and 1970s Britain gave us The Beatles’ ‘Taxman’. In the Kinks’ ‘Sunny Afternoon’, the songwriters complain “The taxman’s taken all my dough”.

No wonder: the Labour Government in the 1960s imposed a massive 95 per cent “supertax” on high income earners. And the rich did more than just complain. Many, like the Rolling Stones, just packed up and left the United Kingdom altogether.

The proposed mining supertax will only be 40 per cent. But, like British rock stars, mining companies keeping a close eye on their bottom lines will leave Australia as soon as it is no longer profitable to stay.

Tax has an ignoble history.

But many people seem to view our tax system as a series of levers by which Australian society can be directed, and the choices of individuals can be manipulated. Increased taxes could shrink waistlines, eliminate traffic congestion, end lung cancer, and reduce drunken inner city violence.

In this view, taxation is not a necessary evil, but an end in itself.

Sure, the revenue from taxation can be used for good things. That money pays for public schools, the court system, police, national defence, maintaining roads, hospitals, and the welfare safety net.

But, don’t let the worthiness of some spending conceal the fact that the art of taxation is the art of plunder. To tax is to confiscate money which individuals and businesses have legally earned.

And, of course, the government wastes a hell of money too: the government ignored the overwhelming majority of the Henry tax recommendations, but the review still cost taxpayers $10 million.

The government’s new taxes won’t inspire revolution. And, luckily, they won’t leave us open to Visigothic invasion. But take the proposed tax on mining. It threatens one of our most valuable industries; one of the sources of Australian prosperity.

That should be more than enough to worry about. New taxes are a big deal.

Immigration and growth: 200 years of success

There’s a Rowan Atkinson sketch about a (pre-David Cameron) Conservative Party speech. In character, Atkinson starts talking about Indian immigrants: “I like curry,” he says. “But, now that we’ve got the recipe… is there really any need for them to stay?”

That combination of populism and affected naivety about immigration and population suddenly dominates our political sphere.

In Tony Burke, we now have Australia’s first dedicated Minister for Population. Under Tony Abbott, the Coalition is looking to make population growth from immigration into an election issue. The shadow immigration minister has called for a dramatic reduction in migrants. There’s now an opposition sub-committee dedicated to population.

And for what it’s worth, the Greens are instinctively hostile to anything that increases consumption within our territorial borders. More immigrants, economic growth, new products, cashed up bogans buying plasma televisions, anyone buying anything – whatever it is, they’re against it.

There is no force in parliament willing to embrace the benefits of population growth and immigration – historically, the two key drivers of Australia’s success.

It’s Kevin Rudd’s fault. In October he admitted publically what most Australian governments have believed for the last century – he believes in a “big Australia” and he “makes no apologies for that”. Since then, we’ve had six months of apologies.

Certainly, immigration itself presents policy challenges. But not that many. Australia isn’t a target for welfare-shopping: migrants can’t get the dole for their first two years.

And I’d be more concerned about the cultural challenges of immigration if we hadn’t had two hundred years of successful pot melting. Each migrant cohort is always more “different” than the last. And each cohort has successfully integrated into Australian society.

But when a politician expresses concern about population pressure, it is typically nothing more than a cover for government failure.

Take infrastructure. Will governments be able to supply enough roads and railways and community services for an expanding population? Well, that’s their job. To abrogate that responsibility is to admit that they are inept. They’ll have the money: more people means more taxpayers.

Or our high house prices, which are now being blamed on migrants and foreign investors. According to opposition housing spokesman Kevin Andrews, speaking to The Australian last week, his constituents are “saying their kids can’t get into the market because they go to auctions and are outbid every time by foreigners”.

Andrews was a former immigration minister (you might remember that) so clearly he’s playing to his favoured side. Nevertheless, Assistant Treasurer Nick Sherry has announced a “new enforcement crackdown” on non-residents buying houses.

House prices are inflated for a very simple reason: governments are choking land supply by restricting housing development at the edges of our cities. When demand increases but supply is limited, prices go up.

That’s the fault of those politicians now so concerned about population. Bob Carr is one of the most passionate advocates of population restraint. And his government was deeply reluctant to release land for housing.

So the idea that we don’t know where all these extra Australians will live is very peculiar. We’ve been expanding for two hundred years, and we haven’t run out of space to build houses.

Critics of immigration and population expansion present their views as brave contrarianism – they are the only ones willing to talk about the elephant in the room.

For such “straight talkers”, their case against population growth requires some awkward moral contortions.

Take the claim made by Bob Brown earlier this month: “skilled migrants, by the way, if left in their own countries, would help raise standards of living there”. This is the “brain-drain” thesis – that when the most educated poor people leave their home countries, they further impoverish the developing world.

But it should go without saying the major problem in the developing world isn’t they don’t have enough skills. It’s that they are underdeveloped. They’re poor.

Brown is telling people in poor countries they cannot seek to improve their lives, and the lives of their family.

That’s cruelty dressed up as kindness.

Well, it’s actually worse. Migrant workers send money to their relatives back home. These remittances add up to more than the world’s foreign aid budgets combined. And, unlike foreign aid, rather being funneled to governments, or distributed according to the preferences of first world donors, remittances go straight to the people who can use the money best.

So limiting skilled migration and chocking off remittances would add to third world poverty.

Migrants to Australia seek better lives than the rest of the world can provide. That should be flattering. They should not be used as scapegoats for the policy failures of our own governments.

The Blame Game Is All Canberra’s Fault

Kevin Rudd will take over the hospital system and everything will be dandy.

That’s the election pitch to voters in New South Wales, South Australia, and Queensland, who are desperate to have the Prime Minister wrestle hospital control out of the hands of the state governments those voters elected.

Rudd’s proposal displeases John Brumby, who believes that comparing Victoria’s health system with that of New South Wales is defamatory, if not outright seditious. If both leaders hold their ground, we have the edifying prospect of a state premier defending his state against a prime minister of his own party, while they both head to an election.

It’s probably some kooky factional thing. No doubt a few Labor heavyweights know the ‘real story’ behind it all.

But Brumby is right to fight. It is very altruistic of the Prime Minister to “end the blame game” by granting himself more power.

After all, this “blame game” is entirely Canberra’s fault. Over the past one hundred years, the Commonwealth just hasn’t been able to stop itself interfering more and more with areas that are state responsibilities. Well, according to the constitution.

It’s understandable the states are so unpopular – the New South Wales government has become little more than a succession of coups d’état. Queensland looks to be heading that way too.

But put aside any notion of states’ rights, of the virtues of a federal structure of government, of having the government closest to the people to be the one that makes the decisions. Or of the danger of concentrating power in just one level of government.

Right now, the biggest delusion in Australian public debate is that the federal government is inherently better at running policy.

There are calls to have Canberra take over: occupational health and safety laws, more workplace laws, disabled parking permits, taxi drivers’ training standards, the timing of daylight saving, the date for ANZAC day, travel concessions for seniors, safety standards for poultry, taxes on racing and wagering, the rules governing firearms management, inheritance laws, public transport, building standards, childcare standards, pokies licensing, bikie gang laws, carbon emissions plans, and on and on and on.

That’s only about half the list I have in front of me – every man, his dog, and his dog’s government relations officer seems to wants Canberra to assume responsibility for some state policy or another.

Last October Kevin Rudd even argued urban planning should be subject to a federal takeover. Urban planning is about as far from a Commonwealth responsibility as you could get.

Dissenting against the Howard Government’s Workchoices industrial relations takeover, Michael Kirby, called this “opportunistic federalism”. There’s no political theory, no policy consistency, or coherent direction governing what policy areas Canberra chooses to suck into its vortex. Just whatever federal politicians reckon will be most popular.

And there’s no doubt the health takeover is popular. Eight out of 10 Australians want a federal takeover of health.

But this isn’t that. The states will continue to fund 40 per cent, the Commonwealth the remaining 60.

Hospital workforce planning will be jointly managed by the federal and state governments, which will make workplace relations for nurses and doctors a hell of a lot more complicated. Specialised services will also be jointly managed, as will the mix of medical services. Procuring equipment will be negotiated between states and local hospital networks. The federal government will set performance targets, state governments will measure targets, and local hospital networks will try to achieve those targets.

This plan won’t cull bureaucracy. It’ll add it. The federal government will have a stake about what happens in the hospitals. The states will have a stake, and the local hospital networks will have a stake. And regulators get a stake. A bit like the current system, except in triplicate.

More: if you believe a federal government takeover of funding will allow local communities to run hospitals, recall the insulation industry debacle. The government that coughs up the money is ultimately held responsible when it all falls apart. The next person to die in a waiting room will be seen as Kevin Rudd’s personal responsibility. And then there’ll be more direct federal intervention into hospital management.

Brumby’s stand against this plan is great. But he doesn’t focus on the real problem.

The states cannot avoid being the lapdog of the federal government while they’re almost entirely reliant on the federal government for their money.

Rudd’s health plan takes a third of the revenue from the GST back from the states.

If Brumby wants to assert Victoria’s position as a health innovator, he’d push for something really radical: to get Canberra out of the income tax business and return the power to levy income taxes to the states.

Ask a nearby teenager. Earning your own money is the key to independence. Only with fiscal sovereignty will the states be able to reassert their policy autonomy.

Brumby’s confrontation with Rudd will be hollow unless he tackles the states’ master-servant relationship with the Commonwealth.

Let Society Shape Itself

It’s hard not to be cynical. Especially when a developer lobby claims giving the government power to force people to sell their homes – to developers – is for “community benefit”, as the chief of the Urban Development Institute did last month.

It’s universally agreed that developers have nothing but the interests of the community at heart.

Anyway, that’s the proposal of the state government: to set up a government planning authority with the power to compulsorily acquire property and hand it to private developers.

The developers will then build higher-density housing – one house replaced with nine – and flog them off at a profit. It’s an ingenious business model. Unless it’s your house they have their eye on. The government believes some houses will just have to be demolished if it is to realise its grand Metropolitan Strategy and relax the pressure on house prices.

I guess you can’t make an omelet without first passing legislation that forces poultry farmers to sell their eggs to an omelet factory.

Traditionally, governments have had the power to compulsorily acquire property for new freeways or rail lines: obviously public things.

But in recent years, that power has become a lot more extensive, allowing private companies to benefit. NSW isn’t the only jurisdiction taking one person’s property and giving it to another.

In 2005, the US Supreme Court ruled that the local authority in a town called New London, in Connecticut, could force people to sell their property to other private property owners – in that case, to the pharmaceutical giant Pfizer, which would inhabit a new corporate facility on the land.

The court made the same argument as the NSW government: compulsory acquisition powers can be used if there is a public benefit from doing so. In the New London case it was claimed that bulldozing homes to make way for Pfizer would bring taxes and jobs. To the New London authority and the US Supreme Court, the property rights of the homeowners were just a trivial obstacle on the road to the town’s bright future.

The court’s decision was widely condemned. Especially because Pfizer left the new site a couple of years later, taking the best hopes of the New London planning establishment with them.

Those people whose homes were forcibly purchased to make way for the Sydney Metro, before it went embarrassingly defunct, have had a similar experience.

These new powers would eliminate something that has dogged urban planners since their profession began: property rights.

Urban planning has always been about more than nominating where streets should go. Planners imagine that if only they could impose their ideal configuration of roads, apartment complexes, and “community spaces”, they could save the environment, improve quality of life, fix the obesity crisis, restore social capital, encourage historical awareness, and boost a city’s self-esteem.

I’d trust them more if their plans weren’t always thrown away well before their use-by date.

The first major plan for Sydney, the 1948 County of Cumberland Plan, was supposed to be in place up to 1980. It was supplanted by a new plan in 1968, supposed to last until 2000. Then came one in 1988, another in 1994, in 1997, in 1998 and in 1999. That last plan should have lasted until 2016. It didn’t.

The planners imagine that the next one will last till 2036. It won’t.

But not discouraged by this seemingly endless cycle of bluster and disappointment, the government’s plans are always extremely ambitious. They’re full of watercolour drawings and accompanied by expensive dioramas.

For modern planners the challenge is how to impose their vision of paradise on existing urban environments. These environments are already full of roads and parks and businesses and various-density housing – remnants of older, forgotten plans, or just a reflection of where people want to live.

The complication is property rights. People own the houses governments want to bulldoze. And the government that tramples property rights tramples the foundation of economic growth, of personal savings, and of economic security. Because, fundamentally, property rights are human rights.

So compulsory acquisition to expedite the government’s planning strategy should be seen for what it is: a cartel of developers and legislators offering a blank cheque to urban planners to undermine the fundamental right of property ownership.

But there is something Sydney can do to ease the pressure on house prices. Governments could just let society and the urban environment shape themselves. It would take the fun out of urban planning, but it’d be a lot more successful.

Some people like living in inner-city shoeboxes. But not everyone does – should their preferences be forfeited? Instead of trying to force as many people into as small a space as possible, the government could release more land for new houses to be built.

There’s enough land on the Cumberland Plain to expand Sydney 50 per cent. And infrastructure spending could follow where people want to live. (That really shouldn’t be beyond the capability of a competent government.)

That would ease the pressure on house prices. Certainly more than giving urban planners the power to eliminate property rights would.